Dwindling petroleum revenue, NNPC and the PIB question

(By Johnson Eze)

All NNPC requires to become formidable in satisfying the oil and gas needs of Nigeria  is  for NASS to see patriotic reason and pass this bill without further delay, bearing in mind that there is no perfect bill anywhere in the World. The Northern state governments, the oil host communities, the international oil companies (IOC) and other stakeholders who might feel disadvantaged in any component of the bill, definitely has another component to benefit in the spirit of give and take.

AS distant past as March 12, 2010, the then Minister of Petroleum, Dr Rilwan Lukman, while unveiling the transformation agenda of Nigerian National Petroleum Corporation (NNPC) at a town hall meeting of the corporation, said that the NNPC was running at a loss of over N200 billion with contingency liabilities of N146 billion and $227 million. He warned that if nothing was done to reverse the trend by transforming NNPC into a commercially viable company, the corporation stood the risk of becoming insolvent. Such warning, coming from an experienced policy-maker who has seen it all at the top echelon of the oil and gas industry, is expected to be taken seriously and acted upon.

  Surprisingly, with the exception of NNPC management and the overseeing ministry, no other institution, federal or state-owned, has exercised perceptible interest to assist NNPC reforms to reduce losses and imbibe efficiency. The height of indifference is exemplified in the handling of the Petroleum Industry Bill otherwise called PIB, which is currently tied down in the National Assembly, NASS.    It is a paradox that some state governments are crying of dwindling petroleum revenue on the one hand while at the same time opposing, in strong terms, the passing of PIB expected to correct the anomalies on the other hand – an instance analogous to a sufferer of a dreadful ailment, crying for help but vehemently rejecting therapy.

  The National Assembly, in addition, is not helping matters either by perennially dragging its feet on the passage of the bill thereby posing credibility questions on the actual intentions of the various legislative probes of the oil and gas sector.   Expressing curiosity on the delay, a civil society activist, Mr. Michael Uchendu, queried the essence of probing various infractions in the Petroleum sector by those who are supposed to have passed the PIB to prevent the infractions in the first place, describing the probes as medicine after death. Uchendu called on NASS to desist from further spending public funds in such probes which he called ‘a wild goose chase’.

  Raising a point of order on the floor of the Senate recently which corroborates the position of Uchendu, the Senator representing Ekiti North in the upper legislative chamber, Senator Olubunmi Adetunmbi, sought explanation on the fate of the PIB before the Senate. He attributed the delay in treatment of the Bill as being responsible for what he described as “large scale abuses and illegalities being witnessed in the nation’s oil sector’’. Further, he expressed dissatisfaction with the handling of the pending PIB in the National Assembly and appealed to the Senate to urgently revisit it in the interest of Nigeria and her peoples.

   Responding to the matter, the President of the Senate, Senator David Mark, sustained the Point of Order and ruled that the relevant committees should take quick action on the issues raised by Adetunmbi. Reassuring the Senate of his commitment to the passage of the bill, he said in lamentation, “The PIB, after debate in this chamber, was committed to the appropriate committee on Thursday, March 7, 2013. It would be one year next month and up till now there seems to be nothing going on.”

   The PIB seeks to establish a legal, fiscal and regulatory framework for the petroleum industry in Nigeria in line with international best practices. It strives to rejuvenate the sector which experts believe has been stagnant for many decades in a dynamic hydrocarbon international marketplace that has built economies of UAE, Saudi Arabia and Malaysia.

   Among the benefits which the Minister of Petroleum, Mrs. Diezani Alison- Madueke, has been using every available opportunity to drum support for, are to create a conducive business environment for the petroleum operations; enhance exploration and exploitation of petroleum resources in Nigeria for the benefits of Nigerian people; and optimize domestic gas supplies, particularly for power generation and industrial development. It is also to establish a progressive fiscal framework that encourages further investment in the petroleum industry while optimizing revenues accruing to the government. It is to establish commercially oriented and profit-driven oil and gas entities. Other benefits include: To deregulate and liberalise the downstream sector; create efficient and effective regulatory agencies; promote transparency and openness in the administration of petroleum resources in Nigeria.

   Additional benefits include to promote the development of Nigerian content in the petroleum industry; protect health safety and environment in the course of operations; and to attain such other objectives to promote a viable and sustainable petroleum industry in Nigeria.

   With all these intentions embodied in the PIB, it is enigmatic that the National Assembly could hold down such a bill till this moment.

   Among the consequences of several years of holding down the bill are the increasing insecurity in oil platforms, increased frequency of pipeline vandalism, heightening crude oil theft and ballooned operational losses all of which combine to produce this dwindling Petroleum revenue as an early warning. Like the famous Nostradamus prediction, there is growing fear among industry stakeholders that Lukman’s prediction of demise of NNPC might come to pass.

   However, the fact that NNPC is still alive meeting up its obligations to Federal Accounts Allocation Committee (FAAC ) with minimal operational losses four  years after Lukman’s warning lends credence to the widespread belief that the Corporation is in safe hands of a competent management headed by the Group Managing Director, Andrew Yakubu, and the strong support of Alison-Madueke all of which have been collectively weathering the storm and  deploying all known economic engineering to keep the national oil and gas behemoth afloat. They have been repairing vandalised pipelines, chasing the crude oil thieves, maintaining old refineries, importing refined products to augment shortfall in local demands and sustaining subsidies on fractions to alleviate the suffering of local consumers

   All NNPC requires to become formidable in satisfying the oil and gas needs of Nigeria  is  for NASS to see patriotic reason and pass this bill without further delay, bearing in mind that there is no perfect bill anywhere in the World. The Northern state governments, the oil host communities, the international oil companies (IOC) and other stakeholders who might feel disadvantaged in any component of the bill, definitely has another component to benefit in the spirit of give and take. As the Group Executive Director of Exploration & Production of NNPC and the Leader of PIB Technical team, Mr. Abiye Membere, rightly pointed out in Houston USA, venue of the Offshore Technology conference, while talking to journalists, “No matter how complex the bill is, let’s pass it then we can set up an institute to look at it yearly or every two years and possibly make amends till we perfect it.”

  For Nigerian economy that relies on oil and gas revenue for up to 95 per cent of its foreign earnings as well as for funding 80 per cent of the nation’s budget, it is the expectation of all patriotic minds that any bill seeking to strengthen the petroleum sector, the PIB should be accorded priority and treated with dispatch. Acting otherwise will be a disservice to the nation.

• Eze is the publisher of Instant Africa News Magazine and wrote from Abuja.

“Opinion pieces of this sort published on RISE Networks are those of the original authors and do not in anyway represent the thoughts, beliefs and ideas of RISE Networks.”

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