Fifteen months and counting after President Muhammadu Buhari appended his signature to the 15 years Petroleum Industry Bill to make it an act, it would seem like there is hardly any impact being felt from the much-anticipated Petroleum Industry Act (PIA). Some spectators in the industry blame the slow evolution of the PIA as deliberate bureaucracy due to inherent corruption in the system.
Rather than the nation’s major source of revenue improving with the passage of the PIA as envisaged by stakeholders, the industry still lags behind other sectors in terms of GDP contribution and appears to be worsening and heading for the doldrums.
International oil companies (IOCs), which were expected to be wooed by the act are still reluctant to make new investments. Except for the timely intervention of the federal government by employing the services of a former militant, the country looked certain to fall to daily oil production of its record lowest of 675,000 barrels per day recorded sometime in February 1983.
Corruption is still rife in the industry as no one has said for certain, for example, how much PMS Nigerians consume on a daily basis. As of date, major cities across the country are reeling under fuel scarcity due to disagreements among critical stakeholders, as if the industry is rudderless.
Revenue from the industry keeps plummeting and is no longer enough to cater to the nation’s multifarious expenditure, including the scandalous product subsidy, which, for political reasons, was reinstated by President Buhari, in total violation of the PIA, which he assented to in 2021.
This is happening at a time when countries like Angola, with the windfall from oil price increase was recently was able to reduce public debt to 56.5 per cent of GDP, down from 79.7 per cent in 2021, and 123.8 per cent in 2020.
The country made $2.1 billion from crude sales in May this year alone, while Nigeria’s oil sector keeps reeling in confusion and debts.
Indeed, critical stakeholders are expressing pessimism about the effectiveness of the PIA.
It would seem like critical decisions on the industry and even the PIA have since been hijacked, as the PIB was supposedly hijacked for more than a decade.
Since the passage of the Petroleum Industry Act in August last year, the legislation has been facing operational and bureaucratic huddles with some pushback from operators who may stall its effective implementation.
Industry analysts said the pushback emanates from operators who desire the business-as-usual status quo, as well as some employees in the regulatory agencies who might be gaining from the endemic corruption in Nigeria’s oil sector.
Lawyer and social commentator, Liborous Oshoma, said, “The PIA being a new law will take a gradual process to permeate considering the enormity of the challenges and the attitude of some operators who would do anything to maintain the status quo.”
He observed that there seems to be some form of systemic corruption in the oil sector’s regulatory agencies, stressing that this had to be addressed in order not to derail the mandates of the regulators.
Oshoma also raised concerns about the issue of arbitrary retirement packages in the defunct DPR, the pushback by some staff members and opposition to performance-based promotion in the upstream regulatory commission.
He said, “It is shocking that until 2020, despite the clear provisions of the Revenue Mobilisation and Fiscal Commission Act vis-a-vis the Pension Act, there are no clear-cut statutory provisions for determining pensions for exiting staff members in the defunct DPR, now NUPRC.”
The former director of the defunct DPR, Sarki Auwalu, had told journalists that it was discovered that over 50 per cent of the assets had remained underdeveloped, which he said was resulting in a loss of revenue to the federal government.
Also speaking on the need that only a strong upstream regulator could fight all the ills in the industry including oil theft, the executive director, DMA Advisory and Management Services Limited, Gbolahan Olojede, said those benefiting from the status quo would subtly oppose the full implementation of the PIA.
Olojede, who is also an economist and financial analyst, said, “These are some of the challenges that the new regulators will have to correct; otherwise, it’s going to be business as usual.
“Mind you, we have already said there is going to be some pushback. People who benefit from this system will not allow the new regulators to work, so they have to put their foot down.
“The government will have to empower the regulator to be able to carry through key decisions.”
Olojede said, “We are an oil-producing country. We sell crude and make money. There are rents, royalties, fees, and all sorts of incomes that we make by virtue of oil production.”
A scholar and renowned energy expert, Prof. Dare Wunmi, said the three institutions overseeing the implementation of PIA namely the NNPC, NUPRC, and NMDPRA have a structural misalignment with the independence of the bodies compromised.
“The business-as-usual implementation approach is not good enough,” he said, adding, “The way the board and the management teams are constituted makes it plausible to suggest the operationality of the PIA by these institutions as new wine in old bottles.”
He said the PIA has prospects, but unfortunately is being handled wrongly, stressing that its effectiveness depends on apolitical engagements of professionals and not politicians to guide PIA implementation.
The chief executive of Transparency Action Group, Paul said the PIA is yet to be fully operational, noting that the legislation is still struggling with bureaucracy and implementational or operational issues.
“The government has to tackle those issues head-on proactively and aggressively. The future looks rosy, but we need to give it more time. We are on the right trajectory but accountability and transparency is key. I hope we achieve those milestones in the near future,” he stated.
The executive director at People’s Advocacy Group, Faith Goke Adekunle, said that the legislation has not lived up to expectations, adding that there was a need for an implementation committee to release its report.
With energy transition now becoming a serious issue, Adekunle said that Nigeria must take advantage of available opportunities to explore.
Also, a former technical adviser at the Nigerian Extractive Industries Transparency Initiative (NEITI), Garuba Dauda, stated that the challenges and issues in the nation’s oil sector are man-made and self-inflicted.
Dauda, who noted that it might be too early to conclude on PIA, said with the necessary measures in place to address them and the negative impacts that they exude, the goal of the reforms being pushed by the PIA 2021 could still be achieved and the sky could still be bright.
It would seem like the most negative signal of the implementation of the PIA was the shift in the date of the removal of oil subsidy by 18 months. Considering the fact that President Buhari was the one who had the effrontery append his signature to the PIB to make it an act, and reneged on enforcing it sent a negative signal about the seriousness the federal government attaches to the PIA.
Investors and other international stakeholders are watching.
