“In any moment of decision, the best thing you can do is the right thing. The worst thing you can do is nothing.” – Theodore Roosevelt
Hurrah! The Petroleum Industry Bill (PIB) that has been much debated and discussed over several years, beginning from as early as 2009 till date, has been finally assented to by President Muhammadu Buhari on Monday, 16th August 2021 having been earlier passed by the 9th National Assembly in July 2021. The way to the assent by the president was not rosy; similar to a beautiful rose with thorns! The host communities felt short changed and were vehement and vociferous for anyone to hear. The executives sitting at the saddle in the southern states were not silent but shouted to the rooftops that the oil producing states deserved better and wanted the National Assembly to do more in jacking up the 3% to 5% of the operation expenditure in the prior year as the accrual to the Host Community Trust Fund. The governors demanded and desired a better deal which the president discountenanced in assenting to the bill. It is pertinent and salient to state that this columnist in aligning with the stand and stake of President Muhammadu Buhari could vividly recollect that while in business school, it was said that “a bad decision is better than indecision”, whether in business or government. This aligns with the belief of erstwhile American President, Theodore Roosevelt, who opined: “In any moment of decision, the best thing you can do is the right thing. The worst thing you can do is nothing.” Hence, to Mr. President, the best thing, rather than dithering, is to consent and assent to the submission, without further moderation, of the lawmakers of the green and red chambers. Despite contention and dissension from certain quarters, the Buhari administration deserved a pat on the back as the oil sector will now be better regulated, “competitive, balanced, fair, reasonable and realistic” (KPMG). How will the operationalization of the PIA ensure this in reality? The coming months will give the industry watchers, analysts and stakeholders a glimpse as the proof of the pudding is the eating!
Pedigree of the PIB
The only existing act regulating the oil industry was outmoded as it dated back to 1969. The Petroleum Industry Bill (PIB) was actually a consolidation of four bills. Why has it taken such a long time to reach a consensus between the executive and legislature? Previously, the bill was lampooned as not competitive enough for investors, the main target of the PIB; ownership was also not properly defined; there was the issue of misaligned interests between the legislature and executive; great opposition by the host communities as they felt they were not properly inputted into the crafting of the bill ab initio; and also, incidence of possible erosion of ministerial power. However, it was the belief of both the executive and legislature of the 9th National Assembly that these identified bottlenecks have been seemingly factored and filtered into the lengthy legislative process culminating in the enacting of the Petroleum Industry Act 2021 (PIA). Why so much attention on the oil industry in Nigeria? The oil sector accounts for a humongous 90% foreign exchange earnings; 60% of total income; and 10% of the country’s GDP (Source: KPMG). All said and done, the PIA will bring sanity and credibility into the oil industry through legal, governance, regulatory and fiscal frameworks which hitherto have been lacking in the sector resulting in a lot of loss and damage to the government, country, stakeholders and especially the host communities. For instance, gas flaring is now punishable under the Act while granting or cancelling of licenses, authorizations and permits is now transferred from the Minister to the headship of the Midstream and Downstream Regulatory Authority. This is a giant leap in warding off red tapism in the operations in the oil sector as it will incentivize investors in the midstream and downstream sectors.
Wearing socio-economic lens at PIA
The PIA, as envisaged and enacted, is meant to be a game changer in the oil and gas industry. It is supposed to be but little attention is paid to the paradigm shift the major stakeholders in the industry are leaning towards – renewable and clean energy. Particularly and pointedly, less attention is devoted to the vital issue of gas deregulation in the PIA. The country stands to gain more in the gas sector as the Nigeria Liquified Natural Gas (NLNG) is presently doing well. Moreover, the host communities are taken care off in the PIA as 3% of the Annual Operating Expenditure in the prior year will be consolidated into the Host Community Trust Fund to develop jointly agreed capital projects within their communities. There is the need for clarification here. Many seemingly do not read and comprehend the section of the Act as it does not relate to the operation profit but expenditure in the prior or previous year. This aspect needs to be clearly understood by the host communities and the Governors of the oil producing states as well. We all need to pay attention to details not just of the matter of PIA but all other issues pertaining to governance. It should be stated that PIA will definitely bring in investment, jobs, and income for the government and people of Nigeria if properly operationalized in line with modern Monitoring, Evaluation, Accountability and Learning (MEAL) framework ab initio. MEAL will establish baselines, milestones, key performance indicators (kpis), targets and will help to decipher ‘what works’, ‘what does not work’, and ‘what changes need to be brought on board’ to hit milestones or targets.
Political Perspectives of the PIA
This columnist perceives this is the vital part of the PIA that the Muhammadu Buhari administration has to properly manage so that the gains of the PIA could be consolidated and sustained. Without mincing words, the Federal Government has not done much in reaching out politically to the southern governors who objected to the 3% of the Operating Expenditure in the prior year to be given to the host communities. Their agitation was for 5% to be granted. In addition, much of the yearnings and longings of the host communities were not factored in even though the Act dealt with environmental remediation, particularly gas flaring. Not much was stated about oil spillage! Going forward, the Federal Government, under President Buhari’s watch, should endeavour to reach out more in dialogue and discourse as we are in a democracy. The process may still ultimately result in the government having her way while the people have their say but in the final analysis, the stakeholders will feel relevant, regarded or recognized to be allowed to express their emotions as expression not vented could turn to depression! Moreover, the government at the centre as a political chess master, could even diplomatically reach out to the aggrieved stakeholders with possibly some other dividends of democracy to assuage their angst or emotions. It is all part of politics. The Buhari administration needs to step up in this regard so that the citizens will not see this government as tending to autocratic or dictatorial and/or denigrating democracy.
Conclusion
As of the time of going to the press, the President appealed to the host community to accept the 3% as a fair deal while some stakeholders from the Niger Delta are saying that the Federal Government was not equitable with the 30% operating profit to be deposited in the Frontier Exploration Fund; 75% of which will be invested in the Upstream operation of prospecting for oil as the main goal of the PIA is for Nigeria to attain 40 billion barrels reserve and 4 million barrels production per day. However, will OPEC give this quota to Nigeria or will global demand for oil justify this gigantic investment instead of investing more in the gas sector as the world shifts to clean and renewable energy? This columnist will want the Minister of State for Petroleum Resources, Mr. Timipre Sylva, to ab initio take into cognizance the inculcation of Monitoring, Evaluation, Accountability and Learning (MEAL) framework into practice as the head of the implementing body of the PIA if truly the loss of $50 billion dollars in the last 10 years (according to President Buhari) will be attuned for and sanity will be restored to the oil sector. Moreover, in the face of growing angst and agitations in the Niger Delta, the Senate President, Dr Ahmed Lawan, stated that there is room for amendment of the PIA. This is aligning with the opinion of an American writer, Wilferd A. Peterson who stated thus: “Decision is the spark that ignites action. Until a decision is made, nothing happens … Decision is the courageous facing of issues, knowing that if they are not faced, problems will remain forever unanswered.” In essence, both the Senate President, Dr Ahmed Lawan, and the President of the Federal Republic of Nigeria, Muhammadu Buhari, are saying with the passage and assent to the bill that action must be taken irrespective of dissenting voices as the onus lies on leaders to develop spines in making tough decisions rather than dithering as past political leaders had failed to demonstrate the political will to get the PIB into becoming an Act. The coming years will determine the timeliness and suitability of the action taken by this administration. Will Nigeria and Nigerians gain from it? Will it attract investors as postulated? Will the host communities be better off? Will it be sustainable? Time will tell!
Dr. Ekundayo, J. M. O., leadership researcher, and consultant, can be reached via 08155262360 (SMS only) and drjmoekundayo@hotmail.com
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