By Dakuku Adol Peterside
For many decades now, we have grappled with the challenge of bringing within one all-inclusive law, the various legislations and regulations that currently govern the oil and gas industry, the main thrust of Nigeria’s economic life. The good news however is that we are at the end of the tunnel, therefore light, to my mind, is imminent. I say so because the Petroleum Industry Bill, to borrow a popular cliché, is an idea whose time has finally come. In a moment, we shall all witness this new dawn, all things being equal.
The latent advantages of the Petroleum Industry Bill will however emerge and become clearer as soon as the process of ensuring that this all-important bill is re-started. Despite these underlying advantages, I am particularly enthralled by the possibility of the bill creating a peaceful business environment for the companies operating in the region. For so long, oil and gas activities in the Niger Delta have been greatly hampered by instability and crisis arising from the alienation of the host communities by the oil companies. And the fact that no particular attention has been paid to the environment which sustains life makes it even worse. This has been the thematic thrust of a long drawn agitation by the people impacted by oil exploration.
This crisis came to a crescendo a few years before the 2009 amnesty programme from the late President Umar Musa Yar’Adua. Prior to 2009, the Delta had witnessed large scale violence and incessant kidnapping of oil workers, particularly expatriates. The situation was further compounded by attacks on pipelines and flow stations. Today, the Niger Delta enjoys relative peace but I think the region deserves enduring peace, critical not only to the operations of the oil companies but also to the wellbeing of the communities. This permanent peace I dare say lies substantially in the provisions of a people oriented Petroleum Industry Bill because expectations are high.This is so because the PIB promises to align the overall interest of the host communities to both those of the oil companies and the government.
The medium to achieving this is through the Petroleum Host Communities Fund. This fund which is embedded in the PIB will significantly address grievances and fears of these long-suffering host communities. I understand the capital for the Petroleum Host Communities Fund will come largely from 10 per cent of the net profit of the multinationals operating in the communities. The good news however is that the fund shall be used to develop economic and social infrastructure of the host communities. The caveat nevertheless, is that a community risks forfeiture of contributions in the fund when any form of vandalism or unrest causes damage to facilities of operating oil concerns in their purview or vicinity.
Sometimes I just wonder what the entire region would look like when eventually this bill becomes operational with all its promises and expectations. For instance, the problem of unemployment among our teeming youths which remains a major challenge would have been considerably addressed with a bill like this. As stakeholders in all the upstream facilities and with the additional incentive offered by the Petroleum Host Communities Fund, the youths would have been sufficiently motivated towards the protection and promotion of this commonwealth. My fear however, is the issue of organizational capacity of our communities.
The PIB also promises to boost exploration, exploitation and production. It is a reform focused bill. This simply means that it will reform a system that has been running for many years without any major attention. A system enmeshed in rot. Again there is a provision in the bill which says that if you produce a certain quantity of crude oil, it is mandatory that you must establish a refinery in Nigeria. Whether we like it or not, there will be a minimum of seven major oil companies that will be compelled by law within 24 months to establish refineries in Nigeria.
Apart from increasing investments, the bill will also do away with funding challenges and create the necessary environment for the deregulation of the downstream sector. With deregulation, more players will enter the oil and gas sector and this will naturally translate into more investments while the government will have enough funds for infrastructural development. The unresolved issue of domestic gas supply has also been sufficiently addressed in the bill. I am aware that future petroleum mining lessees must necessarily meet their domestic gas supply as a condition and defaulters risk serious sanctions. Conversely, the process of collecting and remitting government revenues from oil assets has also been made easy by the bill. [eap_ad_1] Like most Nigerians, I fully support the commercialization of the Nigerian National Petroleum Corporation, NNPC. We can no longer accept the corporation’s curious and dual role as a player and regulator. This is unethical and business should not be driven that way. It is actually possible to create a commercially viable national oil company with fitting regulatory bodies that would effectively tackle issues of transparency and accountability which have remained the bane of the oil and gas industry.