The Petroleum Industry Bill (PIB) that was first introduced in 2000 seeks to create a fiscal, legal and regulatory framework for the petroleum industry. The bill is also expected to revitalise the industry which is believed to have been immobile for many years.
“I think (the thing holding this bill back) is its complexity, which will be the first issue. It tries to do too many things at the same time and the second thing is you have misaligned interests. Complex because there are about 10 current laws that the PIB repeals and tries to replace the numerous provisions that are in there,” Akinyemi Osinubi, Director at Riverbank Capital told CNBC Africa.
The PIB amongst other things is meant to unbundle the NNPC, which has been described by many as one of the most opaque institutions in the world.
“On the other hand there are issues with the restructuring of the NNPC that is going to be very difficult to implement. Even if you had the political will to implement those things, as it currently stands, it doesn’t do enough for that restructuring,” he said.
According to Osinubi, the third part is the fiscal provisions. As international companies, the NNPC, or/and indigenous company, will like or dislike various parts of the bill.
“A lot of research was done but I also think even those who wrote the bill had different interests in mind. So for example, on the issues of the new provisions provided in transparency, it brings in the Nigerian extractive initiative transparency act into it but at the same time, it removes the NNPC from the public procurement act from publishing its account,” he explained.
In July last year, the Oil Producers Trade Section represented their case before the Senate and Mr Mark Ward, Managing Director, Exxon Mobil said that if the PIB is passed in its current state, oil and gas production will decline from 63 per cent to about 25 per cent.
“The indigenous players get a good deal in terms of tax payment and things like that but in terms of the IOC’s, for those who are doing deep water drilling, I think they are in the worst position. They don’t get all the capital recovery that is required to make all these investments,” he added.