Petroleum Industry Bill

Businessday highlights one of the major problems associated with the continued delay of the passage of the PIB – the deferral of investment decision making for gas development projects. In addition, the article suggests that the proposed fiscal terms for gas will not incentivise oil producing companies to develop gas projects.

A list of the PIB committee members may be found in the Leadership.

The Petroleum Industry Bill successfully passed through the second reading phase in the House of Representatives. As reported by Channels, there was no dissenting voice when the vote was called. The House has constituted a 23 man Special Ad hoc Committee led by Ishaka Bawa, the Chief Whip of the House to review the Bill in detail. We shall provide you with a list of the other members of the Ad hoc Committee as we receive them.

Nigeria’s house of representatives commenced debates on the General Principles of the PIB yesterday. The Bill’s second reading, which is usually a perfunctory stage in the legislative process, has been characterised by very robust debates on certain key terms of the Bill. Some of the issues raised related to the establishment of the Petroleum Host Communities Fund and the discretionary powers of the Minister. The debate continues in the House of Representatives today. See the reports in the Tribune and AfriqueJet.

The effective restructuring of the Nigerian National Petroleum Corporation (NNPC) is one of the major objectives of the PIB. In an indept analysis of the provisions of the current PIB on this issue, the Revenue Watch Institute explains why the current PIB has fallen short of achieving this goal.

 

A recent article by The Economist expresses concerns about the state of the Nigerian oil and gas industry highlighting issues such as oil theft, regulatory uncertainties, moribund refineries, environmental degradation, pervading corruption and lack of transparency of the national oil company, the Nigerian National Petroleum Corporation (NNPC), as some of the problems plaguing Africa’s biggest oil industry. The article expresses doubtful hope that the current administration can make a difference under the PIB.

The renowned Professor of Economics, Paul Collier writes in Businessday on what the PIB gets right. The focus of the short article is on the balance between taxes and royalties under the PIB, with Collier suggesting that the greater emphasis on royalties is better as it provides fewer opportunities for companies to disguise taxable profits. It should be noted that the current draft of the PIB does not indicate the royalty regime at all, but leaves it for the Minister to determine by regulations. Prof. Collier’s comments are likely to be based on the last exposure drafts of the proposed royalty regime. Nevertheless the article is worth reading for an understanding of the dynamics surrounding the royalty/tax debates in Nigeria’s petroleum fiscal reform initiatives.

Mr. Pedro Van Meurs, an experienced consultant on petroleum matters has just released his commentary to the PIB 2012 which may be found here. Mr. Van Meurs was a consultant to the Inter-Agency Team which worked on a previous draft of the PIB between 2008-2010.

The Washington Post reports the comments of the British Business Secretary, Vince Cable, on the Petroleum Industry Bill at a business roundtable held on Monday, 10th of October in Lagos. His comments appear to contrast with those of UK diplomats reported in the Leadership.

The Osun Defender highlights the geopolitical dynamics in the National Assembly regarding the passage of the Petroleum Industry Bill.