‘Passage of PIFB will encourage huge investment in petroleum industry’

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Chuks Udo Okonta

As President Muhammadu Buhari gradually moves into another election year, stakeholders in oil and gas sector have reaffirmed the need to hasten up everything around the Petroleum Industry Bill (PIB)

PIB, which has been split into different categories for ease of administration, is a document that is expected to positively redirect the nation’s oil and gas fortune.

Speaking during a Nigerian Bar Association Roundtable on Nigeria’s Petroleum Industry Reforms, Joe Nwakue of ZERA Advisory & Consultancy, who spoke on Review of Proposed Petroleum Industry Fiscal Bill (PIFB), said the bill, if passed into law, would establish a progressive fiscal framework that encourages substantial and progressive investment in the petroleum industry balancing rewards with risk and enhancing revenues to the Federal Government of Nigeria.

He added that it would also institute a forward looking fiscal framework that is based on core principles of clarity, dynamism, neutrality, open access and fiscal rules of general applications as well as provide clear distinction between legislative aspects of the fiscal regime and negotiable aspects of contractual obligation.

Nwakue pointed out that the fiscal bill would establish a framework that expands the revenue base for the government while ensuring a fair return for the investors, simplify the administration of petroleum tax as well as promote equity and transparency in the fiscal system.

Calling on the current National Assembly to leave a legacy by producing a bill that will reverse the negative growth in the industry lately, he said the imperative to pass a new fiscal bill was obvious, stressing that the proposed bill in its current form would benefit from the suggestions made to ensure “we have a legislation that ensures a win-win for all stakeholders and takes the industry to the next level.”

In his presentation at the roundtable, Senior Partner, Gbenga Biobaku & Co, Gbenga Biobaku, who spoke on the Petroleum Industry Governance Bill (PIGB), said the bill would establish a framework for the creation of commercially oriented and profit driven petroleum entities that ensures value addition and internationalisation of the petroleum industry.

He said signing the bill into law “will eliminate uncertainty in the Nigerian petroleum industry, stimulate growth and investments, significantly improve investor confidence and demonstrate seriousness about implementing reforms, strengthen governance and transparency, result in more effective regulation, unlock substantial resources, which will be available for further growth of the industry, result in improved performance and accountability by the commercial entities and refocus attention to frontier exploration.”

According to him, it will also promote transparency and accountability in the administration of the petroleum resources of Nigeria, adding that it will also create a conducive business environment for petroleum industry operations.

Speaking further on the key principles of the bill, the legal practitioner pointed out that it would also ensure clear separation of roles, promote distinct accountabilities, ensure simple and clear line of sight, allow for focused operation, transparency and good governance, full coverage of the value chain, minimal interference and elimination of cross subsidisation risks.

Biobaku also observed that the bill would provide clear and distinct roles for the minister such as being the owner and driver of industry policies, setting general industry direction, issuing general policy directions, supervision on behalf of the government, owner of Industry diplomatic roles, and strategic planning.

Speaking on the benefits of an independent regulator, he said it would allow for a strengthened governance and improved transparency in decision making and leading to more effective regulation.

It will also ensure long term regulatory stability, and lead to a one stop shop on matters related to the petroleum industry just as it will promote Federal Government policy on ease of doing business.

Biobaku also observed that the bill would also create a strong competent board with mainly non-execs, enable the commission to give reasons for its decisions and t respond within a specified time.
He said: “The bill prescribes a procedure for public hearing prior to the issue of regulations. Commission to present midyear and annual reports of its operations to the minister and make available its annual report and audited financial account on its website before of March 31, every year.

Speaking on the benefits of new commercial structure, he pointed out that it would ensure enhanced revenues to the federation through robust cost management and disciplined collection processes as well give room for robust governance, performance and engender bottom line mind sets.

Others include focusing on strategic interests, in particular cost management, enhancing funding capacity by creating a financially capable entity with the ability to source independent (non-budgetary) financing for JV operations, rationalizing portfolio to smaller, more manageable entities as well as minimisng/elimination of cross subsidisation.

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