The stunted growth as well as low level of heavy investment in Nigeria's oil and gas industry (OGI), among other militating factors for sustainable growth of the industry, will soon be a thing of the past.
To address the issues, the Federal Government, in its wisdom, submitted a Petroleum Industry Bill (PIB) before the National Assembly, prepared and packaged by stakeholders in the OGI.
For more than 50 years of activities in the sector, Nigeria's OGI has been dominated by foreigners to the detriment of Nigeria and its citizens. The situation denies Nigeria the ownership and control of its God-given hydrocarbon endowments.
However, the scenario will soon undoubtedly change, as the PIB has already passed second reading at both the House of Representatives and the Senate, as well as gone through public hearing, where diverse stakeholders made submissions seeking to improve the Bill when passed into Law.
Most stakeholders who spoke during the public hearing expressed optimism that the PIB would go a long way in transforming the industry for the common good of all investors, the government and citizens. They acknowledged the need to reform the OGI in line with international best practices.
The NNPC Group Managing Director, Dr. Mohammed Sanusi Barkindo, said the PIB if passed into law would enable Nigeria to assume ownership of its resources and create a modern petroleum legal framework. He said passage into law of the PIB would open up the nation's oil and gas sector to new local and international investors and foster competition, growth and sustainable development.
The law will enhance transparency and establish good governance practices and processes, while reinforcing linkages between the OGI and other sectors of the Nigerian economy. It will also support the energy objectives of government as enshrined in the seven-point agenda of Mr. President.
Secrecy encourages corruption, and as such the PIB removes confidentiality on a scale not seen in the world before. With the passage of the PIB, Nigeria will move from being one of the most opaque petroleum nations in Africa, to one of the most open and transparent in the world.
Since the PIB is aimed at streamlining and strengthening petroleum administration, then one wonders why its opponents will not see the point that the future of energy to developing economies like Nigeria is a matter that concerns all. Reforms in the oil and gas industry should be viewed as a subject of interest to all and sundry given the inherent benefits to the nation and its citizens.
The exercise is imperative for the nation's OGI to survive the ever-changing business in the sector, according to an analyst, Mr. Mohammed Rabe, who said any sector desirous of thriving must have a sound legal framework as well transparent and accountable processes and procedures that would stand the test of time.
Rabe said the part of the PIB that seeks to establish the Incorporated Joint Ventures (IJVs) is of great interest to Nigeria since it will solve the financial bottleneck of cash calls and promote a faster development and expansion of oil and gas fields. In the IJVs, the National Oil Company and the foreign companies will now join into a single company of which they will be both shareholders. The number of shares will reflect the current interest in the Joint Ventures. This will undoubtedly increase Nigeria's control over its resources in the JVs.
Another important aspect of the PIB that makes the reforms in the sector desirable is the National Content Provision in the Bill, since no project can be approved without a comprehensive Nigerian Content Plan covering purchase of local goods and services as well as employment of Nigerian citizens, among others.
According to Rabe, in the long run Nigerian investors in the industry stand to benefit more, as the international oil companies in the Joint Venture partnerships with NNPC would have to give up some acreages under the relinquishment clause in the PIB. This is a good omen and a right step in the right direction for our local companies. "Reforming the oil and gas industry at this point in time will assist in no small measure the quest to attract more investment, grow production capacities, profitability for investors and more revenue to government," he said.
Commenting on criticisms of the PIB, the Minister of Petroleum Resources, Dr. Rilwanu Lukman, explained that it was "a healthy development in a democracy", adding that it would go a long way to make the Bill better understood and accepted.
Since the oil and gas sector is the number one revenue spinner for the country, Nigerians await patiently as lawmakers cross the t's and dot the i's in the PIB in the process of making it a law.
Mohammed S. Umar is of NNPC Group Public Affairs Division.