By Adewale Sanyaolu
Stakeholders in the nation’s energy sector have called on the Federal Government to ensure that some hanging energy fiscals are addressed as a priority in 2021.
They argued that for the sector to record appreciable progress in 2021, the Petroleum Industry Bil l(PIB), which has been in the books for close to 20 years , should be passed into law, the Nigerian Gas Flare Commercialisation Programme(NGFCP), which seeks to harness stranded gas from over 187 fields and the marginal oil bid round, should also be completed this year.
The stakeholders who responded to Daily Sun inquiry in their separate reactions submitted that key energy policies that could not succeed last year should be well articulated in 2021 if the country should reap the required gains in the sector.
The Director General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, and Partner, Bloomfield Law Practice, Mr. Ayodele oni, maintained that the reforms in the power sector, which included renewable energy policy and the take-off of the service reflective tariff, should be sustained.
The duo posited that the deregulation of the downstream sector should be pursued in a manner that would benefit the country as against the current skewed manner in which its implementation is being driven.
Marginal bid round
Some experts have argued that the marginal field oil bid round is capable of generating about N112 billion in signature bonuses which can partly help fund the 13.58 trillion 2021 budget
Signature bonuses, according to NNPC, are funds paid by oil companies to the Federal Government upon their successful bid for oil blocks.
Last year’s commencement of the marginal oil bid round is coming 18 years after the first one was conducted in 2002.
Prior to flag-off , stakeholders in the country’s oil and gas industry have consistently urged the Federal Government to conduct an oil bid round for the purpose of raising revenue to fund some of its critical projects.
But the implementing agency announced that the bid round exercise is open to indigenous companies and investors interested in participating in exploration and production business in Nigeria.
Stakeholders had hoped that last year’s oil bid round flag-off would help reflate Nigeria’s precarious economic situation but their guess was wrong as the Department of Petroleum Resources (DPR), the implementing agency, failed to complete the bid round process which opened in June 2020 as at December.
Oni advised that there is the need to ensure transparency in the marginal fields bid round, saying the process appears now opaque
He lamented that most investors are beginning to see options in Angola because the cost of oil production is relatively cheaper compared to what obtains in Nigeria.
He equally took a swipe at some Nigerian investors who won marginal bids in the past but have failed to develop them due to lack of expertise, saying such fields were better in the hands of foreigners than Nigerians because they have the technical know-how to handle the investments.
‘‘Government, I believe, should also consider the option of reducing its 49 percent stake in NLNG in order to raise revenue,’’ he said.
Gas fare commercialisation
The delay in the completion of bid process for investors under the Nigerian Gas Flare Commercialisation process (NGFCP) has also become a source of concern to stakeholders.
The NGFCP was floated to help reduce the 320 billion Cubic Feet of Gas (BCF) flared in 2019.
The DPR had , in February 2020, announced the shortlisting of 200 companies to develop 45 gas flare sites across the country under its NGFCP.
But 10 months after it held its NGFCP bidders’ conference, the agency was yet to follow up on the deal.
‘‘The Gas Flare Commercialisation Programme should also be completed to monetize gas flares.Incomes from such programmes should then be used for infrastructural development and social programmes’’ Oni said
DPR Director and Chief Executive Officer, Mr. Sarki Auwalu, had disclosed at the NGFCP bidders’ conference in Lagos.
According to Auwalu, the NGFCP was launched in 2016 and is designed as the strategy to implement the policy objectives of the Federal Government for the elimination of gas flares with potential enormous multiplier and development outcomes for Nigeria.
He added that the objective of NGFCP is to eliminate gas flaring through technically and commercially sustainable gas utilisation projects developed by competent third party investors who have been invited to participate in a competitive and transparent bid process.
He disclosed that the 200 bidders were drawn from a pool of 800 who had expressed interest to manage about 178 gas flare sites.
The DPR helmsman stated further that in selecting the 200 bidders, careful consideration was given to their capacity, quality of service, track record and ability to deliver on set targets.
He had assured that there are other flare sites which are coming on board, saying this was just the first stage of the bidding round to be followed by others in due course.
Auwalu said Nigeria is the first country to have taken the bull by the horn through its NGFCP initiative aimed at putting an end to gas flaring, adding that the number of bidders attest to the fact that investors across the globe are interested in Nigeria
Nigerians await PIB
No doubt, there is considerable concern and outrage among many stakeholders in the country’s oil and gas industry over the delay in the passage of the Petroleum Industry Bill (PIB), which has been in the offing for close to two decades.
The transmission of the PIB to the National Assembly in September by the President according to industry stakeholders shows a willingness to reposition the oil and gas industry.
Group Managing Director of the Nigerian National Petroleum Corporation(NNPC), Mele Kyari, is optimistic that the bill, which has passed second reading, will be passed into law in 2021.
The PIB, which has been mooted for almost two decades, will provide a clear fiscal environment for the sector, thereby attracting investors and increasing government revenue.
Indeed, the stakeholders are worried that while other countries are fast moving with the times by changing obsolete oil and gas laws to attract fresh investments for the development of their countries, through increased revenue to government, infrastructure development and job creation, Nigeria, which needs revenue and investment more, has failed to pass the law in decades.
Former Group Coordinator of Corporate Planning and Strategy in the Nigerian National Petroleum Corporation (NNPC), Mr Tim Okon, warned that the oil industry was going away and that it is important not to waste the last stages.
The PIB was first introduced to the National Assembly in December 2000. A presidential committee set up in 2007 to look into the oil and gas sector came up with the idea of this bill, which aims at increasing transparency at the NNPC and to increase Nigeria’s share of oil revenue.
Drafts of the bill, however, became very contentious due to objections from the international oil companies (IOCs) and the Nigerian National Petroleum Corporation (NNPC). Consequently, the bill was never passed into law.
Towards the end of 2015, the then Minister of State for Petroleum Resources, Dr Ibe Kachikwu, noted that the PIB was to be amended to speed up its passage.
Consequently, the PIB was broken into four different bills, which included the Petroleum Industry Governance Bill (PIGB), Petroleum Industry Administrative Bill (PIAB), Petroleum Host and Impacted Community Bill (PHIB) and Petroleum Industry Fiscal Bill (PIFB).
The PIGB, which was considered the least contentious, set the ball rolling to address various aspects of the oil industry. In January 2018, the PIGB was passed by the House of Representatives. This marked a significant milestone in the journey of replacing the obsolete Petroleum Act (1969), as the Senate had earlier passed the PIGB in May 2017.
Regrettably, the PIGB suffered a major setback, as President Buhari withheld assent, citing constitutional and legal reasons.
Presidential Aide on National Assembly Matters, Ita Enang, said the President wanted a more comprehensive and current legal framework that aligned with global standards.
Yusuf said it was important to expedite the consideration and passage of the PIB. He, however, said before passage, there should be a robust consultation with critical stakeholders in the sector, adding that to attract investment, the expeditious passage of PIB was imperative.
In a telephone interview with Daily Sun, Chairman, Major Oil Marketers Association of Nigeria (MOMAN), Mr Oyetunji Oyebanji, said the delay in the passage of the PIB has eroded investors’ confidence.
Oyebanji noted that investors have since moved their funds to other climes where the operating environment is more favourable and their laws clearly spelt out.
He noted that of all countries in the world, Nigeria is the most desirous of Foreign Direct Investment (FDI) but that the country’s posture on FDI suggests that of a country that is self sufficient in every aspect.
He lamented that the PIB has become more of a political legislation, which he said was one of the major reasons for its delay.
“I am still at a crossroads as to why it will take forever to pass a legislation that I consider one of the most crucial laws for this country because it is one law that would bring about transformation, job creation and infrastructural development for the country,” he said.