Age-old complaints that the operations of the Nigerian oil industry are shrouded in secrecy may soon be history as the Minister of Petroleum Resources, Dr. Rilwanu Lukman, yesterday said the Petroleum Industry Bill (PIB) would eliminate confidentiality which, he said, encourages corruption.
He also tacitly gave the reason why multinational oil companies have been seriously campaigning against the PIB, and affirmed that Nigeria would not allow foreigners to write the laws of the country for the citizens.
The international oil companies (IOCs) have been crying out that they were not properly consulted and that their interests should have been better reflected in the new legislation.
They were reported to have taken some Nigerian lawmakers to Ghana on a retreat in what was interpreted as an attempt to stall or water down the bill.
But in what might be a final nail in the coffin of their drive, Lukman declared: “We consulted extensively. What we didn’t do and couldn’t have done was to let somebody else write the law for Nigeria… It is not possible to please each and every stakeholder. Some will benefit more than others.”
He said in the long run, Nigerian investors in the
industry stood to benefit more as the international oil companies in the
joint venture partnership with NNPC would have to give up some acreages
under the relinquishment clause in the PIB.
Such relinquished acreages, he pointed out, would likely go to local
investors.
The minister spoke at a consultative meeting by the Minis-try of Petroleum Resources and Nigerian National Petroleum Corporation (NNPC), with stakeholders in the oil and gas industry from the IOCs to labor, marginal field operators, the media and National Association of Road Transport Owners (NARTO).
“The bill has gone out of its way to take care of the interests of indigenous producers,” he said. “It provides for giving up acreages through the relinquishment clause. This will benefit the local investors. Some acreages given up by the local investors. We’ve done so much to encourage local producers.”
Nevertheless, Lukman said the law would be also beneficial to foreign investors as they crafted the law with the aim of retaining foreign and local investors and attracting new ones.
On corruption, he said: “The best way to fight corruption is to remove confidentiality for all procedures, contracts and payments. Every Nigerian, including all stakeholders, should have the right to know what is going on. The bill removes confidentiality on a scale not seen in the world before.”
When the bill becomes law, he said: “Nigeria will move one step from [being] one of the most opaque petroleum nations in Africa to one of the most open and transparent in the world.”
To illustrate how far the proposed law would go in this direction, Lukman explained that the texts of all licenses, leases and contracts and any of the changes to such documents would no longer be confidential while payments to the government would be public information.
He also said from now on, petroleum prospecting licenses and petroleum mining leases could only be granted by the Minister through a “truly competitive” bid process which would be open and accessible to all qualified companies.
“Every company involved in the upstream petroleum industry will be subject to the same system of rents, royalties and taxes, depending on whether they operate in the onshore, shallow or deep offshore or inland areas. This means it will not be possible under the bill to treat certain companies more favorably than others,” he said.
In addition, Lukman reaffirmed the Federal Government’s determination to go on with the deregulation of the downstream sector of the oil and gas industry, saying government would pursue it to its logical conclusion.
According to him, Nigeria’s long term energy security depended on its ability to deliver petroleum products in the domestic market at cost reflective prices, which could only be attained in an environment where clear ground rules were set and oligolistic market distortions were removed.
“For effective and competitive domestic petroleum products market to be developed in Nigeria, the downstream petroleum sector must be deregulated,” he said. “This will encourage investment in refining and marketing infrastructure.”
He said the bill contained one of the strongest and most far reaching provisions in the world with respect to the promotion of the Nigerian Content, as it is mandatory that no project could be approved without a comprehensive Nigerian Content Plan.
To take care of host communities, the bill obliges any licensee or lessee to provide an extensive spin-off program for those near petroleum activities, Lukman stated. Such provisions, he added, are in the areas of construction of roads, hospitals and community centers, with special emphasis on local job opportunities and training programs.
Environmental issues are also addressed in the proposed legislation, he said.
On efforts to promote greater gas supply to the domestic market in line with the master plan, the minister said royalties and the hydrocarbon tax are low, while the creation of new gas processing plants and gas pipelines is supported through favorable tax holidays under the Corporate Income Tax.
Nearly all the stakeholders supported the PIB even though some had reservations about aspects of it. President of the Petroleum Senior Staff Association of Nigeria (PENGASSAN), Babatunde Ogun, said the bill was long overdue but that the most important thing was in its implementation.
He listed some of the ills in the past which the bill
seeks to cure as corruption, nepotism, Federal character application.
He said what was important was for the refineries to work and suggested that
50 per cent of oil and gas must be refined locally and that the jobs of the
workers must be secured.
He also advised that the private sector should take part in the deregulation and that government should break the jinx of tyrants that had held sway in the industry, while the Niger Delta, power and security issues should be dealt with speedily.
