Page 7 - AfrElec Week 34

AfrElec COMMENTARY AfrElec

this week that the PIB marked a necessary step
towards securing new investment. “We are keen This appears to represent a welcome change
to continue to invest in Nigeria and to contrib- from last year’s passage of amendments to the
ute constructively to the ongoing debate about Deep Offshore and Inland Basin Production
the Petroleum Industry Bill,” he said during the Sharing Contract Act, which has been widely
SPE’s Nigeria Energy Industry Transformation criticised as a revenue grab and as a threat to
Summit. “We welcome the efforts being made by investors’ confidence in Nigeria. But circum-
the authorities to define a long-term framework stances – namely, the damage that the oil and gas
for the oil and gas industry.” sector has sustained as a result of the coronavi-
Sangster also stressed, though, that Total rus (COVID-19) pandemic and the oil price war
wanted to be certain that the legislation pro- between Russia and Saudi Arabia – have driven
vided “clarity and certainty,” as well as “attractive home the necessity of such change. This means
terms and a win/win solution for the country that the bill does stand a decent chance of being
and investors in order to entice sufficient capital adopted before the end of the year.
in an ever more competitive world.” As Ian Simm, principal advisor at the IGM
He added: “A progressive, win/win PIB could Energy consultancy, told AfrOil: “Nigeria has
be the catalyst needed for a new wave of invest- been trying to pass the PIB into law since 1999.
ment in Nigeria instead of other countries and Last year, Mele Kyari [group managing direc-
hence contribute to the sustainability of the oil tor of Nigerian National Petroleum Corp., or
and gas industry.” NNPC] said that failure to implement the leg-
For its part, Royal Dutch Shell (UK/Neth- islation was a ‘disappointment.’ But ‘farce’ would
erlands), another major investor in Nigeria’s have been a more appropriate choice of words.
hydrocarbon sector, has said it wants to see the “When President Buhari came into power,
country adopt legislation that truly serves its the government broke up the PIB into smaller
interests. “We hope that the final bill would be parts in an attempt to make the unwieldly pack-
one that would unlock potential investments age of regulations more manageable. However,
that Nigeria’s rich resource base truly deserves,” even the smaller chunks have failed to be passed.
a spokesman for Shell’s Nigerian operations told It could be argued that as long as the status quo
Reuters last week. continued, there was a lack of incentive to enact
the bill.
The necessity of change “This time, though, Nigeria may find that it
The PIB is reported to contain provisions that is forced to pass the PIB, given the upheaval the
will be attractive to investors such as Shell and industry has faced. With oil and gas investments
Total. coming under increased scrutiny amid concerns
For example, a draft summary of the bill over returns as well as the growing importance
viewed by Reuters last week streamlines oil and to shareholders of ESG [environmental, social
gas royalty payments and also reduces the rate and corporate governance standards] compli-
of some royalties. The news agency also quoted ance, African states have had to improve terms
anonymous sources as saying that Nigeria had for developers to ensure their continued involve-
taken a more “aggressive” approach than other ment. Indeed, much has changed since the last
African states to reducing the government’s [truly comprehensive] hydrocarbon regulations
share of total oil revenues in the form of royalties, were implemented in 1960, and an update is long
taxes and other fees. overdue.” ™

Week 34 27•August•2020 www. NEWSBASE .com P7