Oil industry experts have outlined critical areas in Nigeria’s extractive sector such as passage of the Petroleum Industry Bill (PIB), curbing revenue leakage occasioned by subsidy/under recovery and host communities benefit transfer mechanism, as top priorities in which they expect to see major developments in 2020.
Also listed are the need to ensure strict compliance with the recently launched Beneficial Ownership (BO) register, ensuring an end to gas flaring by December this year, mainstreaming women into the extractive sector and implementation of the ambitions outlined by the Minister of State for Petroleum Resources last year.
Speaking exclusively to e360, Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Rafsanjani, said there are many things that we will expect to happen in the extractive sector this year but we will like to zero on a few as priorities.
On the industry reform law, he disclosed that there is an indication of a move to review the OGIC document and pass it as the PIB. “We intend to see how we can follow up on the process to make sure that we don’t have a less than nothing type of law passed to govern the extractive sector” he said.
Emphasizing the need to revisit the under-recovery scheme, Rafsanjani noted that the nation is seriously bleeding from the scheme, whether it is called subsidy or under-recovery. “The data on the daily consumption of fuel in Nigeria is based on no reasonable basis yet we pay varying sums of money on each liter of fuel consumed based on the price of fuel in the international market and also the landing cost on each liter of fuel imported into the country.
“The GMD of NNPC when assuming office last year promised to revitalize the refineries and improve local production within the first year in office, we need to know how that has progressed in order to curb the huge waste in the name of under-recovery or subsidy” he said.
On industry restructure, Rafsanjani expressed concern that up till now the NNPC remains the sole power in the oil and gas sector. “We need to see the actualization of the promised reforms as contained in the 7 big wins policy document which is almost elapsing” he said.
Listing BO as a key focus area, Rafsanjani said, after the launch of the extractive sector beneficial ownership disclosure portal by the Nigeria extractive Industries Transparency Initiative (NEITI) in December 2019, Nigerians are looking forward to strict push for compliance by the operators in the sector as well as the efficient engagement of the platform by anti-corruption agencies to enforce transparency and accountability in the procurement and contracting processes.
Beneficial Ownership draft register
Also setting an agenda for the government, Nigeria’s former representative on the global Extractive Industries Transparency Initiative (EITI) board, Faith Nwadishi, said it would be nice for the country to finish discussions around the reform in the petroleum sector by having the PIB become an act.
Nwadishi said she expects to see the presidency take it up as an executive bill and push for its passage “so that we can put a final stop on that”.
Speaking further she tasked government to improve on the strides being made in the gas sector in a more sustainable manner such that the gas commercialization programme can benefit the country. “The government has said it plans to end gas flaring by December 2020, so hopefully by December, we would love to see more development around that plan,” she said.
Emphasizing local content development, Nwadishi who is also the Convener, Women in Extractives, told e360 that government needs to be more assertive in its engagement with local communities this year.
Gas flaring
“Communities are always agitating with companies that are working around them, so government should be more assertive in ensuring that concerns to environmental regulations are addressed. That can only happen if there is better synergy between government agencies responsible for that with the Department of Petroleum Resources (DPR) taking lead,” she said.
She also harped on the need to mainstream women into the extractive sector saying “I will like to see more development agreements addressing women participation and issues that affect women in the sector, especially in the solid minerals sector where there is a law requiring companies to sit down and negotiate with communities to come up with community development agreements.
Nwadishi further expressed worry about Nigeria’s seemingly unpreparedness to grab any potential market the US/Iran conflict can provide. “On the US/Iran conflict and the impact it would cause the oil market, how far can Nigeria take advantage of that, what do we have on ground to take advantage of it, the gap that would be caused in the energy market, how would Nigeria take advantage of that?” she queried.
For her part, the Programme Coordinator, Nigeria Natural Resource Charter (NNRC), Tengi George-Ikoli, said Nigeria must ensure that its host communities enjoy the benefits from resource extraction by passing a bill where the communities are afforded the opportunity to participate meaningfully in decision making processes.
Devastated host community’s farmlands
“I expect also that the petroleum industry will begin to take significant strides towards achieving the ambitions outlined by the Minister for Petroleum Resources last year, first step of which would be strengthening Nigeria’s regulatory frameworks through governance, administrative and fiscal reforms,” Ikoli told e360.
Ikoli noted that If Nigeria does not strengthen these frameworks to introduce certainty and the ensure sanctity of its laws, other neighbouring countries like Ghana, Mozambique etc, who have taken those steps will be more attractive to investors and be better poised to attract the investments and grab the markets that any potential US/Iraq conflicts provide.