The Petroleum Industry Bill (PIB) has been delayed for too long. Having failed to be passed by the sixth National Assembly, it is now before the seventh National Assembly. Juliet Alohan highlights implications of the delay and calls for its urgent passage.

The delay in passing the PIB which is currently before the National Assembly is certainly costing the nation's oil and gas sector huge opportunities, especially with regards to attracting new investments to the sector.

President Goodluck Jonathan, while speaking at the official commissioning of Total's USAN FPSO and commemoration of first oil production in deepwater offshore in Port Harcourt last year, stressed the need for more investments to be attracted to the sector which accounts for most of the country's revenue.

While expressing delight that the Total project will add about 500 million barrels of oil to Nigeria's production, Jonathan used the opportunity to solicit for more investments in the oil sector.

But taking cognisance of the fact that such investments would be far from coming under the present uncertain environment, he further seized the opportunity to assure of the passage of the PIB. "I would like to assure the industry that our administration is making concerted efforts with the legislation to ensure the speedy passage into law of the PIB. We are convinced that the PIB will enhance transparency, accountability and effective governance of the Nigerian petroleum industry for the benefit of all stakeholders," the President noted.

Meanwhile, speaking during the 2012 Nigeria Oil and Gas (NOG) conference and exhibition, Country Chair of Shell Petroleum Development Company (SPDC), Mutiu Sunmonu, stressed that the needed huge investments in exploration activities in Nigeria's oil and gas industry would not be achieved without the right environment.

Sunmonu noted that there was also no reason why Nigeria's crude production, especially onshore production, could not be more than the current 600,000bpd, if there was adequate security in the operating environment.

"I do believe that there is plenty of room to improve our efficiency if we are to make our industry like others in the world. Regulatory framework is necessary. If we have a weak regulation, it will slow down everything,"Sunmonu noted.

The passage of the PIB will open up the Nigerian oil industry to privatisation and bring about the full deregulation and liberalisation of the downstream petroleum sector and speedily grow investments in the sector for the betterment of the nation.

Increased production ultimately will lead to increased revenue for government, optimised domestic gas supplies for power projects, industrial and residential use among other benefits.

To achieve these objectives, the PIB is structured to harmonise all the current separate legislations governing the oil and gas sector as well as institute transparency and eliminate corruption in the industry.

The draft Bill has clearly spelt out the operational guidelines, institutional framework and regulatory bodies for the oil and gas sector, the era of overlapping functions which results in inefficiency would be over even as it would further enable and empower regulatory bodies to effectively discharge their duties.

The issue of environmental devastation of oil producing areas would be addressed through the provisions of the Bill which seeks to ensure remediation of devastated environment, compensation to communities as well as safeguards against unsafe operations.

Other major features of the Bill include its fiscal provisions which would ensure increased share of revenue accruing to government relative to the oil companies. This is necessary as oil is a strategic commodity, but the ratio of improvement is limited by the need to offer competitive terms to the oil companies who have alternative markets for their investments.

The Minister of Petroleum Resources, Mrs.Diezani Alison-Madueke, while noting that the fiscal regime in the Bill will help increase production, also added that it has strong incentives for production.

Alison-Madueke who was speaking at the investment summit organised by the Ministry of Trade and Investment in conjunction with the Bank of Industry, in London, explained that the royalty by price ensures a trigger mechanism which provides the existence of fair and balanced pricing which is fair to all irrespective of the terrain of the operator since it comes with a self-adjusting rate based on the price of crude oil and the natural gas price.

Perhaps, the most important feature of the Bill is the unbundling of the Nigerian National Petroleum Corporation (NNPC), to become more commercially focused and profit oriented like other national oil companies such as Petrobras.

Another important feature of the Bill is the host community fund clause which provides that 10 per cent of the net profit of every oil operator in the country be remitted into the Petroleum Host Communities Fund (PHCF) to be used for the development of infrastructure in the oil-producing communities. This provision can go a long way to reduce the conflicts occasioned by weak infrastructure leading to spills and other related hazards.

The Bill also seeks to ensure the protection of the environment by compelling all operators of oil leases to contribute to an environmental remediation fund, a clause which is also expected to significantly help end gas flaring.

It is however,sad to note that despite these laudable provisions of the PIB, it is still faced with opposition both by the International Oil Companies (IOCs) who are concerned that the fiscal terms are uncompetitive even as the Northern governors and legislators worry that host communities' fund skews yet more resources to Niger Delta States.

But the National President of the Oil and Gas Service Providers Association of Nigeria (OGSPAN),Mazi Colman Obasi, has urged the Northern governors to think more of how revenue from oil can be used to diversify the economy of the North rather than oppose it.

"I expect the Northern governors to ask what is in the PIB that can be used to develop resources in the North so as to diversify the economy and not just limit all their arguments to sharing the money. If we structure the PIB well and stop the idea of sharing the money, there will be no unemployment in this country in the next five years," the expert said.

Another drawback to the Bill is the argument over ministerial powers which are considered excessive and offering too much room for discretion. This is because theBill does not insist that oil licence awards be based on transparent auctions and due process.

Experts have advised that while a strong executive leadership by the petroleum minister is required to drive reforms and policy, discretionary award has to however, be guided.

These arguments notwithstanding, the overall interest of the nation which hugely depends on oil proceeds for survival, should be placed above all to ensure the speedy passage of the Bill. The uncertainty over the terms of the new legislation has prevented the country from holding an oil licensing round in five years.

Passage of the PIB will offer the chance to guarantee domestic refining by liberalising the sector, incentivising private refining and ending the subsidy regime which is marred with corruption.

More dangerous for Nigeria is the alternative and competitive markets provided with the discovery of oil in commercial quantities by several new African entrants such as Ghana, Uganda, Kenya, Mozambique and Tanzania.