October 5, 2020
EXPLORING THE SIGNIFICANCE OF THE PETROLEUM INDUSTRY BILL, 2020
BY Akorede Folarin (Associate)
Close to two decades after the Petroleum Industry Bill (the Bill) was first conceived and more than a decade since it was first introduced (with several back and forth in between over its content and structure), the Presidency has again transmitted the Petroleum Industry Bill (now PIB 2020 ) to the National Assembly for deliberation and passage.
Generally, the Bill signifies necessary reforms to the Nigerian petroleum regulatory framework that is still being governed by laws and regulations made more than 40 to 50 years ago. It is clear that despite being Africa’s largest oil producer and boasting its second-largest proven oil reserves and largest gas reserves, Nigeria inarguably lags behind several other continental producers in reforms and has started to lose crucial investors to big weights like Angola and neighbouring newcomer Ghana with more investor-friendly petroleum sectors, whilst facing stiffer competition from new entrants on the continent like Tanzania, Uganda, Mozambique etc.
The lack of a modern and up-to-date regulatory framework has been repeatedly identified as a cog in the wheel of a sector which accounts for the staggering majority of the nation’s revenues, having undoubtedly repelled vital investments (both local and foreign) into the sector at a time when many other countries are moving to exploit their oil and gas resources. Previous iterations of the Bill had suffered setbacks not due to poor understanding of the problems or due to deficiency in expert inputs, but largely due to disagreement among key stakeholders on the regulatory framework, ranging from the powers of the Minister of Petroleum, ownership and control of resources, appropriate fiscal regime, host community benefits, environmental concerns, etc.
According to a policy brief by the Nigeria Extractive Industries Transparency Initiative (NEITI) titled The Urgency of a New Petroleum Sector Law, such regulatory uncertainty in the petroleum industry has cost the country an estimated $200 billion including loss of projected investments of up to $120 billion ($15 billion yearly).
