ALLAFRICA.COM
Office of Senator Bukola Saraki (Ilorin) [05/03/13]
Press Release
PROTOCOL
PREAMBLE
There is little doubt that the Nigerian petroleum industry is in dire need of reform. On the face of it, having a system running on almost a half a century old law is bad enough. The fact that today we are here debating the PIB is essentially because most of us agree that the industry is performing sub-optimally compared to its counterparts around the globe. Aside international comparison, evidence of sub-optimal performance of the industry is legion.
• The endemic corruption in the industry
• The lack of probity and accountability
• Too much political interference
• Nepotism,
• Lack of transparency
The industry works for a select few and has turned itself into a hydra-headed monster in a dark allay. In fact an exhaustive list of the current challenge of the industry will take up the time allotted for this debate, so lets get to the meat of the matter. Changing this scenario must necessarily start with a review of the legal, institutional and regulatory framework on which the industry operates.
As the main stay of the Nigerian economy it is difficult to see how the Petroleum Act passed over 40 years ago is still the framework on which we expect optimal efficiency from in a market that is undergoing constant rapid change. It is obvious following what we have witnessed as a nation in recent times including the issue of subsidy management, scarcity of petroleum products, gas utilization challenge in the power industry, the issue of discrepancy in the remittances and management of oil revenues accruing to the federation among others that things have to change. The industry indeed is today running on a vehicle built for the 20th century and therefore out of tone with our reality.
THE REFORM STRATEGY
Nigeria faces a very unique prospect with the oil industry. There is no doubt that rather than help Nigeria build other important and viable sectors of the economy, there has been glut in most other areas of our strength including agriculture and agro-allied industry due to too much reliance on oil. So getting the reforms right is imperative. In every reform process there are unintended and unforeseeable consequences. In other to minimize these unforeseeable situations we need to adopt a reform structure that is manageable. Many commentators on this all important sector which holds the key to many other sectors of the economy including our politics requires a lot of deliberateness, rigor and studied checkpoint base approach in which we stop and reassess and make addition- what some people have called a graduated approach to reforms. This is the way to an incremental sustainable reforming of the oil industry in a manner that will not shock the industry and indeed the country to its roots.
WHAT WE AGREE NOW AND GOING FORWARD
The opportunity to be debating the PIB today is a unique and very important one. We must find a way to pursue this project in a manner that is inclusive and widely participatory. I believe that we can only do justice to this process if we are exhaustive on every aspect of this reform. We must then decide if we need to take on everything at once or take them on segmented basis in order to ensure that every I, is doted and every T is crossed. In other words, there are several matters in this important bill that we can easily agree with and for which there is clarity as to what is in view. So we spend little time dealing with the details and agreeing to move it off the shelf with quick dispatch, but there are issues that are not so easily dealt with that may require much more deliberateness either due to their novelty or operational complexities.
There is no over-emphasis on the imperativeness of the PIB and all that is contained therein. However, we must avoid the tendency to rush ourselves through this bill because of the impact value and the centrality of the outcome of the bill to the wellbeing of our nation.
Again, we must bear in mind that the market is evolving worldwide. In the last few years there has been a shifting in the market value of crude and the hitherto predictable demand market. With oil sprouting from many more places in the world including Africa and the United states accelerating its domestic exploration and production, we are today challenged to evolve an industry that will ride the coast of this changing demand pattern to evolve into a much more sustainable world class industry.
Getting the industry to become more transparent and competitive is then a key aspect of the reforms that we need to proceed with. It is still a matter of guesswork to police the Nigerian oil industry because of the hydra-headed framework on which it operates and the opacity of the management of the NNPC and its subsidiaries. NNPC' was conceived as a vertically integrated oil company, but for over 40 years NNPC is neither a real commercial entity nor a meaningful oil operator. It lacks control over the revenue it generates and thus is unable to set its own strategy. Its portfolio of activities is too diverse, incoherent, and beyond the reach of government control for it to function as a government policymaking instrument.
I support therefore in principle the proposed reform targeted at unbundling NNPC and improving on the funding structure. It is in this light that it is satisfying that the PIB is today before us for consideration on how we can turn this critical sector of the economy into a global player and one that serves the purpose of the development of the country.
THE MARKET AND THE REFORM PROCESS
I believe that the market is both excited and anxious about the prospects of the PIB. It is excited that at long last there is the political will to reform the industry to inject transparency, competition and market innovation that drive growth. But the anxiety is in the process. This is where we have a problem we must deal with.
We must give the market some comfort and ease the level of nervousness in the system today. There is as at today too much uncertainties about contracts and the overall market direction due to the PIB. This is especially so with the fiscal terms within the PIB. I believe that it will serve our purpose much more broadly and efficiently if we apply acquired lessons on the PIB from the last attempt at passing the bill. I know that there is another school of thought who believes in the shock therapy method where everything is done at once as a way of not derailing the reform. But the danger is that we run the risk of not achieving anything at all as the entire gamut of reform proposed as it is risked on the weakest proposal under the bill.
To this I could have proposed that the bill be broken down into several bills and passed into an incorporated bundled one after the other. In that way, the new policy is graduated and tested on a checkpoint basis. by checkpoint basis I mean a situation where we give ourselves the opportunity to review where things stand with what we have introduced and if it is working, we move to the next level. Where it is not working, we review before moving to the next level or introducing the next direction.
The issue of the reform necessary for the industry is today almost a decade old and not much traction has been made. This is not for not trying, no it only underscores the difficult in handling some of the issues involved in some cases or the need to adopt a new approach. Nonetheless what it says to us today is that we are 10 years late in coming. Not taking up these issues and dealing with them or delaying legislative action on them is not by any stretch of the imagination moving the industry in the right direction. A decision could deal with a matter exhaustively or decide to postpone further decision to another determined time, thereby creating stability and clarity in the market. As we speak, investment decisions on gas utilization and exploration including LNG are today on hold as a result. So I urge us to bear this in mind and bring closure to this process through levelheaded and objective arguments that are courageous and forward-looking. Whichever frame we chose to adopt, I believe it is important that we give comfort and certainty to the market and release already stagnating investment climate of the industry.
HIGHLIGHTS OF THE BILL
However, I will commend the federal government for its courage and determination to improve on the fortunes of this very important sector of the economy in the manner envisaged under the bill, which is to create a commercially viable NOC. It is envisaged that we will see a new company run with efficiency in mind. What we have and which almost all the committees setup to probe its activities in the have confirmed to us is that NNPC is a cesspit of corruption and inefficiency. So it is indeed heart warming the effort at unbundling this structure and have in place the NOC.
The introduction of competition into the market as enshrined under the bill will help us in the long run to create a market that is driving by efficiency and innovation. Another exciting package under the bill today is the transformation of NNPC into a CAMA company where any member of the company can demand accountability from the management of the company irrespective of his or her share value. Where the company must as a matter of law file returns and audit its account and disclose entirely its books; where officials could go to jail for illegality in the operation or dealing of company property. That is a positive from this bill. A situation where 'publish what you earn' will no longer be as a matter of political expediency but rather a routine legal expectation. Also, the creation of a multifaceted regulatory structure with emphasis on sub-sectoral management under the bill is welcome as all of these if well structured and manicured will promote transparency and good governance, health and sustainable environment is a manner that we have not seen before. The key word is SYSTEMATIC STRUCTURING.
FISCAL REGIME
The fiscal regime, which includes royalties and tax, is now predicated on production as opposed to terrain and investment. I believe that this will give operators the opportunity to make fair returns during field declines, as the mechanism is self-adjusted. This framework is better than what we have had hitherto where the Production Share Contract (PSC) of 1993 for instance which was based on a $20 per barrel for crude oil has remained with us even when almost immediately after the start of the production of PSC fields oil has been on the upswing and have even quadrupled in value thus the need to review the terms.
INVESTMENT DRIVE: GAS AS THE NEW ENERGY AREA
Given the quantum of Nigerian gas reserves, it is expected that gas is the next area of exploration. Recently the federal government launched the Gas Master Plan. Clearly this is not enough. We need to be doing more to enhance gas exploration in Nigeria following the market trend. I would like to see a more robust framework that focuses on accelerating gas exploration; utilization, regulation and investment in a manner that allows Nigeria and Nigerians take greater advantage of the gas resource through greater input and value chain utilization. The planned commercialization of gas is beyond supporting power generation; it must include enthroning gas flare-out to save the environment and conserve our wasting resource, enabling gas to serve as feedstock for industry within its value chain including fertilizers and petrochemicals.
Gas flare alone if put out will save the country a lot of revenue opportunity. This is because in 2010 alone gas flaring cost Nigeria over $2.5bn. This framework must also target widening opportunity for third parties to access to gas pipelines and licensing in a manner that expands participation and innovation, which will ultimately drive the gas master plan.
Gas investment and use should concern us very much. We are still laying a lot of emphasis on oil but the world energy mix is changing. Today the US total petroleum imports in January this year were at their lowest level in 13 years, since 2000. But natural gas liquids (NGL) production, a co-product of natural gas production, rose from the prior month and the prior year to record highs in January. Total U.S. NGL production increased by 0.7 percent from December 2012 and was up 5.6 percent from January 2012 to average slightly above 2.5 million barrels in January. NGL production in January was the highest January level recorded and the second highest output ever. In the Eurozone Germany, Italy and the United Kingdom, gas consumption is growing at a steady rate, and gas consumption in 2001 was fully 50% greater than it was in 1990 and continues to grow. The Netherlands government has stated that peak gas occurred in 2007-2008 and the country will have become a net importer of natural gas by 2025. The same is true for Asia as gas demand is at an all time high. Nigeria has the highest gas reserve in Africa so it will be a disservice for this bill to deal with gas tangentially.
BETTER REGULATION & DISCRETIONARY POWERS
One of the key elements of a good regulatory framework is independence and impartiality. These two elements are so vital that where they are missing the impact will always be the failure of regulation or the weakening of regulatory efficiency. There is therefore need to sensitively deal with any matter that has the potential of weakening the effectiveness of the regulatory reforms envisaged under this proposal.
One key thorny issue this calls to mind is the much talked about wide discretionary powers of the president and the minister under the bill. Discretionary powers are an important regulatory instrument that adds intelligence to the process of regulation. However, wide powers that are absolute in nature have only one possible outcome -they are corrupting and negate the goal of competition and impartiality it opens the way to uncertainty and abuse and ultimately imperils the new legal regime.
The bill needs to go farther in the critical issue of disclosure also. It will be recalled that in 2011 Revenue Watch Institute (RWI) and Transparency International (TI), an international watch dog dedicated to openness in public life and transparency in all aspects of national and international relationships, teamed up to conduct a review of 44 national oil and gas companies (NOCs) in the world. The report, 'Promoting Revenue Transparency - 2011 found that NNPC is the most corrupt national oil and gas company among its peers in the world. NNPC recorded 0% in reporting on anti-corruption programs and another 0% in organizational disclosure.
DRAFTING STYLE
I will like to make a few comments on the basic principles of the bill. I support the objectives of the bill but on the style adopted by the draftsman, I do not think the principle of vesting ownership of petroleum resources on the government of the federation is proper. The vesting of the property of Nigeria should desirably be vested in the Nigerian state rather than the government of the federation. Again, on the surface there is a lot of cheer in terms of what the bill seeks to achieve but it appears that it is still frosty and laden with inconsistent provisions which I believe, depending on how we chose to approach the bill we will have to deal with going forward. I will touch on some that I have observed on the broad principles without going into specific provisions.
BAR AGAINST ATTACHMENT
I will also like to make a few comments on the provisions, which has the implied effect of creating quasi ouster clauses and simply put they have the implication of acting as a bar against execution or attachment of the property of certain agencies created under the Bill. This is in my view not a right way to go in a democratic setting. This is the kind of provisions, which will be seen by the courts as an affront on the rights of litigants and a violation of citizens right to fair hearing and remedy.
Petroleum Host Community Fund
The provision made for the Petroleum Host Community Fund, is in my mind one of the areas we must carefully deliberate and resolve. We must ensure that the framework of any of such fund is a creation of deliberate thought looking into the future in a manner that ensures the unity of this country and the prosperity of the entire nation. Arguably the Fund is one of the hot button issues of this bill, which we must deliberate with the right emotion. I support giving opportunity to our people to participate in the fortunes of the oil industry but we must do so in a sustainable and equitable manner.
I believe that the host communities need better treatment. No doubt, but today there is an apparent lack of clarity in the structure for control and management of the fund. Again there is yet to be established the relationship between the fund as envisages and such other vehicles, which are already running like the NDDC in the federal and their state counterparts. I say this in view of the fact that the fund and the overarching objective of the other schemes are one and the same. This is not made easier by the provision giving powers to the minister to under section 118 (6) to make regulations on entitlements, governance and management structure with respect to the fund.
FUNDING OF NEW ENTITITES AND GOVERNMENT CONTROL
There is consensus for the unbundling of NNPC into the National Oil Company (NOC) but stones are being thrown at the idea of the new company being run by government officials as very unsatisfactory. Again the funding model for these key institutions has been criticized and the widely held opinion is for them to be independently funded through a surcharge on per barrel basis in other to insulate them from too much interference.
PIB AND OTHER SECTORS OF THE ECONOMY
The Nigerian economy relies hugely on the petroleum industry. If we get the PIB right we stand a chance of giving a fresh impetus to the economy as a whole. We can only do this if we are able to check the huge leakages in the sector that has denied Nigeria a sizable vault of capital that could have helped renew and expand our infrastructural base, stimulate local content and value chain additions.
If we fail, we perpetuate the opacity in the industry and its attendant consequences which including putting ourselves in the perilous position of escalating the possibility of political and social instability due to unemployment, weak regulation and greed.
THE WAY FORWARD
in conclusion therefore, it is imperative to bring closure to all matters that have significant impact on investment within the framework of this bill. This is so because the world will not wait for us to make a decision. We leave in a world were capital mobility is at a pace never seen before. This is through both for local investors as well as foreign investment.
Our decisions must take into cognizance the need to stabilize the market and drive investment again. Not necessarily to suit any particular segment' of the market but to ensure that we do not unnecessarily expand the period of uncertainty through inaction. I am alive to the fact that some of the issues here may require greater consultation, participation, and deliberation and may even be based on the review or performance of other aspects of the reform envisaged under the bill. It is my considered view that in such situations we can still bring closure and stability to the market by agreeing to stay action until such other time as may be agreed to have the matter finally dealt with.
I will expect that we can enshrine in the bill for instance a matter dealing with licensing which may not have been dealt with fully, that such matter or some aspects of it remain inchoate for the next 10 years or 5 years or such other time that guarantees the market some continuity.
Again, we can enshrine sunshine provisions, which act like a checkpoint mechanism on some of the critical reform areas, by providing that such provisions shall stand to be reviewed or approved for a further period of time at the expiration of a number of years. An example will be, in cases where there exists little critical operational comparison upon which experiential understanding of the outcome could be based.
The emphasis here is that this bill or some form of it need to have been passed yesterday. However, the needful must be done. So long as we bear Nigeria in mind as a strong and united country for all of us the needful to me will be thoroughness, trust, deliberateness, exhaustiveness that is forward looking, we will deliver to Nigerian a new and improved less corrupt oil industry built for Nigeria of the 21st century.
THE REFORM STRATEGY
Nigeria faces a very unique prospect with the oil industry. There is no doubt that rather than help Nigeria build other important and viable sectors of the economy, there has been glut in most other areas of our strength including agriculture and agro-allied industry due to too much reliance on oil. So getting the reforms right is imperative. In every reform process there are unintended and unforeseeable consequences. In other to minimize these unforeseeable situations we need to adopt a reform structure that is manageable. Many commentators on this all important sector which holds the key to many other sectors of the economy including our politics requires a lot of deliberateness, rigor and studied checkpoint base approach in which we stop and reassess and make addition- what some people have called a graduated approach to reforms. This is the way to an incremental sustainable reforming of the oil industry in a manner that will not shock the industry and indeed the country to its roots.
WHAT WE AGREE NOW AND GOING FORWARD
The opportunity to be debating the PIB today is a unique and very important one. We must find a way to pursue this project in a manner that is inclusive and widely participatory. I believe that we can only do justice to this process if we are exhaustive on every aspect of this reform. We must then decide if we need to take on everything at once or take them on segmented basis in order to ensure that every I, is doted and every T is crossed. In other words, there are several matters in this important bill that we can easily agree with and for which there is clarity as to what is in view. So we spend little time dealing with the details and agreeing to move it off the shelf with quick dispatch, but there are issues that are not so easily dealt with that may require much more deliberateness either due to their novelty or operational complexities.
There is no over-emphasis on the imperativeness of the PIB and all that is contained therein. However, we must avoid the tendency to rush ourselves through this bill because of the impact value and the centrality of the outcome of the bill to the wellbeing of our nation.
Again, we must bear in mind that the market is evolving worldwide. In the last few years there has been a shifting in the market value of crude and the hitherto predictable demand market. With oil sprouting from many more places in the world including Africa and the United states accelerating its domestic exploration and production, we are today challenged to evolve an industry that will ride the coast of this changing demand pattern to evolve into a much more sustainable world class industry.
Getting the industry to become more transparent and competitive is then a key aspect of the reforms that we need to proceed with. It is still a matter of guesswork to police the Nigerian oil industry because of the hydra-headed framework on which it operates and the opacity of the management of the NNPC and its subsidiaries. NNPC' was conceived as a vertically integrated oil company, but for over 40 years NNPC is neither a real commercial entity nor a meaningful oil operator. It lacks control over the revenue it generates and thus is unable to set its own strategy. Its portfolio of activities is too diverse, incoherent, and beyond the reach of government control for it to function as a government policymaking instrument.
I support therefore in principle the proposed reform targeted at unbundling NNPC and improving on the funding structure. It is in this light that it is satisfying that the PIB is today before us for consideration on how we can turn this critical sector of the economy into a global player and one that serves the purpose of the development of the country.
THE MARKET AND THE REFORM PROCESS
I believe that the market is both excited and anxious about the prospects of the PIB. It is excited that at long last there is the political will to reform the industry to inject transparency, competition and market innovation that drive growth. But the anxiety is in the process. This is where we have a problem we must deal with.
We must give the market some comfort and ease the level of nervousness in the system today. There is as at today too much uncertainties about contracts and the overall market direction due to the PIB. This is especially so with the fiscal terms within the PIB. I believe that it will serve our purpose much more broadly and efficiently if we apply acquired lessons on the PIB from the last attempt at passing the bill. I know that there is another school of thought who believes in the shock therapy method where everything is done at once as a way of not derailing the reform. But the danger is that we run the risk of not achieving anything at all as the entire gamut of reform proposed as it is risked on the weakest proposal under the bill.
To this I could have proposed that the bill be broken down into several bills and passed into an incorporated bundled one after the other. In that way, the new policy is graduated and tested on a checkpoint basis. by checkpoint basis I mean a situation where we give ourselves the opportunity to review where things stand with what we have introduced and if it is working, we move to the next level. Where it is not working, we review before moving to the next level or introducing the next direction.
The issue of the reform necessary for the industry is today almost a decade old and not much traction has been made. This is not for not trying, no it only underscores the difficult in handling some of the issues involved in some cases or the need to adopt a new approach. Nonetheless what it says to us today is that we are 10 years late in coming. Not taking up these issues and dealing with them or delaying legislative action on them is not by any stretch of the imagination moving the industry in the right direction. A decision could deal with a matter exhaustively or decide to postpone further decision to another determined time, thereby creating stability and clarity in the market. As we speak, investment decisions on gas utilization and exploration including LNG are today on hold as a result. So I urge us to bear this in mind and bring closure to this process through levelheaded and objective arguments that are courageous and forward-looking. Whichever frame we chose to adopt, I believe it is important that we give comfort and certainty to the market and release already stagnating investment climate of the industry.
HIGHLIGHTS OF THE BILL
However, I will commend the federal government for its courage and determination to improve on the fortunes of this very important sector of the economy in the manner envisaged under the bill, which is to create a commercially viable NOC. It is envisaged that we will see a new company run with efficiency in mind. What we have and which almost all the committees setup to probe its activities in the have confirmed to us is that NNPC is a cesspit of corruption and inefficiency. So it is indeed heart warming the effort at unbundling this structure and have in place the NOC.
The introduction of competition into the market as enshrined under the bill will help us in the long run to create a market that is driving by efficiency and innovation. Another exciting package under the bill today is the transformation of NNPC into a CAMA company where any member of the company can demand accountability from the management of the company irrespective of his or her share value. Where the company must as a matter of law file returns and audit its account and disclose entirely its books; where officials could go to jail for illegality in the operation or dealing of company property. That is a positive from this bill. A situation where 'publish what you earn' will no longer be as a matter of political expediency but rather a routine legal expectation. Also, the creation of a multifaceted regulatory structure with emphasis on sub-sectoral management under the bill is welcome as all of these if well structured and manicured will promote transparency and good governance, health and sustainable environment is a manner that we have not seen before. The key word is SYSTEMATIC STRUCTURING.
FISCAL REGIME
The fiscal regime, which includes royalties and tax, is now predicated on production as opposed to terrain and investment. I believe that this will give operators the opportunity to make fair returns during field declines, as the mechanism is self-adjusted. This framework is better than what we have had hitherto where the Production Share Contract (PSC) of 1993 for instance which was based on a $20 per barrel for crude oil has remained with us even when almost immediately after the start of the production of PSC fields oil has been on the upswing and have even quadrupled in value thus the need to review the terms.
INVESTMENT DRIVE: GAS AS THE NEW ENERGY AREA
Given the quantum of Nigerian gas reserves, it is expected that gas is the next area of exploration. Recently the federal government launched the Gas Master Plan. Clearly this is not enough. We need to be doing more to enhance gas exploration in Nigeria following the market trend. I would like to see a more robust framework that focuses on accelerating gas exploration; utilization, regulation and investment in a manner that allows Nigeria and Nigerians take greater advantage of the gas resource through greater input and value chain utilization. The planned commercialization of gas is beyond supporting power generation; it must include enthroning gas flare-out to save the environment and conserve our wasting resource, enabling gas to serve as feedstock for industry within its value chain including fertilizers and petrochemicals.
Gas flare alone if put out will save the country a lot of revenue opportunity. This is because in 2010 alone gas flaring cost Nigeria over $2.5bn. This framework must also target widening opportunity for third parties to access to gas pipelines and licensing in a manner that expands participation and innovation, which will ultimately drive the gas master plan.
Gas investment and use should concern us very much. We are still laying a lot of emphasis on oil but the world energy mix is changing. Today the US total petroleum imports in January this year were at their lowest level in 13 years, since 2000. But natural gas liquids (NGL) production, a co-product of natural gas production, rose from the prior month and the prior year to record highs in January. Total U.S. NGL production increased by 0.7 percent from December 2012 and was up 5.6 percent from January 2012 to average slightly above 2.5 million barrels in January. NGL production in January was the highest January level recorded and the second highest output ever. In the Eurozone Germany, Italy and the United Kingdom, gas consumption is growing at a steady rate, and gas consumption in 2001 was fully 50% greater than it was in 1990 and continues to grow. The Netherlands government has stated that peak gas occurred in 2007-2008 and the country will have become a net importer of natural gas by 2025. The same is true for Asia as gas demand is at an all time high. Nigeria has the highest gas reserve in Africa so it will be a disservice for this bill to deal with gas tangentially.
BETTER REGULATION & DISCRETIONARY POWERS
One of the key elements of a good regulatory framework is independence and impartiality. These two elements are so vital that where they are missing the impact will always be the failure of regulation or the weakening of regulatory efficiency. There is therefore need to sensitively deal with any matter that has the potential of weakening the effectiveness of the regulatory reforms envisaged under this proposal.
One key thorny issue this calls to mind is the much talked about wide discretionary powers of the president and the minister under the bill. Discretionary powers are an important regulatory instrument that adds intelligence to the process of regulation. However, wide powers that are absolute in nature have only one possible outcome -they are corrupting and negate the goal of competition and impartiality it opens the way to uncertainty and abuse and ultimately imperils the new legal regime.
The bill needs to go farther in the critical issue of disclosure also. It will be recalled that in 2011 Revenue Watch Institute (RWI) and Transparency International (TI), an international watch dog dedicated to openness in public life and transparency in all aspects of national and international relationships, teamed up to conduct a review of 44 national oil and gas companies (NOCs) in the world. The report, 'Promoting Revenue Transparency - 2011 found that NNPC is the most corrupt national oil and gas company among its peers in the world. NNPC recorded 0% in reporting on anti-corruption programs and another 0% in organizational disclosure.
DRAFTING STYLE
I will like to make a few comments on the basic principles of the bill. I support the objectives of the bill but on the style adopted by the draftsman, I do not think the principle of vesting ownership of petroleum resources on the government of the federation is proper. The vesting of the property of Nigeria should desirably be vested in the Nigerian state rather than the government of the federation. Again, on the surface there is a lot of cheer in terms of what the bill seeks to achieve but it appears that it is still frosty and laden with inconsistent provisions which I believe, depending on how we chose to approach the bill we will have to deal with going forward. I will touch on some that I have observed on the broad principles without going into specific provisions.
BAR AGAINST ATTACHMENT
I will also like to make a few comments on the provisions, which has the implied effect of creating quasi ouster clauses and simply put they have the implication of acting as a bar against execution or attachment of the property of certain agencies created under the Bill. This is in my view not a right way to go in a democratic setting. This is the kind of provisions, which will be seen by the courts as an affront on the rights of litigants and a violation of citizens right to fair hearing and remedy.
Petroleum Host Community Fund
The provision made for the Petroleum Host Community Fund, is in my mind one of the areas we must carefully deliberate and resolve. We must ensure that the framework of any of such fund is a creation of deliberate thought looking into the future in a manner that ensures the unity of this country and the prosperity of the entire nation. Arguably the Fund is one of the hot button issues of this bill, which we must deliberate with the right emotion. I support giving opportunity to our people to participate in the fortunes of the oil industry but we must do so in a sustainable and equitable manner.
I believe that the host communities need better treatment. No doubt, but today there is an apparent lack of clarity in the structure for control and management of the fund. Again there is yet to be established the relationship between the fund as envisages and such other vehicles, which are already running like the NDDC in the federal and their state counterparts. I say this in view of the fact that the fund and the overarching objective of the other schemes are one and the same. This is not made easier by the provision giving powers to the minister to under section 118 (6) to make regulations on entitlements, governance and management structure with respect to the fund.
FUNDING OF NEW ENTITITES AND GOVERNMENT CONTROL
There is consensus for the unbundling of NNPC into the National Oil Company (NOC) but stones are being thrown at the idea of the new company being run by government officials as very unsatisfactory. Again the funding model for these key institutions has been criticized and the widely held opinion is for them to be independently funded through a surcharge on per barrel basis in other to insulate them from too much interference.
PIB AND OTHER SECTORS OF THE ECONOMY
The Nigerian economy relies hugely on the petroleum industry. If we get the PIB right we stand a chance of giving a fresh impetus to the economy as a whole. We can only do this if we are able to check the huge leakages in the sector that has denied Nigeria a sizable vault of capital that could have helped renew and expand our infrastructural base, stimulate local content and value chain additions.
If we fail, we perpetuate the opacity in the industry and its attendant consequences which including putting ourselves in the perilous position of escalating the possibility of political and social instability due to unemployment, weak regulation and greed.
THE WAY FORWARD
in conclusion therefore, it is imperative to bring closure to all matters that have significant impact on investment within the framework of this bill. This is so because the world will not wait for us to make a decision. We leave in a world were capital mobility is at a pace never seen before. This is through both for local investors as well as foreign investment.
Our decisions must take into cognizance the need to stabilize the market and drive investment again. Not necessarily to suit any particular segment' of the market but to ensure that we do not unnecessarily expand the period of uncertainty through inaction. I am alive to the fact that some of the issues here may require greater consultation, participation, and deliberation and may even be based on the review or performance of other aspects of the reform envisaged under the bill. It is my considered view that in such situations we can still bring closure and stability to the market by agreeing to stay action until such other time as may be agreed to have the matter finally dealt with.
I will expect that we can enshrine in the bill for instance a matter dealing with licensing which may not have been dealt with fully, that such matter or some aspects of it remain inchoate for the next 10 years or 5 years or such other time that guarantees the market some continuity.
Again, we can enshrine sunshine provisions, which act like a checkpoint mechanism on some of the critical reform areas, by providing that such provisions shall stand to be reviewed or approved for a further period of time at the expiration of a number of years. An example will be, in cases where there exists little critical operational comparison upon which experiential understanding of the outcome could be based.
The emphasis here is that this bill or some form of it need to have been passed yesterday. However, the needful must be done. So long as we bear Nigeria in mind as a strong and united country for all of us the needful to me will be thoroughness, trust, deliberateness, exhaustiveness that is forward looking, we will deliver to Nigerian a new and improved less corrupt oil industry built for Nigeria of the 21st century.
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