PIB: Don’t threaten Nigeria, Mark warns oil firms

JULY 19, 2013 

President of the Senate, David Mark

The President of the Senate, David Mark, has warned the International Oil Companies operations in the country not to engage in making threats of closing down their operating in Nigeria because of the structure of the Petroleum Industry Bill.

Mark was reacting to threats by the IOCs of holding back investments in the oil and gas industry as well as pulling out of some of their operations in the country if the fiscal terms proposed in the draft legislation were passed by the legislature.

While declaring open the two-day public hearing on the bill on Thursday, Mark said there had been efforts to get the PIB passed into law in the last National Assembly, but the proliferation of versions of the bill had hindered its passage.

He said, “The International Oil Companies too should not take undue advantage of Nigeria. What I do not want is when people begin to threaten that if you do not do this, we will park out of Nigeria. That is not the correct thing. We are conscious of the fact that there is frustration in the oil industry. It must be a fair deal for everybody.

“We had shown understanding in the past. I recalled that when the crisis in the Niger Delta crisis was at its peak, the IOCs used that as an excuse. The security situation is not a permanent thing it is only temporary.

“We like as much as possible to fast-track this bill because it is beginning to hold up so many things. Some investors, when you talk to them, they tell you that they are waiting for the PIB to be passed; so, we are anxious to get it out of the way. It should not be a parochial issue or one section of the country versus another, everyone should be objective.”

He appealed to stakeholders to eschew sentiments as the Senate was willing to accept superior arguments.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, however, cautioned lawmakers on the implications of politicising the bill.

In her presentation, Alison-Madueke rejected the notion that the bill provided too much power for her office and that of the President, arguing that the President Goodluck Jonathan and herself would be out of office by the time the bill would come into full operation in five years’ time.

She said, “Don’t politicise and personalise the PIB. Full and efficient implementation of any law as robust as the PIB takes a number of years. You cannot pass or promulgate a bill into law overnight, and that is quite obvious.

“A complex bill that has many facets to it takes a number of years for full implementation in all its ramifications. By the time your National Oil Company is fully up, running and working seamlessly, we are talking about four, five or six years down the road.

“By the time other institutions and entities that will be established as part of the implementation of the bill are in full implementation and running as efficiently as we expect them to run, we are talking of six or seven years down the road. By that time, President Goodluck Jonathan and the Petroleum Minister, Alison-Madueke, will not be in office.

“So, this is not a bill that should be personalised or politicised. It was put forward for the benefit of the nation, the economy and all Nigerians, bearing in mind that we expect, in the next few years, to find oil or hydro-carbon in other parts of the country.”

The IOCs had faulted the provisions of the bill to regulate the fiscal regime in the oil sector.

Coming under the Oil Producers Trade Section, the companies made their submission to the Senate public hearing on the bill on Thursday, expressing concerns that the objectives set out in the proposed legislation would not be achieved by the way the bill was structured.

The Chairman, OPTS, Mr. Mark Ward, while making the presentation on behalf of the IOCs, said the PIB presented a unique opportunity to resolve many of the challenges inherent in the petroleum industry.

“However, in our view, the bill not only does not resolve these challenges, but will in fact reduce much needed investments to sustain and grow the oil and gas industry,” he said.

Ward explained that the industry was facing challenges such as illegal bunkering and sabotage; constant security threats to sites and employees; shortfalls in Joint Venture funding; lengthy delays in project and contracting approvals; lack of domestic gas infrastructure; and low domestic gas prices.

He also said the country’s was facing a continual decline in demand for crude oil in the global market given the developments in the United States of America and stiffer competitions from other oil producing countries.

Complaining of the fiscal structure of the bill, Ward said, “Fiscal regimes are royalties, taxes and incentives, and no single element should be taken in isolation when evaluating the overall impact of a country’s fiscal system on investments.”