Senator Ovie Omo-Agege, Deputy President of the Senate has warned that the world is moving away from fossil fuels as the paradigm is shifting towards clean energy, a situation that demands hydrocarbon resource rich countries like Nigeria, to hurry and maximise its benefits before the era passes.
Speaking at a colloquium on Petroleum Industry Bill (PIB) and the Host Communities, organised by Order Paper Advocacy Initiative, in Owerri, the deputy Senate President said, we should be concerned, given the continually rising uncertainties in the industry both at the global level, and in Nigeria.
“There is a growing paradigm shift globally in terms of sources of energy. Fossil fuels are giving way to cleaner sources of fuel that are even envisaged to be cheaper and renewable. Some countries have been known to have laid out road maps for the phasing out of fossil-fuel-based sources of energy.
“In fact, it is estimated that in about 30- 50 years from now, there will be a total shift from these traditional sources. What this demand is that nations that have abundance of fossil fuels, especially oil and gas, that today dominate the present paradigm, must be in a hurry to make maximum use of these resources”, he said.
According to him, many oil and gas-producing countries have taken the initiative to make the best of their resources by complying with global best practices in the exploration and exploitation of the petroleum resource and creating the enabling environment for the resource to be best exploited.
“For some countries like Saudi Arabia, Brazil, Russia, Norway and Malaysia, government midwifing is done using models driven by the desire to ensure that the best values are derived from each segment of the value chain. The result is usually high turnovers at each segment, and with them robust additions to the countries’ revenues and of course, GDPs,” Omo-Agege pointed out.
“Conversely, for some countries the administration of the petroleum sector is rather handled as a cost-based department of state for the purposes of regulating the industry. This comes with all the nuances, nay negative, that bedevil regulatory institutions, while at the same time, denies the system the huge potential to create value and wealth, associated with the petroleum industry, as the experiences of many climes, have shown. Unfortunately, this is the category to which Nigeria belongs,” he added.
However, he stated that the PIB is a silver lining coming to change the negative narrative for Nigeria with the major objective of running the Nigeria National Petroleum Corporation (NNPC) as a business enterprise akin to Saudi Aramco, Petrobras, Equinor and Petronas, and with strong regulatory agencies been proposed.
He further emphasised that the good for petroleum host communities is also a cardinal objective of the coming law as the Bill provides for a dual regulatory system, with the first taking care of the upstream sector where the most encounter with host communities, happens.
He noted that the Bill also proposes a Host Community Development Trust scheme to accommodate the incorporation of Petroleum Host Communities Development Trusts by oil companies and provide direct social and economic benefits to host communities. The scheme would be funded by 2.5percent of the actual operating expenses (OPEX) of the companies for the accounting period of the preceding year. Omo-Agege stated, however, that the percentage should be increased to 5percent, in his opinion.
With the lofty objectives of the PIB and the intervention mechanisms for host communities; both existing ones and those expected to come with the Bill, a lot of things are expected to happen that will be beneficially impactful on host communities, such as jobs creation, environmental care and social responsibility by operating firms, he said.
Also speaking, Deputy Chairman, House Committee on Niger Delta, Hon. Henry Nwawuba, said Nigeria cannot afford to lay back anymore while countries we were ahead of have now overtaken us by passing their oil sector reform laws and attracting huge investments.
He assured that the PIB was top on the agenda of the 9th NASS, stating that it won’t be too long before it will be passed as most the work have be done.
Earlier n his remarks, Oke Epia, Executive Director, OrderPaper Advocacy Initiative, opined that, not only does the Bill sidestep the ownership question but also tends to outsource government responsibility for robust redress of the debilitating consequences of extraction to corporates.
“I am also aligned with the argument that a law is better than no law in the ongoing quest for reforms. While the PIB may not be tailored to address the decades-long resource ownership question, it nonetheless presents an opportunity to make incremental gains in the agitation for a better Niger delta region,” Epia added.