Petroleum Industry Bill (PIB) 2020 - A Game Changer?

Proshare

Sunday, July 04, 2021 / 02:20 AM / By KPMG Nigeria/ Header Image Credit: KPMG Nigeria


 Proshare Nigeria Pvt. Ltd.


The oil and gas industry has a significant impact on the Nigeria's economy. Though the industry contributes less than 10% to the country's gross domestic product, it contributes about 90% of the foreign exchange earnings and 60% of total income. Consequently, any adverse change in the industry will have a big and long-term impact on government finances. This is the reason why successive governments have remained focused on the sector despite various discussions on diversifying the economy.

 

For the past 20 years, there have been various attempts at reforming the industry. However, none of these efforts has yielded any tangible result until the introduction of the Petroleum Industry Bill (PIB) 2020. Prior to now, there were various iterations of the PIB. The PIB started as an omnibus bill and was later divided into 4 separate bills before emerging in 2020 as a consolidated bill.

 

It is a fact that previous attempts at passing the PIB in 2009, 2012 and 2018 failed because of factors such as lack of ownership, misalignment of interests between the National Assembly and the Executive, perceived erosion of ministerial powers, stiff opposition by the petroleum host communities and push back by investors on the perceived uncompetitive provisions in those versions of the bill. The PIB 2020 is set to address all the issues to the extent possible. It should be noted that the present administration has demonstrated unparalleled commitment to passing the bill. However, it is important that we do not just pass any law but a law that is competitive, balanced, fair, reasonable and realistic.

 

The jury is out on whether the PIB will achieve these objectives. One thing is clear - government has tried to strike a balance between immediate revenues demands and the need to attract long-term investment for the industry. This has become extremely crucial when one considers the fact that only 4% of the $70billion investments made in Africa's oil and gas industry between 2015 and 2019 was in respect of Nigeria even though it is the biggest producer and has the largest reserves on the continent. According to the National Bureau of Statistics, only $53.5m or 0.55% of total investment of $9.680billion in Nigeria in 2020 was made in the industry.

 

If we must achieve our ambition of 40 billion barrels of oil in reserves and 4million barrels of oil per day, we need to attract new investments into the sector. This task has even become more daunting in the light of the various challenges facing the industry, especially with respect to the renewed focus on renewables and energy transition. The oil in the ground is of no use to the country if it cannot monetize it. Therefore, the PIB must lead to a massive transformation of the industry and succeed in attracting the desired investment required to reposition the industry. Otherwise, Nigeria's production will continue to decline significantly.

 

Hopefully, the provisions of the PIB will be enough to stimulate the desired investment though it has not addressed the issue of energy transition from fossil fuel to clean energy. The key question is whether those investments would pay off or would they be a risky bet?

 

Download Full PDF Report Here


 Proshare Nigeria Pvt. Ltd.


Related News

  1. Senate Passes Petroleum Industry Bill
  2. The Benefits of the Passing of Nigeria's PIB Will be Top of the Agenda at African Energy Week 2021
  3. PDFInside Nigeria's 2020 Petroleum Industry Bill - Budgit
  4. PDF: The Petroleum Industry Bill 2020
  5. PDFPIB Report Draft 2021 - House of Reps AD-HOC Committee
  6. TheAnalystSpeaks 1.0 - PIB will Sanitize and Standardize Processes in Nigeria's Oil and Gas Sector
  7. The PIB and the Gas Sector - Shaping a New Model
  8. NNRC Encourages NASS to Prioritize The PIB
  9. The PIB: Matters Arising
  10. PIB Will Ensure Nigerians Benefit Optimally from Oil and Gas Resources - Ahmed Lawan
  11. PIB: Will the Jinx be Broken This Time Around?
  12. PIB Will Be An Enabler For Increased Investments In The Oil and Gas Sector - Bambo Ibidapo-Obe
  13. Inside Nigeria's 2020 Petroleum Industry Bill
  14. Impact of the New Petroleum Industry Bill on Nigeria's Oil
  15. Petroleum Industry Bill - Is There Light At The End of The Tunnel?
  16. Nigeria to Draft Petroleum Industry Bill from Scratch
  17. Analysing the Petroleum Industry Bill
  18. Petroleum Industry Bill - Senate To Receive Final Report on PIGB April 25
  19. Bukola Saraki's Remarks at Petroleum Industry Bill Public Hearing
  20. The New Petroleum Industry Bill and Taxation of Petroleum Products in Nigeria
  21. FG may effect changes in Petroleum Industry Bill
  22. FG Explains Why Presidential Assent Was Withheld For Petroleum Industry Governance Bill
  23. House of Representatives Passes Petroleum Industry Governance Bill
  24. Senate Passed Petroleum Industry Governance Bill

 

 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP