By Kede Aihie

As part of reforms that make up Nigeria’s (Africa’s largest economy) Petroleum Industry Bill (PIB), the Senate has passed Petroleum Industry Governance Bill (PIGB). This is coming, almost 17 years of back and forth by politicians on reforming the state run oil company. 

Under Nigeria’s constitution, the bill will also require passage by the House of Representatives and get presidential approval, before becoming law. So, it still has some way to go as both the Senate and House of Representatives will have to harmonise their respective bills.

Petroleum Industry Governance Bill (PIGB) unbundles NNPC and proposes the creation of three new companies, namely Nigeria Petroleum Assets Management Company (NPAMC), National Petroleum Company (NPC) and the Nigeria Petroleum Liability Management Company (NPLM), with assets and liabilities of NNPC split between all three, new companies.

The PIGB bill will check minister of petroleum’s powers and does not deal with regulation. It will not unlock the billions of dollars as being speculated, as it does not deal with fiscal terms for upstream projects, which is perhaps of utmost interest to international oil firms. The host community and fiscal bill will be considered by the Senate at a later date.

According to the 191-page PIGB document, the objective is to create ‘efficient and effective governing institutions, separate roles for the petroleum industry, establish framework for the creation of commercial and profit driven petroleum entities’. This is new and positive, in terms of going operational, there is urgency and hopefully it will not linger for long, before becoming law.

What is the significance of the part bill of the wider PIB?

PIGB could be a moment of reset for oil industry, it will promote accountability and transparency; there will be opportunities for private investment (10 percent of shares of the National Petroleum Company will be divested within five years of its creation, rising to 30 percent within a decade).

The optics and narrative about Nigeria’s oil sector has been defined by corruption, underperformance and poor policy implementation. Nigeria has vast resources, vibrant young people and most importantly, huge array of human resources that is not being put to good use. This negative narrative has gone on, for too long, it must change.

The one point that will resonate with industry watchers is when the host community fund and fiscal aspect of the bill would be treated by the National Assembly in two separate segments at a later date. The fiscal bill is what will unlock the billions

Getting it right

In principle, PIGB has good intentions; hopefully, it will not be scuppered by poor implementation or sell out of Nigeria.

According to the Boston Consulting Group 2017 report, Nigeria is weak in converting wealth into well-being (the overall standard of living). It goes on to say ‘given Nigeria’s size and resources, the country should be significantly outperforming, not merely matching, its sub-Saharan peers’.

Nigeria may well take a leaf from Rwandan’s approach to governance. The Rwanda Governance Board (RGB) and Rwanda Governance Scorecard (RGS), exists to closely monitor and provide good governance guides. Performance contracts (“Imihigo” in Kinyarwanda) are contracts between the President of Rwanda and government agencies detailing what the respective institution sets itself as targets on a number of governance, justice, economic and social indicators.

The stated objective of Imihigo is to improve the speed and quality of execution of government programmes, thus making public agencies more effective. It is a means of planning to accelerate progress towards economic development and poverty reduction. Imihigo has a strong focus on results which makes it an invaluable tool in the planning, accountability and monitoring and evaluation processes

For Nigeria to make significant progress, which has been quiet slow, there must be a well thought out plan and technical competence for implementation, enforceable regulations and improvement on governance.

 

Kede Aihie is Founder/Chairman Nigeria Magazine Ltd