10 May 2014

Nigeria: Lawmakers Should Be Blamed for PIB Delay, Alison-Madueke Says

The Minister of Petroleum Resources, Diezani Alison-Madueke, said on Friday that the National Assembly should be blamed for the delay in the passage into law of the Petroleum Industry Bill, PIB, more than two years after it was sent to lawmakers.

The Minister who was among the panelists in the "Engaging In Energy" session at the World Economic Forum for Africa, WEFA, in Abuja said the process to get the draft document passed into law was not in the Executive's hands, but the National Assembly's.

"The delay in the passage of the PIB is outside government's hands," she said. "The process is in the hands of the National Assembly."

According to the minister, the PIB was an attempt by government to comprehensively reform the oil and gas industry and ensure that it moved on the path of internationally acceptable best practices of transparency, accountability, and more security for medium and long-term investments.

She said she regretted that the delay in the passage of the PIB by the National Assembly was a major setback to that effort, as government does not have the legal basis to take major measures to make the industry more accountable and less corruption-prone.

"The country's oil and gas industry in the last 25 years has been known to be unaccountable, non-transparent and corruption-prone, particularly allegations of manipulation of processes in favour of some vested interests," she said.

"Unless there is a backing of the law, through the passage of the PIB, to tear apart these established entities and create entities that are competition-driven and accountable to the state and the people, it would be difficult to erode the sector of some entrenched methods and modes of behavior," she stated.

Expressing the hope that the PIB would be passed into law soon, Mrs. Alison-Madueke urged Nigerians to exercise patience to allow government push the process to its conclusion.

Mrs. Alison-Madueke said most of the issues in the proposed PIB was about the need to adjust the existing fiscal regimes in the oil industry, most of which were outdated and therefore not favourable to Nigeria.

She said despite the resistance by both multinationals and indigenous companies, government was determined to ensure the bill became law.

The minister said that until the adjustments have been made and the PIB passed into law, government would not be able to take necessary actions in Nigeria's oil industry.

"Government cannot feed an asset management company with equity and shareholding; create new regulatory entities, which are pseudo or semi-independent, and have general oversight over independent entities that it has no right to regulate properly," she said.

In the meantime, she said, what government could do going forward was to establish a framework that would ensure that the oil and gas industry processes were audited regularly, particularly as they relate to revenue receipts by government and payments by the Nigerian National Petroleum Corporation, NNPC.

Mrs. Alison-Madueke said adequate steps should be taken to plug the leakages in the system and ensure that the processes were being followed and managed adequately according to laid down regulatory procedures.

She said government expects that within the next three to four months, the solutions to cover any gaps and leakages would be begin to be felt throughout the economy.

"Government has to be aggressive in cleaning out the operational processes in the oil and gas industry to bring it in line with acceptable global standards," she said.

On efforts to ensure that the industry responded to the people's need for affordable power supply, Mrs. Alison-Madueke said government has a programme to ensure that the people moved away from petrol for power generation to the use of environmentally-friendly and safe ways of generating electricity, namely renewable energy through solar and wind.

The cost of renewable energy, she said was lower than the cost of diesel, which costs about 60 to 70 cents per kilowatt hour of electricity against electricity through solar, which costs about 15 cents per kilowatt hour, and wind, which costs even less.

She acknowledged the role of the infrastructure in powering Africa, pointing out that to realise this objective stakeholders must step backwards to understand the infrastructural deficit, particularly as they affect the transmission of gas to power the independent power plants, IPPs.

Though she said government was working on short-term solutions to generate gas for the power plants, the minister pointed out that long term solutions, in terms of major gas pipeline projects, were highly capital intensive.

Coping with this, the Minister explained, was beyond the capacity of one country, hence the need for regional cooperation to find integrated solutions, while also looking for what each can do internally to meet its needs.

On gas flaring, Mrs. Alison-Madueke said the level has drastically reduced in recent times, pointing out that by 2020, Nigeria would be within the acceptable margins. She did not provide any details.

"The way to get there is to ensure that there was a complete framework in place, including the central processing facilities, the LPGs liquefied petroleum gas), and major industrial gas entities like petrochemicals, fertilizers, and methanol. It's a holistic approach that would do the reduction not only in terms of environmental damage, but also to ensure that the people begin to feel the real benefits of the abundant natural resources at the country's disposal," she said.

She said it was only through making the industry to realise its potentials that it would generate hundreds of thousands of jobs and create inclusive growth.

"This is the only time the Nigerian oil and gas sector would begin to, over the next four years, critically touch the lives of the people directly," she said.

On local content policy, she said a lot of jobs have been created by indigenous Nigerian service providers in the downstream sector of the industry who came into the market to discover several opportunities they could do business, particularly in fabrications.

To make gas available for the domestic market, she said government was currently reviewing the price to make it competitive to attract the right investment to the sector.

She said though domestic gas price went up from 50 cents per 1000 cubic feet to about $1.50 cents per 1000 cubic feet today, government was still looking at how to ensure that it was competitive enough to attract more investors.

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