Nigeria Content Online

The National
Assembly’s continued delay in passing the Petroleum Industry Bill (PIB)
into law is still a source of worry for Nigerians. Both industry
watchers and non-governmental groups raise concerns that the delay
casts dark shadows over our country’s readiness to tackle transparency
issues in the extractive sector. Speculations abound that both the
executive and the legislative arms of government are under pressure by
oil industry players to keep the bill under the carpet until after the
April elections. And, thereafter, probably kill it.

Worried observers
believe that, following the conclusion of public hearings which ended a
while ago, the PIB left the public domain and has since been held on
the surgical table by the government, while the oil companies control
both the surgical knives and the anaesthetic valves.

The most strident
arguments over the bill have come from the oil companies, who have for
decades enjoyed the unfettered privilege of calling the shots in the
sector. They have enjoyed unrestricted extraction and have gone without
accountability, aided by an entrenched architecture of impunity.

Even the extractive
industries audits of recent years have not factored environmental
destruction and social dislocations into their accounting processes.
Without bringing these into the equation, it is impossible to see how
the decimated livelihoods of the poor communities and peoples in the
oil fields can be redressed.

The major concern
of the oil companies has been over the margins of profit the new
regimes proposed in the bill would allow them. In seeking to address
one of their concerns, the companies impressed on government to turn
the existing unincorporated Joint Ventures between the international
oil companies (Shell, Total, Mobil, Agip, Chevron, Mobil) and the
Nigerian National Petroleum Corporation (NNPC) into Incorporated Joint
Ventures (IJVs). While government agreed to this realignment, the
companies seethe over its insistence on retaining control of the
venture. They believe that the funding situation would not be different
from what currently pertains, since they would not be able to raise
funds for the ventures from the capital market.

The delay in
passing the bill into law until probably after the forthcoming
elections is seen as clear case of playing politics over this urgent
matter. Even non-governmental campaigners for the swift passage of the
bill demand “all political parties to mainstream the debate on the PIB
into their political campaigns as a demonstration of their commitment
to transparency in the oil and gas sector.” This demand can be
understood as a tacit acceptance that the PIB will likely only come
into force on the nod of whoever wins the elections. If that is so, it
would mean that the earliest date the bill could become law would be
sometime after May 29, 2011, after the winners of the election are
sworn in. It could also be that what the agitators are demanding is
that all politicians should seek the immediate passage of the PIB into
law. Which is which?

Reports on how and
why the PIB will not see the light of day before May 29 make
interesting reading. Some speculate that the National Assembly will
simply not act on the bill until after the elections. Others say that
even if the Assembly passes the bill, some insiders in the corridors of
power will work out plausible reasons the president could offer for not
signing the bill into law. The speculators are all casting their
readings on the basis that the power of industry is setting booby traps
everywhere and squeezing the bill under the carpet. We need to know.
Government should urgently speak up on this.

We hear the
minister of petroleum waxing positive about the PIB and suggesting that
its passage is imminent. Recent reports quote her as saying that
oil-producing communities would earn about N1.1 billion as yearly
dividend payments from oil revenues, as part of incentives in the bill.
It will be great to know the mechanisms that would ensure that such
sums trickle down to the people.

She is also quoted
as saying, “There have been so many discussions, modifications and
debates by stakeholders in order to ensure a viable legal and
regulatory framework for the benefit of, not only the Nigerians, but
also for local and international investors.” The government, according
to her, “will continue to engage the National Assembly to ensure
passage of the bill as soon as possible”. Nigerians need to know what
these modifications are.

One reason why the
international oil companies, and possibly even the NNPC, are resisting
the passage of the PIB into law is probably the implication of what
implementing strict metering of petroleum extraction would mean to
them. The bill requires that royalties be paid on production and not
merely on what is exported. Oil companies argue against this because a
fraction of their production gets lost during transmission to the
export terminals. They claim that such losses are owing to oil theft
and that paying royalty on production would place the burden of
securing the transmission lines on them, whereas it should be the duty
of government.

The issue of
metering and the insistence on payment of royalties on production
volumes are essential to bringing sanity to the sector. The government
should not back down on this. Nigerians deserve to have factual data on
how much oil is being extracted daily from our nation and not just how
much gets to the official end of the pipelines. The fact that oil is
lost/stolen during transmission is well known. We deserve to know how
much is being lost. This can only happen if production is strictly
metered. If production data were available, simple accounting would
reveal how much gets missing. The next questions would be concerning
the points of leakage and who benefits from such leakages. The refusal
of industry players to allow this simple step in transparency shows the
rogue nature of the game and underscores why the people and the
environment continue to suffer at their hands.

With all the
politicking over the PIB and all the surgery going on outside public
purview, who knows what creature will eventually emerge from the
theatre?