When the Nigeria Extractive Industries Transparency Initiative (NEITI) last week strongly advised the National Assembly to ensure that, in its consideration of the Petroleum Industry Reform Bill (PIB), nothing but Nigeria’s overriding national interest is held supreme, it was because the agency has every reason to believe that the nation’s interests in the oil sector are in danger of being sacrificed by the compromised version of the bill before the National Assembly.
When the Nigeria Extractive Industries Transparency Initiative (NEITI) last week strongly advised the National Assembly to ensure that, in its consideration of the Petroleum Industry Reform Bill (PIB), nothing but Nigeria’s overriding national interest is held supreme, it was because the agency has every reason to believe that the nation’s interests in the oil sector are in danger of being sacrificed by the compromised version of the bill before the National Assembly.
It was rather unfortunate that those who represent our collective interests at both chambers of the National Assembly either in ignorance or covert compromise okayed fiscal terms in the bill with a government share of oil revenues grossly below internationally competitive levels and a structure that will result in a rapid and progressive erosion of government revenues during the next 10 years as our production capacity increases.
In plain language, the bill before the National Assembly sets to work against optimisation of revenue flows to Nigeria, protection of the operational environment, transparency, accountability and above all, inter-generational equity.
Who would have bewitched our lawmakers to believe falsehood rather than truth? It is possible some crucial facts and data on the Bill were either not made available to the National Assembly by covert manipulation or misunderstood by the legislators in respect to its import to our national interests.
The Current rates of Nigerian Government share of Revenues are: Production Sharing Contract (PSC) 48 percent, Joint Venture (JV) 82 percent. In other oil producing nations, government share of oil revenue are: Minimum of 56 percent for PSC and Maximum of 90 percent for joint venture.
However, the House of Representatives’ report for reasons best known to the lawmakers okayed a sharing formula of 45 percent maximum for PSC, and 60 percent for JV. This translates to a progressive loss of about $10bn annually.
This is the story: Nigeria currently gets about $6billion from royalties, profit oil etc. The federal government in the original version of the PIB it presented during the public hearing in 2009 proposed a fiscal term that will generate about US$10 billion. But for whatever reason which obviously was not based on patriotic considerations, the Senate okayed US$5.8billion as supposed government earnings from royalties, profit oil and other earnings from oil operations.
It is actually surprising that people (Nigerians in and outside the oil industry) supporting and campaigning for the taskforce passage of the Bill in its present form, do not see the harmful implications of removing Section 5 in the original version which clearly underscores the importance of transparency and good governance and also makes it obligatory for all agencies, institutions, organisations and companies to operate according to the principles of transparency, accountability, anti-corruption and due process, as enshrined in the NEITI Act, 2007.
The question is: why should the National Assembly particularly the Senate canvass on fiscal terms that would drastically shortchange the federal government rather than the other way round? Whose interest was the Senate supposed to protect- national interests or the interests of foreign oil operators? This is a moral question which the Senate should answer to Nigerians.
From obvious indications, the discrepancies must have been a result of possible capitulation of the National Assembly to the demands or rather blackmails of foreign multinational oil firms to water down the provisions of the original Bill.
Do we need to shout at the lawmakers for them to see that the compromised version before them is against our national interest and could wreak great havoc to the country’s economy if passed into law? What do they actually represent- their interests or our collective interests?
It should be noted that in addition to the unprecedented loss of revenue to government from the inconsistent fiscal regime of the PIB, its passage would add to nothing in addressing the inherent irregularities in the oil and gas sector, which it was expected to sanitise. The nation’s oil and gas sector will be in serious danger of not achieving the desired national goals of promoting greater indigenous participation and improved relationship with the oil producing communities.
As said before by this writer in: “Ambushed PIB: Mischief Vs Genuine Oil and Gas Reform,” the compromised version of the PIB, would also grossly undermine whatever efforts the government is making to free produced natural gas for its independent power generation projects. So whatever investment the government wants to make in gas infrastructures will amount to nothing but another drain of resources. Those who have ears let them hear.
For the mere fact that oil is the mainstay of the Nigerian Economy, the National Assembly owes all Nigerians a responsibility to promote and protect our national interest in the proposed fiscal and structural reforms. Anything otherwise amounts to treason, pure and simple!
Where in the world could it be said that, the House of Representatives report established fiscal terms with a government share of oil revenues below international competitive levels and with a structure that will result in a rapid erosion of government petroleum revenues during the next five years? Is it not funny also that the Senate Committee report’s provision on fiscal regime equally set out to progressively reduce government revenue earnings from the sector as production volume increases?
How could our lawmakers allow foreign multinational oil firms retain unused oil fields and blocking them indefinitely from recovery instead of returning them to the government for re-allocation. The oil companies wanted this clause simply because they use these oilfields as assets to boost their corporate financial value. And this is criminal!
It is coyness at its best for Nigerians to fold their hands and allow the IOCs who are afraid of the proposed fiscal system contained in the original bill; the NNPC bureaucrats who want business to continue their way without control; and few privileged politicians who want un-coordinated oil industry in order to continue enjoying from leakages in the system, to mess the idea of genuine reforms in the oil sector as proposed by the spirit of the original PIB.
Nigeria is not the first oil producing country to review the fiscal regime in its oil business. Venezuela and Bolivia successfully did that without the heavens falling. The IOCs are taking advantage of lack of political leadership and massive corruption in our system to manipulate all sorts of things.
Today, the fortunes of the global oil business have increased dramatically. Why should Nigerian government and oil producing communities not benefit from it? It is an outright mischief and a crime against humanity?
All well meaning Nigerians should actually join hands to appeal to the National Assembly to allow an opportunity to give a full scale presentation of the issues at stake to the lawmakers.
The National Assembly should listen to NEITI which has agreed to appear before both chambers to marshal empirical data and logical argument to validate the fact that in addition to huge revenue loss, the compromised bill would also impede transparent management of revenue collection.
This is because if the National Assembly and the President are successfully manipulated into endorsing the compromised version of the bill as the lawful framework for the nation’s oil industry, then it will be too late for anybody to do anything about. And this is where the real danger lies.
IFEANYI IZEZE IS AN ABUJA-BASED CONSULTANT ON STRATEGY AND COMMUNICATION ([email protected])
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