Page 5 - AfrOil Week 34

AfrOil COMMENTARY AfrOil

She continued: “The country has suffered from investment in Nigeria instead of other countries
unnecessary delays from the PIB. Investors are and hence contribute to the sustainability of the
not making a lot of decisions because of the oil and gas industry.”
delayed PIB. Available capital can only come For its part, Royal Dutch Shell (UK/Neth-
into the country if people see that their invest- erlands), another major investor in Nigeria’s
ments are secured.” hydrocarbon sector, has said it wants to see the
country adopt legislation that truly serves its
Support from local business leaders interests. “We hope that the final bill would be
Nigerian business leaders are also pulling for one that would unlock potential investments
adoption of the bill. Joseph Nwakwue, the head that Nigeria’s rich resource base truly deserves,”
of the Nigeria Council of the Society of Petro- a spokesman for Shell’s Nigerian operations told
leum Engineers (SPE), said last week that the Reuters last week.
PIB could dispel widespread uncertainty about
the security of investments in the country. “We The necessity of change
used to be a choice destination for investment, The PIB is reported to contain provisions that
but I am afraid we have lost that place over time,” will be attractive to investors such as Shell and
he told reporters in Lagos. “Key considerations Total. For example, a draft summary of the bill
for investors are resource endowment/density, viewed by Reuters last week streamlines oil and
fiscal terms, ease of doing business, et cetera. gas royalty payments and also reduces the rate
We have slipped by most measures, but there is of some royalties. The news agency also quoted
scope for a rebound if we get the PIB right.” anonymous sources as saying that Nigeria had
He added: “The Minister of State for Petro- taken a more “aggressive” approach than other
leum Resources, Chief Timipre Sylva, has said African states to reducing the government’s
hopefully [the bill] will be passed before the share of total oil revenues in the form of royal-
year ends. We are hoping and praying that this ties, taxes and other fees. “
happens.” This appears to represent a welcome change The damage
Likewise, Michael Adebayo, the chairman of from last year’s passage of amendments to the
the oil and gas sector team at the Manufacturers Deep Offshore and Inland Basin Production that the oil and
Association of Nigeria (MAN), stated last week Sharing Contract Act, which has been widely
that he hoped the PIB would be signed into law criticised as a revenue grab and as a threat to gas sector has
quickly. The adoption of the law would greatly investors’ confidence in Nigeria. But circum- sustained in
benefit Nigerian manufacturers by increasing stances – namely, the damage that the oil and gas
the amount of gas available for electricity gen- sector has sustained as a result of the coronavi- 2020 has
eration, he said. rus (COVID-19) pandemic and the oil price war
“The government is working to make sure between Russia and Saudi Arabia – have driven driven home
that gas is available for domestic consumption home the necessity of such change. This means
and must be sold in naira,” he was quoted as say- that the bill does stand a decent chance of being the necessity
ing by SunNewsOnline.com. “Before the end adopted before the end of the year. of change
of 2020, [if] the PIB is implemented, we would As Ian Simm, principal advisor at the IGM
enjoy maximum benefit and the nation’s econ- Energy consultancy, told AfrOil: “Nigeria has
omy would experience a boom because more been trying to pass the PIB into law since 1999.
consumers of gas would emerge, gas would Last year, Mele Kyari [group managing direc-
become more relevant to the Nigerian economy tor of Nigerian National Petroleum Corp., or
than oil, and investment [would] improve.” NNPC] said that failure to implement the leg-
islation was a ‘disappointment.’ But ‘farce’ would
Foreign investors weigh in have been a more appropriate choice of words.
The bill also seems to have some support among “When President Buhari came into power,
foreign investors. Mike Sangster, the managing the government broke up the PIB into smaller
director of Total Exploration and Production parts in an attempt to make the unwieldly pack-
Nigeria, a subsidiary of the French major Total, age of regulations more manageable. However,
said earlier this week that the PIB was a neces- even the smaller chunks have failed to be passed.
sary step towards securing new investment. “We It could be argued that as long as the status quo
are keen to continue to invest in Nigeria and to continued, there was a lack of incentive to enact
contribute constructively to the ongoing debate the bill.
about the Petroleum Industry Bill,” he said dur- “This time, though, Nigeria may find that it
ing the SPE’s Nigeria Energy Industry Transfor- is forced to pass the PIB, given the upheaval the
mation Summit. “We welcome the efforts being industry has faced. With oil and gas investments
made by the authorities to define a long-term coming under increased scrutiny amid concerns
framework for the oil and gas industry.” over returns as well as the growing importance
Sangster also stressed, though, that Total to shareholders of ESG [environmental, social
wanted to be certain that the legislation pro- and corporate governance standards] com-
vided “clarity and certainty,” as well as “attractive pliance, African states have had to improve
terms and a win/win solution for the country terms for developers to ensure their continued
and investors in order to entice sufficient capital involvement. Indeed, much has changed since
in an ever more competitive world.” the last [truly comprehensive] hydrocarbon
He added: “A progressive, win/win PIB regulations were implemented in 1960, and an
could be the catalyst needed for a new wave of update is long overdue.” ™

Week 34 26•August•2020 www. NEWSBASE .com P5