Law News
Bane of Nigeria’s oil sector

There is the need to implement the report of the Oil and Gas Industry Committee (OGIC) on new institutional structures for the sector. This has culminated in the Petroleum Industry Bill (PIB) whichwas passed by only the House of Representatives of the 7th National Assembly without a concurrent passage by the Senate.

Hopefully, the 8th National Assembly (barring the sustained sentiments and partisan politicking) would do well to pass the bill with gusto and alacrity.

When passed, it will repeal previous oil and gas statutes and related legislations, which certain elements (both locally and internationally) have exploited to deprive the nation huge earnings. The bill appropriately delineates roles among the various institutions in the industry and is comprehensively crafted to engender the much touted overall reforms of the oil and gas sector.

It also aims at creating operational autonomy and transparency. There is the need to create a vibrant industry where the private sector plays pivotal roles. It is pertinent to note that, without independent-minded technocrat(s) being saddled with the responsibilities of conducting bidding processes for prospective firms, the very idea a performance-driven industry would be lost on the altar of sentimental profligacy.

Unnecessary bureaucratic bottlenecks should be eliminated, and undue government interference should be minimized to guarantee effectiveness and result-oriented performance. The would-be regulators of the oil and Gas sector must first try to regulate the sector through standardization of all the players and new entrants.

It cannot be business as usual. There must be a period of tutelage and cognate experience acquisition. Human capacity training and development should be encouraged, with stipulated transition period for expatriates to hand over to locals, especially in the low and middle cadres.

There is the need to unleash the full potential of the Gas Master Plan on the development of the economy. There is need for appropriate assets, policy framework for optimum utilization and value for the vast gas resources. This needs to be done to cater adequately for domestic and international markets.

The development of the gas sub-sector in a comprehensive and integrated manner along with its entire value chain can be used as a launch pad to jump-start the economy. As a way of curbing the prevalent corruption in the sector, there remains no alternative to outright deregulation of the downstream sector.

This, however, unlike the approach of the immediate past administration, should be done systematically in such a way that the resultant impact would not be transferred to the members of the public unnecessarily. Adequate measures should be put in place (before and not after the full-blown deregulation as was done by the out-gone administration) to cushion whatever effect that may arise thereafter.

This is one major error committed by the President Jonathan-led administration. No doubt, he was wrongly advised, and that speaks volume of the type and make-up of the people he appointed to oversee the sector. Efforts should be aimed at ensuring that the established high standards are maintained and sustained in NEITI’s interface with oil and solid mineral sectors, particularly in the discharge of its mandates under the NEITI Acts.

This, once more, needs experts’ input. Other statutory regulatory bodies should be prodded to be much more responsive and accountable. There is need for a policy framework to address (aggressively) the infrastructural deficit of the Niger-Delta region; and producing companies should be encouraged to be more socially responsible.

More importantly, regulatory bodies and management companies should be domiciled in the area where the golden egg is laid. NNPC, like the regulatory and management companies should not be working out of Abuja.

Environmental protection should be highlighted, and defaulters must be punished with recourse to relevant legislation. The Nigerian Local Content legislationshould be promoted and implemented to the letter.

The estimated cumulative worth of the total businesses in the oil and gas sector is about $18 billion US Dollars (N2.7 Trillion). The government wanted to achieve 45 per cent success in 2009 and 70 per cent in 2010, in respect of its local content drive in the oil and gas sector but recorded a paltry 39 per cent success in 2009 and almost the same in 2010.

This lack of success was largely due to absence of technocrats at the helm of affairs in the industry to provide quality direction; the lack of enabling legislation and inadequate monitoring/supervision by the NNPC.

This new dawn of CHANGE should herald change in attitude and the thought-process, by first seeing the oil and gas sector as a business that must be cultivated and nurtured to grow.

Achieving the goals enumerated so far (which are by no means exhaustive) would no doubt be a daunting task in a terrain that has wallowed in institutionalized bureaucracy, mediocrity and corruption.

It is not an assignment that any serious government would commit to the hands of career politicians or political jobbers. The in-coming administration must be painstaking in appointing a capable team to oversee the oil and gas industry. Johnson is a Lagos based legal practitioner.

Click here to read from source.