Unless something extraordinary happens, the country is about to miss out on another opportunity to put in place some regulatory clarity in the oil sector as time runs out for the passage of the Petroleum Industry Bills (PIB). One of the proposed bills, the Petroleum Industry Governance Bill (PIGB) has been passed by the National Assembly and was sent to President Buhari for his signature on 3 July. Since then there has been no word about whether it will be signed or not but the chances that Buhari will not do so emerged on 16 August when the Nigerian National Petroleum Corporation (NNPC) picked several holes in the bill. It claims that the provision in the PIGB — that the NNPC should be split up — would be resisted by the oil worker trade unions unless it was communicated properly.
Other issues that NNPC has with the bill include: the lack of clarity on the nature and type of NNPC liability to be transferred to the proposed Nigeria Petroleum Liability Management Company (NPLMC); the outstanding pension obligations of the Department of Petroleum Resources (DPR); and the lack of clarity on the funding of Nigeria Petroleum Assets Management Company (NPAMC) and the newly created NPLMC.
The NNPC is also proposing that the NPAMC should to be structured in the form of an agency rather than a company with a limited role in the administration of Production Sharing Contract assets. Because Buhari also doubles as Minister of Petroleum and consequently, NNPC’s chairman, the corporation’s reservations about the PIGB could be taken as being those of the president. This could explain why the PIGB has yet to be signed after six weeks.
Three other bills — the Petroleum Industry Administrative Bill (PIAB); the Petroleum Industry Fiscal Bill (PIFB); and the Petroleum Industry Host Community Bill (PIHB) — have all already gone through public hearings in both chambers of the National Assembly. They are now awaiting their third and final reading before they are sent to President Buhari for his assent.
The current deterioration in the relationship between the National Assembly and the Presidency would, however, make it difficult for the bills to be passed. If they are not before the end of the tenure of the current administration, all the work done on them so far would have been wasted and the next government would have to start afresh on the bills. The proposal for a new legal regulatory framework for the oil sector has been stuck in the House since 2008 and the continual delay in not passing the bills is estimated to have cost Nigeria about US$15 billion a year in new investments.