20, 2020 / 01:17 PM / by CSL Research / Header Image
Credit: ESI Africa/Ecographics
Local media reports say the Ministry of Petroleum Resources will be presenting the highly anticipated oil and gas reform bill to the President soon. The Petroleum Industry Bill (PIB) which was introduced to the National Assembly over a decade ago was aimed at overhauling and strengthening the regulatory framework governing the entire value chain of the oil and gas industry and at the same time, promoting transparency in the administration of the petroleum resources in Nigeria. Unfortunately, protracted years of delay and disagreeements between the Executive and Legislative has hindered the passage of the bill into law.
Over the years, there have been several attempts by past administrations to fashion out ways of streamlining the legislative procedures given the complexities and contentious issues associated with the bill. The most recent of this was in 2015 when the Bill was broken into four parts to ease passage. These parts include; Petroleum Industry Governance Bill (PIGB), Petroleum Host and Impacted Community Bill (PHICB), Petroleum Industry Administration Bill (PIAB) and Petroleum Industry Fiscal Bill (PIFB). On 25 May 2017, the Senate passed the Petroleum Industry Governance Bill (PIGB or the Bill). However the PIGB is yet to become a law as it still needs to be passed by the House of Representatives and assented to by the President.
Some of the key objectives of the PIB include; safeguarding the long term macroeconomic stability of the country, reformation of the extractive industry institutional framework, provision of better clarity for Nigeria and its partners (particularly IOCs), entrenching a domestic gas to power market, increasing oil and gas production whilst protecting the environment and supporting the economic diversification agenda of the country. In order to achieve these objectives, some of the pertinent issues that the PIB seeks to address include; oil and gas royalties and taxes, regulations guiding production sharing contracts (PSC), dispute resolution between companies and the government, dispute resolution between companies and their host communities, removal of the fuel subsidy arising from deregulation of the downstream sector. Clearly, the PIB is a critical market reform needed in exploiting the untapped potentials in Nigeria's oil and gas resources.
Despite the growing adoption of renewable sources of energy which may reduce the investment case for the oil and gas related investments, we believe the passage of the PIB particularly the Petroleum Industry Fiscal Bill (PIFB) has the ability to attract investments that will stimulate government revenues, provide employment opportunities and strengthen the longterm sustainability of the industry. The current administration has demonstrated its commitment and drive for enacting laws, given the passage of the 2019 Finance Bill, Production Sharing Contract Amendment Bill and recently the Companies and Allied Matters Act 2020. This makes us a little optimistic that the PIB may finally see the light of the day.