Page 4 - DMEA Week 02 2021

DMEA COMMENTARY DMEA

Nigeria begins another year

without a new oil and gas law

Industry observers are keen to see the PIB passed soon – and are also coming

forward with criticism of the bill now under discussion

NIGERIA WHEN his government submitted its draft barrels of oil and 188 trillion cubic feet [5.32 tril-
version of the Petroleum Industry Bill (PIB) to lion cubic metres] of gas.”
WHAT: the National Assembly last August, President Another was Omowumi Iledare, a professor
The National Assembly Muhammadu Buhari said he was determined at the Institute for Oil and Gas Studies, which is
has resumed its review of to see the legislation pass quickly. Specifically, part of the University of Cape Coast in Ghana.
the PIB. he stated that he wanted to wrap up the matter He said that it was in Nigeria’s best interest to
before the end of 2020 so that the country’s oil use the new legislation as a selling point. The
WHY: and gas sector could start benefiting from the country’s oil and gas sector needs to attract new
Without a new law in introduction of the new law as soon as possible. investment, especially now that low prices, the
place, Nigeria will have Buhari’s sense of urgency was understanda- coronavirus (COVID-19) pandemic and other
difficulty maximising the ble, given that Nigeria has been trying (and fail- factors have impaired the federal government’s
potential of its oil and gas ing) to pass a new oil and gas law for more than ability to support new capital expenditures and
resources. two decades. However, legislators missed the other programmes, he told Vanguard.
president’s deadline. The newspaper also quoted an industry
WHAT NEXT: Both houses of the National Assembly passed expert as saying that the country needed a new
As critiques emerge, the the PIB in the first reading in September and in oil and gas law. “The PIB is very important,
government still hopes the second reading in October. Then in Novem- especially as the oil and gas industry is the main
to wrap up the legislative ber, they opted to suspend discussions on the bill pillar of Nigeria’s economy. The industry con-
process in March or April. so that they could focus on securing the passage tributed 65% of all revenues for the government
of a budget for 2021. As a result, the PIB has yet of Nigeria and 88% of Nigeria’s foreign exchange
to reach the final stage of the legislative process, as of 2018. Several enabled projects created job
and officials in Abuja have said they are now opportunities for over 600,000 Nigerians in the
aiming to finalise the bill in March or August. last decade, improving the conditions of many
And so Nigeria has marked the beginning of people. The industry has shaped Nigeria into the
yet another new year without an adequate legal largest oil producer in Africa and the fifth-larg-
foundation for the development of its abundant est LNG producer in the world,” said the expert,
hydrocarbon resources. Nevertheless, discus- who spoke on condition of anonymity.
sions on the bill have resumed, and legislators
are still hopeful of passing it and sending it to A more critical perspective
the president for signature within the next few The same expert also indicated, though, that he
months. believed the version of the PIB now under dis-
cussion was far from perfect.
Advocating for passage For one thing, he said, the legislation did not
Buhari is not the only one eager to see the PIB do enough to make more Nigeria a more com-
pass. Late last month, several public figures told petitive destination than other oil and gas-pro-
the Vanguard newspaper that they hoped the ducing states. Specifically, he said, it does not
National Assembly would move quickly. keep the federal government’s total take from
One of them was Victoria Ibezim-Ohaeri, the hydrocarbon projects – in the form of taxes,
executive director of Spaces for Change, a non- royalties and the share of profit oil reserved for
profit organisation that promotes human rights. state-owned Nigerian National Petroleum Corp.
“Nigeria needs to pass the PIB as soon as possi- (NNPC) – within a globally competitive range.
ble to ensure the country gets maximum benefits If no action is taken on this front, he said, oil
from its petroleum resources,” she commented. and gas projects are less likely to reach the final
“Crude oil dominates Nigeria’s economy, investment decision (FID) stage. “The current
accounting for around 80% of export earnings. 2020 draft PIB does not improve the invest-
Nigeria has the largest oil and gas reserves in ment environment for new project FIDs to be
sub-Saharan Africa, with an estimated 37bn taken,” he told Vanguard. “As it is currently,

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