Chief Timipre Sylva, Minister of State for Petroleum Resources
…Plans are in the offing for NASS to accelerate passage of bill
-By Felix Douglas
The oil and gas industry is Nigeria’s economic mainstay and it has benefited immensely from it, but could have done more in terms of investment. One of the main issue Nigeria has with regards to the oil industry, is the Petroleum Industry Bill (PIB) which has been a concern for stakeholders owing to investment mechanism. The bill has not yet seen legislative light nor being approved by the executive. The need to fast track the passage of the bill is not unconnected with the federal government desire to end the delays associated with the bill in the past 20 years. Industry players over the years have decried the delay in the passage of the bill which they said had stalled investment in the oil and gas sector.
Concerned by this development, stakeholders and industry professionals had presented several position papers on PIB to the government, in spite of its failure to scale through different processes and arrive at logical conclusion, experts are not comfortable owing to a lot of resources embedded on it.
The slowness in passage of the bill has led to missed opportunities. The growth in the industry could have accelerated at a fast pace with investments opportunities if the bill had been passed to attract external investors.
The perception and reputation of Nigeria not having a bill to govern its energy sector is not palatable for Nigeria hence the industry is impacted.
Thus, one of Nigeria’s cardinal oil professional association in sub-Saharan Africa, Nigerian Association of Petroleum Explorationist (NAPE), in its August virtual series deliberated on the topic: “Fiscal Regime Design, Government Revenue & Investors’ Interest in Nigeria Oil & Gas Sector” invited the Minister of State for Petroleum Resources, Chief Timipre Sylva to give an insight of the PIB.
Moderating the event, former Director of Department of Petroleum Resources (DPR), and President of Energy Institute, Nigeria, Mr. Osteen Olurunsola, who is also one of the progenitors of PIB from inception, disclosed that the bill will soon be assented by the executive hence passage will not linger as seen in previous administrations.
Olorunsola assured that the bill has gone to the National Assembly (NASS) and the legislators will give it priority in order to move the industry forward. The bill will address gray areas across the energy sector.
Giving his keynote address at the NAPE Forum, the minister said the PIB will be presented to NASS in the next few weeks.
Sylva submitted that the Executive arm would be requesting the lawmakers to specially reconvene to receive and begin deliberations on the bill. The bill is key to repositioning of Nigeria’s oil and gas industry under its post COVID-19 agenda.
Sylva asserted, “I cannot give a specific timeline on the passage of the PIB because it involves the National Assembly. I can only give you our own timeline and what we have been doing. For us, I will tell you that we have finished our job. The drafting process has been concluded and we have also discussed with the relevant stakeholders in the industry.”
He stated further that, “The Ministry of Justice has also looked at the draft to ensure that there are no issues, and that has been concluded.
According to him, “In the coming few days, we will be requesting the National Assembly to specially reconvene to look at the PIB, which may as well take some weeks before its passage.”
The minister expressed optimism that the bill would be expeditiously dealt with by the lawmakers, given that it had taken the country years to get it to this stage. Government needs maximum fiscal environment to deal with the COVID-19 crisis. For this reason, we are proposing grand fathering in the new PIB.
Sylva believed that the bill will preserve current government take while also guaranteeing investors’ returns in the industry. This will also guarantee that investors can continue with the existing operations while earning favourable returns. They will also be confident in doing business in the sector without fear.
The proposed PIB framework will be based on core principles of clarity, dynamism, neutrality, open access and fiscal rules of general application. Investments in new acreages will be encouraged with attractive competitive terms in order to achieve economic growth.
The minister said, investors existing assets will sign conversion contracts to obtain better terms for production to explore and produce part of blocks under new terms.
Contrary to the past, Sylva said, host communities would be adequately covered to foster sustainable prosperity, provide direct social and economic benefits from petroleum operations.
He also maintained that a diversification plan to non-oil economy had become a national imperative due to the impact of the COVID-19 pandemic on the oil and gas industry and other sectors of the economy.
Sylva stated further that, “The PIB will provide a framework for increased petroleum industry activities in terms of developing gas for the domestic market and increasing oil production under competitive terms and support the goal of a stronger non-oil economy for the benefit of all Nigerians.”
He therefore said that NASS has received the draft and move ahead to pass the bill. He hinted being in touch with the law makers who had given him the assurance that the bill will not stay with the legislators more than six month from the time they receive the draft.
The minister lamented the poor investment and development in the nation’s midstream sector. “The midstream is nonexistence in Nigeria.”
Responding to question whether the government will continue to encourage investment and remove monopoly in the gas subsector, he explained that PIB, when passed will make it impossible for monopoly.
“Though only few operators are existing in the gas subsector. But we will not promote monopoly” he said.
The ministry is receiving a lot of interest from investors now expressing desires to invest in the gas sector.
On his mandate to increase the nation’s production capacity to 3 million barrel per day, the minister maintained that he is working assiduously to improve the nation’s production volume.
However, he noted that the pandemic coupled with OPEC production cuts have attributed to no small measure in restraining the nation desire to hit 3 million barrels.
Notwithstanding, with the expectation from Bonga South and West coupled with the plan to embark on another major bid round after the marginal field bid round the Minister is optimistic that Nigeria will be able to attain 3 million barrels particularly when the PIB has been passed by NASS.
Obviously, with the assurance of the Minister, the lingering PIB will soon be passed into law by the current administration after about twenty years at the legislative stage.
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