The oil and gas industry recently welcomed the passing into law of the Petroleum Industry Governance Bill (PIGB) by the House of Representatives, for which we commend the parliament. The bill had similarly been passed by the upper chamber in May last year.
The PIGB is expected to most importantly, restructure and reform the oil sector by unbundling government controlled Nigerian National Petroleum Corporation (NNPC) and create an independent agency tasked with effective operationalization and regulations of the sector.
The bill aims to establish the Nigerian petroleum regulatory commission as a one-stop regulator that will be responsible for licensing, monitoring, supervising as well as enforcing industry laws, regulations and standards. In other words, the bill is seeking to institutionalize processes instead of residing powers in personalities as is the present case.
It is also expected that the bill which seeks to attract investors and open up the sector for investment by restoring business confidence will help resolve the issues plaguing the downstream sector through deregulation.
Furthermore, the bill would modernize operations in the petroleum industry by overhauling the entire system in line with best practices. It will promote openness and transparency in the sector by clarifying the rules, processes, and procedures that govern the Nigerian oil and gas sector while also making it mandatory for processes and operations to be digitalized.
These are aimed at significantly reducing corruption in the sector and make it more efficient and productive. While we recognise that this development is indeed an exciting and significant achievement, but we believe we are far from getting to the desired destination.
Given the sluggish nature of the present government in getting things done, concerned stakeholders must know that intensified advocacy is required for the PIGB to get presidential assent and to not only become law, but tto further ensure that its implementation begins immediately.
Beyond that, the question really is whether the passage of the PIGB segment of the Petroleum Industry Bill (PIB) alone is enough to actually deliver the desired transformation of the oil and gas industry? Again, we believe it is not sufficient enough. Without the concurrent passage of the components dealing with the Fiscals and Host Community, the sector would continue to be clouded by uncertainty and that ultimately will reflect on investments decisions.
Lest we forget, parliament decided to push through with the PIGB, considered the low hanging fruit, why shying away from the segments dealing with the fiscals and host community bills, which are considered to be more contentious.
Therefore, we believe that only the concurrent passage of the remaining sections of the PIB (to complement the PIGB) can holistically reform the Nigerian oil and gas sector. Only so will licensing rounds, contract renewals and investment decisions that have been put on hold in the industry, receive a boost.
What is sure to be achieved with the PIGB passage is the unbundling of the sector – where government will cease to be operator, regulator, operationalizing agency and contracting agency – which is a great development. Beyond that, to clear uncertainty, attract more investment, eliminate corruption, end gas flaring and environmental degradation, stem emerging militancy, grow the country’s hydrocarbon resources, dislodge the sectors cartel and generally better the lives of Nigerians with improved resources from the oil and gas sector, we call for entire component of the PIB to be passed.