The Nigerian petroleum industry is losing the chance to have more money committed to financing new projects and completing or servicing many pre-existing ones due to the old set of laws that govern how oil and gas business is done in the country.
Ahmed Lawan, who is the country’s senate president, stated this Monday, January 25 while declaring open a 2-day public hearing on the Nigerian Petroleum Industry Bill (PIB).
The PIB has been in the works at the National Assembly for nearly two decades without becoming a law to replace current regulations that have been in place for over half a century and have largely become unattractive and ineffective.
“The mere knowledge that the nation’s oil industry is still being governed by laws enacted more than 50 years ago is ludicrous and extremely disappointing,” said Lawan.
The senate president further noted that the non-passage of the PIB had been a major drag on the industry over the years, significantly limiting its ability to attract both local and foreign capital at a time when many other countries are scrambling to exploit their oil and gas resources.
According to him, “let me say this, we (National Assembly) will pass this bill not without ensuring that it is a bill that satisfies certain conditions. And the National Assembly, in its consideration of the piece of legislation, would ensure that the bill when passed into law, guarantees improved revenue earnings for the country.
“Nigeria is blessed with these resources, we want Nigeria to benefit optimally from them. In fact, we are in a hurry because we have lost so many years of benefits that we could have had.
“As legislators, we will strive to deliver a bill that will enhance the growth of our oil and gas industry, modernize our fiscal system and enhance competitiveness, while creating harmony for all stakeholders. This is a promise we have made and that we shall achieve.
“Nigeria must have an oil and gas industry that benefits its people. Equally, our oil and gas industry must be competitive. We must create a sustainable investment climate, where business in the sector will flourish.”
He added that the determination by the legislature to pass the bill “is driven by the need to overhaul a system that has refused to operate optimally in line with global standards, resulting in loss of continental competitiveness, transparency, accountability, good governance and economic loss for the petroleum industry and the country.”
The senate president noted that the challenges surrounding the future usefulness of petroleum resources and the increased level of uncertainty on oil demand call for great concern.
“It is estimated that with evolving new technologies, fossil fuel may be less attractive if not of no value in the next 20 years.
“It is, therefore, time for us to make maximum benefit of our fossil fuel reserves through this reform before it fades away,” Lawan stressed.
According to him, the petroleum industry bill comprises of 4 chapters that outline how to create efficient and effective governing institutions with clear and separate roles for the petroleum industry; as well as establish a framework for the creation of a commercially oriented and profit-driven national petroleum company; and promote transparency, good governance and accountability in the administration of the petroleum resources of Nigeria, among others.
He added that the piece of legislation, among others, also seeks to promote the exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people; and promote the efficient, effective and sustainable development of the petroleum industry.
Lawan said the PIB, upon passage and assent into law by the president of Nigeria, would “foster sustainable prosperity within host communities, provide direct social and economic benefits from petroleum operations to host communities; and create a framework to support the development of host communities among others.
It will also “establish a progressive fiscal framework that encourages investment in the Nigerian petroleum industry, balancing rewards with risks and enhancing revenues to the federal government of Nigeria; provide a forward-looking fiscal framework that is based on core principles of clarity, dynamism and fiscal rules of general application; and establish a fiscal framework that expands the revenue base of the federal government, while ensuring a fair return for investors.”
