The Nigerian midstream and downstream sub-sectors of the petroleum industry are not robust enough, they are extractive at best.
Israel Aye, Senior Partner, Energy and Commercial Transaction at Primera Africa Legal, revealed this during an interview with Sahara Reporters last week.
According to Aye, that the existence of the petroleum industry in Nigeria could be argued, it is only the extraction phase of the sector that is active
“Some of us make the argument that we probably don’t even have a petroleum industry in Nigeria, we have an extraction industry,” Aye stated.
His argument was premised on the inadequate legal framework of the oil and gas industry which he described as being fit for exporting petroleum and not consuming it.
‘We have a framework for win, work and carry away,’ Aye disclosed. He further explained that it is impossible to lay the foundation for a bungalow and midway decide to build a ten-story building down the road.
In July 2018, President Mohammadu Buhari had communicated his refusal to assent to the Petroleum Industry Governance Bill. Aye said the inability of the country to pass the bill after indicating it wanted to make changes to its oil and gas laws in 2008, makes investing in Nigeria a risk that cannot be planned for by investors.
“The moment you signal to the international community that you’re in the process of replacing all of these- (Nigeria’s oil and gas laws), what you then say to them is that you effectively have no law,” he said.
“From a typical investment point of view, you have three broad scenarios: You have the good law scenario, you have the bad law scenario and you have the no law scenario. And so Nigeria you may argue in respect to the petroleum industry is somewhere in the no law scenario. Since President Buhari rejected the bill, the public had gone silent on the need for reforms in the oil and gas industry,”
Aye also frowned at the lack of apathy on the PIGB by the Nigerian public. He says conversations about the industry are held at a level every-day Nigerians cannot comprehend:
“Sometimes, the way we carry on the conversation around the petroleum industry is that we hold it at such an esoteric level that people can’t connect or relate to it. I am just totally alarmed at the complete lack of information, awareness and perhaps interest by the Nigerian public in this particular space. And even where there is a little interest, the tendency is for us to engage in banal banter,” he lamented.
The Petroleum Industry Bill (PIB), first entered the floor of the National Assembly in 2008. After passing through two National Assembly cycles without getting passed, the 8th National Assembly decided in 2016 to divide the bill into four parts: the PIGB, the Petroleum Industry Administration Bill (PIAB), the Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Host Community and Impacted persons Bill (PHICB).
The PIGB was passed and communicated to the President in June 2018, after corrections were made to the initial draft submitted in March of the same year.
Among other reforms, the PIGB takes away the right of the President to have a final say on licensing and vests it in a Petroleum Regulatory Commission. President Buhari’s choice to veto the bill is anchored on the withdrawal of that power, the removal of regulatory roles from the office of the minister, the 10 percent revenue given to run the commission among other observations.