Onyekakeyah: Why the PIB is facing stiff hurdles

BY May 29, 2015, which marks the end of the current legislative year, it would be exactly eight years since the Petroleum Industry Bill (PIB) was first presented to the National Assembly (NASS) for passage into law. By that date, two legislative assemblies would have sat over this critical PIB without passing it. The bill is yet to see the light of the day, and the question is why? Why have two sets of lawmakers been unable to pass this crucial bill? These are the questions bothering many Nigerians.

    Two main forces from both inside and outside are fighting against the passage of the bill. Among other things, the fundamental objective of the PIB is to “Vest oil and gas resources in the sovereign state of Nigeria”. This is tantamount to changing the existing order, whereby foreign interests are reaping the benefits of Nigeria’s oil while Nigerians languish in poverty. The question then is are those reaping this huge benefit ready and willing to relinquish it? That is the crux of the matter, which the NASS must address. For purposes of historical insight, I would like to highlight the background to Nigeria’s oil development for better appreciation of why there is impasse in the PIB.

   Shell-BP is the pioneer of oil prospecting in Nigeria, which began in 1937. It took three decades of concerted effort before the company struck oil in commercial quantity at Oloibiri in the present Bayelsa State in 1956. Nigerians were not in the picture. Three years later in 1959, just a year before independence, the colonial government introduced the first regulations governing petroleum taxation. Under the regulation, profit made from oil was shared 50-50 between the colonial government and the oil companies. That arrangement provided the basis for foreign domination of Nigeria’s oil till today. 

   On October 1, 1960, Nigeria gained independence from Britain. The reins of government were handed over to indigenous Nigerian authorities. It was at that point that Nigeria should have changed the colonial regulation and fashioned out a more patriotic framework for exploiting the country’s oil resources. Nigerians should have been made the sole stakeholders in the oil business, the way Brazil did in 1953. Unfortunately, that was not done. Instead, the post-independence Nigerian authorities settled for royalty collection from the foreign oil companies. 

    That was how Nigerians were sidelined and today, we are talking of local content, meaning how to get Nigerians involved in the oil industry business, which again is proving most difficult. Nigerians are begging to participate in the exploitation of their own oil resources. It is remarkable that between 1956 when oil was discovered and 1970 (end of the civil war), there was no national body responsible for managing Nigeria’s oil. The Nigerian National Oil Corporation (NNOC), the precursor of today’s Nigerian National Petroleum Corporation (NNPC), was founded in 1971 by Decree 18, under Gen. Yakubu Gowon (retd). This is unlike Brazil, where the country’s national oil company Petrobras, was founded in 1953, the same year that oil exploitation began.

   The Nigerian experience is therefore different from what happened in Brazil. After oil was discovered in Brazil, Petrobras, Brazil’s giant multinational oil company was founded to take charge of the oil. The Brazilians came up with a framework that allowed the government to own 55.7 per cent share while the rest was owned by private people. The Brazil motto was “The Petroleum is ours”. That effectively gave Brazilians full control of their oil without foreign involvement. It is only of recent that Brazil, for the first time, started allowing foreign interests to come in. That is in contradistinction to what happened in Nigeria, where foreigners have been in full control of the oil while Nigerians were sidelined. 

   Given the two scenarios, it is easier to let foreign interests in, like in Brazil, than to let them out, like in Nigeria. The foreign interests that have entrenched themselves in the oil, with billions of dollar turnover, will definitely resist any attempt to edge them out. Having dominated the oil industry for over fifty years, getting them to relinquish their investments and interests is an uphill task. That is the hurdle the PIB has been facing for eight years. Like I said earlier, whether it would be able to scale the hurdles it is a matter of conjecture. 

   Apart from the external forces, there are also the internal hurdles arising from the geopolitics of oil revenue sharing in Nigeria. Here, the North constitutes the obstacle. The North has over the decades reaped from the oil revenue. Many states are literally sustained by the allocation received from the Federation Account. Like the foreign interests, the Northern power bloc can’t understand why the existing arrangement should change under the PIB. Consequently, they want the status quo to remain. 

   From the foregoing, it is obvious that the PIB represents the single most ambitious piece of legislation that has the capacity to transform the Nigerian economy, which under the present structure, is mono-cultural oil-based economy. Given the importance of the bill, one can’t understand why the NASS should leave no stone unturned to get it passed into law. How long more would this bill remain in limbo, especially, if the current lawmakers fail to pass it? Should the bill continue to be presented indefinitely to future batch of lawmakers? 

   Since the PIB is an executive bill, I believe some background work was done to unravel the nature of obstacles that would arise? The executive would have envisaged these obstacles beforehand. And for the NASS, what does it take to get the bill passed? That the PIB has dragged on for eight years without passage smacks of lack of patriotism on the part of the legislators. 

   Some people have even tried to blame the Minister of Petroleum Resources, in this case, Mrs. Diezani  Alison-Madueke for failure to get the PIB passed into law. They blame her for not delivering the PIB! That is totally misplaced borne out of misunderstanding. The truth is that Mrs. Alison-Madueke cannot deliver the PIB. She is part and parcel of the executive that prepared the bill, meaning that she has done her bit. She is in the same shoes with President Goodluck Jonathan. Whatever needs to be done to pass the bill, including lobbying, is left to the legislature. The ball is in the court of the lawmakers. These clarifications are necessary for Nigerians to know where the problem is coming from and who to blame.

   Having said that, I must stress that, in a way, the NASS has been given a hard nut to crack as far as the PIB is concerned. Whether or not they can crack it is a matter of conjecture. The eight years give insight into such possibility or otherwise. Nevertheless, I don’t think that the NASS is not interested in passing this bill. But with the Northern power bloc literally opposed to the bill, I don’t know how a divided NASS can present a common formidable front to face the external forces. The external forces are more difficult to handle than the internal. The NASS should take note.



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