Page 5 - AfrOil Week 33 2022

AfrOil COMMENTARY AfrOil

Buhari also asserted in the statement that the hydrocarbon law and inconsistency with respect
only reason why confusion had arisen on this to taxation, regulation and enforcement as rea-
front was because “the various agencies involved sons for not committing to Nigerian projects.
in the decision had not co-ordinated well among
themselves.” As such, according to Shehu, after Whither the PIA?
reviewing the facts of the matter and examining But it also makes sense to ask questions about
the implications of all possible actions, Buhari the implications of this episode – which is, for
had opted to back NUPRC’s position. the record, not even over yet. One of the impli-
“[The] issue at stake is purely a regulatory cations may be this: Nigeria may have passed
matter, and the commission had earlier com- the PIA, but it has yet to sort out exactly how it
municated the decline of ministerial assent to intends to enforce it.
ExxonMobil in this regard,” he commented. “As And thus far, its approach to enforcement
such, the commission further affirms that the seems to be a bit disorganised. Consider, for
status quo remains.” example, the matter of the domestic gaso-
line subsidy. The PIA called for eliminating Thus far, Nigeria’s
Rule of law? that expensive programme six months after
In an ideal world, this series of events would be its passage, but that deadline was most decid- approach to
a net gain for Nigeria, at least in a philosophical edly not met, despite Finance Minister Zainab
sense. It would represent a series of glitches that Ahmed’s attempts to reassure the World Bank enforcement of
nevertheless proved, in the end, that the legal last November. Instead, the subsidy has been the PIA seems
system could be trusted and that the country extended – initially for six months and then for
was ruled by laws and not by men – that even at least 18 months. to be a bit
the president could not overstep the bounds of This was ostensibly done to protect the poor
his authority. from the impact of inflation. But this protection disorganised
But this is, sadly, not an ideal world, and is coming at the cost of nearly NGN7 trillion
public responses to Buhari’s about-face have ($16.65bn) in extra government spending next
focused more on how these developments might year, more than has ever been spent before for
affect investment in Nigeria than on the rule of this purpose, even after refinery construction
law. Bloomberg, for example, quoted Mariam and repair projects designed to improve fuel
Olabode, an oil and gas analyst at the Afrivest supply conditions are anticipated to begin bear-
West Africa consultancy in Lagos, as saying that ing fruit. The Dangote refinery, majority-owned
the “acquisition dispute” was likely to compound by the private Dangote Group, is due to come
anxieties arising from “oil theft, vandalism and on stream at an initial capacity of 540,000 bar-
insecurity along the pipelines,” all of which have rels per day early next year, while the Port Har-
caused output to fall. court Refining Complex (PHRC), a 210,000
The news agency also quoted Gail Ander- bpd facility that includes two refineries owned
son, research director at UK-based Wood Mac- by state-run Nigerian National Petroleum Co.
kenzie, as saying that the public disagreement Ltd (NNPC Ltd), may resume operations by the
between Buhari and Komolafe was likely a end of 2022.
source of concern for investors. The back-and- Going forward, then, it seems likely that
forth over the MPNU deal could be having “a there will be more debates and disputes about
knock-on effect on other deals that are waiting how exactly Nigeria is to implement the PIA.
on the outcome here,” she said. This doesn’t just raise questions about the
Seplat-ExxonMobil deal; it also raises questions
Investors’ exit strategies about whether the PIA will yield the results that
Ayodele Oni, a partner at Bloomfield Law Prac- both IOCs and officials in Abuja had hoped to
tice in Lagos, went further, saying that inter- see. ™
national oil companies (IOCs) might use the
incident as a pretext to ensure that they had exit
strategies in place before starting negotiations
on new projects. “The optics are not very good
for the country,” he told Bloomberg.
Toyin Akinosho, the publisher of Africa Oil
and Gas Report, spoke similarly, telling This Day
that Nigeria was likely to face more questions
from potential investors about stress-free exit
strategies. “The optics are not good for Nigerian
investment drive,” he said.
These observers’ emphasis on investment
does make sense, given that Buhari had said
on August 8 that he was green-lighting the
acquisition in order to jump-start the process
of attracting new investment into the oil and
gas sector following the adoption of the PIA.
In turn, Buhari’s desire to push forward on the
investment front also makes sense, given that
multiple IOCs have cited the lack of an updated Nigeria is still working out how to implement the PIA (Image: Seplat Energy)

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