The signing into law of the Petroleum Industry Bill (PIB) by President Muhammadu Buhari is commendable. The law came about after many years of being in the National Assembly. The Senate and the House of Representatives had passed the bill on July 15 and 16, 2021 respectively.
The Petroleum Industry Act (PIA) is expected to have far-reaching effect in the oil industry. The Nigerian oil and gas industry lost as much as $50 billion worth of investments in 10 years as a result of the lack of PIA. President Buhari said at a ceremony on the PIA last Wednesday that the lack of political will by past administrations to actualise the needed transformation in the petroleum industry contributed to the loss of that sum of money. Now, the situation will change. Hopefully, the Act will revolutionise the nation’s oil sector and attract more investments in the sector.
For instance, it will lead to the commercialisation of the Nigerian National Petroleum Corporation (NNPC). Section 53 (7) (8) of the law provides that the NNPC Limited must declare dividends and also pay all fees, rents, royalties, profit oil share taxes and some other requirements.
Besides, the PIA has provided the legal, governance, regulatory and fiscal framework for the industry as well as the development of the host communities. It will hopefully engender the return of transparency and openness to the oil sector.
The Senate described the signing of the Act as a major victory that had the potential of bailing Nigeria out of its economic problems. In a statement, the Chairman of the Sen- ate Committee on Media and Public Affairs, Senator Ajibola Basiru, enthused that the “9th National Assembly finally broke the jinx when it recently passed the bill after working dispassionately by putting the interest of the nation first over petty squabbles and other self-interests, thereby laying finally to rest, previous failed attempts.”
In a similar victorious tone, the Speaker of the House of Representatives, Mr. Femi Gbajabiamila, noted that the PIA was a landmark achievement and victory for Nigerians. He said many Nigerians would gain employment with the massive investments that would come as a result of the PIA.
The National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Mr. Festus Osifo, reportedly described it as a welcome development as the signing of the bill had brought the level of uncertainty in the sector to an end.
Part of the criticisms against the law is the three per cent allocation of operating expenditure to the host communities. The communities had demanded 10 per cent allocation. But many individuals and groups in the Niger Delta were surprised and shocked that the President still signed the bill without amending the percentage allocation for host communities.
The Pan Niger Delta Forum (PANDEF) said “it is quite unfortunate that President Buhari went ahead to assent to the PIB despite the overwhelming outcry and condemnation that greeted its passage by the National Assembly, especially with regard to the paltry three per cent provision for the Host Communities Development Trust Fund and the brazen appropriation of an outrageous 30 per cent of NNPC Ltd profit for a dubious, nebulous Frontier Oil Exploration Fund.”
Southern governors had also rejected the 30 per cent set aside for oil prospecting in frontier basins. They also opposed three per cent share proposed for the host communities.
The National Assembly had increased the original 20 per cent that was canvassed for exploration of oil in the frontier basins to 30 per cent. Some of the basins include the Benue Trough, Chad Basin and Sokoto Basin. The huge allocation for oil exploration is in spite of Nigeria’s search for alternative sources of income.
The National Leader of PANDEF and elder statesman, Chief Edwin Clark, had described the three per cent share as satanic, unjust and provocative, threatening that the Niger Delta people might be forced to take their destiny into their own hands.
The President of the Ijaw National Congress (INC), Prof. Benjamin Okaba, said they remained resolute on their earlier stance on the minimum acceptable allocation of 10 per cent for the oil-bearing communities as compensation for the various degrees of damages suffered in the course of oil and gas production in the area. We think the President could have returned the bill to the National Assembly with a request to address the grey areas before assenting to it.
Nevertheless, we believe the implementation of the PIA will show the strengths and weaknesses of the law. An amendment could be made later to accommodate the concerns of oil-bearing communities. Good enough, the President of the Senate, Ahmad Lawan, said the Act was not perfect and could be amended in the future.
While we commend President Buhari for his swiftness in signing the PIB into law, we advise that the PIA be well implemented to avoid adverse consequences. The three per cent allocated to the host communities must be judiciously used.