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AfrOil JANUARY AfrOil

The newspaper also quoted an industry expert sources. For example, the Lagos Chamber of
as saying that the country needed a new oil and Commerce and Industry (LCCI) said in a state-
gas law. “The PIB is very important, especially ment earlier this month that the current version
as the oil and gas industry is the main pillar of of the bill laid the groundwork for much-needed
Nigeria’s economy. The industry contributed reform in multiple areas but would not suffice to
65% of all revenues for the government of make the country as competitive as one might
Nigeria and 88% of Nigeria’s foreign exchange hope. It urged the government to go further by
as of 2018. Several enabled projects created job ensuring that the new oil and gas law promoted
opportunities for over 600,000 Nigerians in the efficient, effective and fiscally prudent govern-
last decade, improving the conditions of many ance and administration practices in the indus-
people. The industry has shaped Nigeria into the try, while also promoting the development of
largest oil producer in Africa and the fifth largest host communities.
LNG producer in the world,” said the expert. Additionally, it called on Abuja to work
harder to protect the existing programmes and
A more critical perspective projects that can serve as the foundation for
The same expert also indicated, though, that he new growth. “We firmly believe that based on
believed the version of the PIB now under dis- constructive co-operation between the govern-
cussion was far from perfect. ment and other stakeholders, host communities
For one thing, he said, the legislation did not and the industry, the objectives of reform can
do enough to make more Nigeria a more com- be successfully met,” it said. “A competitive bill
petitive destination than other oil- and gas-pro- would help preserve the integrity of the exist-
ducing states. Specifically, he said, it does not ing projects and also encourage future growth
keep the federal government’s total take from of production and make Nigeria an investment
hydrocarbon projects – in the form of taxes, destination of choice.”
royalties and the share of profit oil reserved for Nigeria has been
state-owned Nigerian National Petroleum Corp. An industry association’s concerns
(NNPC) – within a globally competitive range. LCCI issued its statement shortly after the trying and failing
If no action is taken on this front, he said, oil Punch newspaper reported that an industry to pass a new oil
and gas projects are less likely to reach the final association, the Oil Producers Trade Section
investment decision (FID) stage. “The current (OPTS), had also expressed reservations about and gas law for
2020 draft PIB does not improve the investment the PIB. It quoted a document issued by the
environment for new project FIDs to be taken,” group as saying that the bill “does not improve more than two
he told Vanguard. “As it is currently, govern- the investment environment for new project
ment’s take on Nigeria’s pre-final investment FIDs to be taken.” decades
decision joint venture oil projects are among OPTS went further, commenting: “Uncom-
the highest in the world. Also, the PIB terms for petitive fiscal terms, increasing cost, unsettled
Deepwater could lead to Nigeria foregoing over deepwater disputes, and upcoming deepwater
30% of its production potential in 2030.” lease expiry increase risk for investors and pre-
He also called on federal authorities to reduce vent new investments. Nigeria’s government
the cost of doing business in Nigeria, saying that take exceeds that of other countries for prolific
Buhari’s government ought to do more. “This deepwater basins. Government take on Nigeria’s
is attributable to high security costs, significant pre-final investment decision JV oil projects is
administrative costs associated with overlap- among the highest in the world.”
ping government department oversight and The group also urged greater protection for
duplicity of demands, approval delays and the contracts, saying: “[The] PIB does not provide
inability to allow industry to optimise,” he said. clear assurances to investors with regards to the
“Additionally, the industry has been increas- sanctity of existing contracts at conversion or on
ingly burdened by a plethora of fees, taxes and how and when NNPC liabilities will be settled ...
levies [that] amount to 10% cost increases. A An investor’s ability to realise return on capital
PIB [that] drives down the cost of doing business under which the investment decision was made
alone would increase the pool of value availa- is essential to competing for additional capi-
ble to both industry and government, such that tal. Lack of contract sanctity compromises the
even at lower government takes, [the] govern- integrity of investments and negatively impacts
ment would realise higher incomes attributa- investor confidence and willingness to further
ble to cutting waste and increasing growth by invest and engage in long-term in Nigeria.”
attracting capital.” If these gaps are not covered, they could pre-
The expert also urged Abuja to improve vent Nigeria from maximising the potential of
conditions in the natural gas sector. “[Multi- its deepwater fields, OPTS added. “Deepwater
ple] issues along the gas value chain need to be provisions in the PIB do not provide a favourable
addressed to maximise gas potential (e.g., com- environment for future investments and launch-
petitive gas terms, resolution of gas investment/ ing projects,” it said. “[The] PIB does not provide
revenue currency-mismatch, free market prices, clear assurances to investors with regards to the
infrastructure availability and adherence to con- sanctity of existing contracts at conversion or on
tractual obligations),” he said. how and when NNPC liabilities will be settled.”
The fact that the PIB has drawn this type of
A business group’s critique responses may make discussions in the National
The PIB has also drawn criticism from other Assembly more heated in the near future. ™

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