Solution to petroleum industry quagmire remains reforms

The crash of global.oil prices in the Advent of the coronavirus pandemic has on e again brought to the fore, the compelling need to update outdated and obsolete laws regulating the oil and gas in Nigeria by engaging a holistic reform of the sector if the nation’s economic lifewire is not to be denied the much needed oxygen to survive, while the country derives maximum economic, and development benefits from the petroleum sector. 

For decades, successive administrations have turned a blind eye to the inadequacies in the sector and have continued to play politics and  postpone promulgating new legislation, and regulations to guide the operations of the petroleum sector.

Nigeria still relies on an obsolete Petroleum Act  to regulate a sector that yields the mist benefits in terms of revenue, while a critical legislation like the Petroleum Industry Bill (PIB) and the recent Petroleum Industry Governance Bill (PIGB) remains on the shelf gathering dust.

The country only has huge and numerous gains to make if the PIGB is passed into law by the National Assembly and assented to by President Muhammadu Buhari, especially if every consideration of sensationalism, sectionalism, ethnic bigotry and political shrewdness is put aside and not above compelling national interests.

Indeed, every section of the Nigerian economy will benefit if the petroleum sector is reformed by way of new regulatory framework, whether the host communities, the Niger Delta Development Commission (NDDC), the economy, local entrepreneurs, manufacturers and industry players.

In truth, every Nigerian will enjoy the benefits of the proposed reforms, if revenue from oil quadruple, transparency is introduced and the secrecy surrounding the operations of the sector is removed and industry players are sourced through a transparent process. 

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When these are achieved, indigenes from oil-producing communities across the country and certainly, every Nigerian, whether from the north, east, west or south will become real stakeholders in the industry, instead of the existing practice where every administration exploits existing regulations to dole out patronage to cronies and allies..

Interestingly while government policies and weak laws continue to be the albatross of the oil sector, experts have continued to reports so far paint a gloomy picture of the huge losses recorded in the petroleum industry that boggles the mind.

For instance, an industry player, Israel Aye, at a recent digital conferencing held for journalists by Foster, alluded that the country lost an aggregate $150 billion in unearned revenue and new investments in the last 10 years.

Aye, a senior partner at Energy and Commercial Contracts, said to address the missed opportunities, Nigeria must grow it’s oil reserves and increase production capacity, reward through incentives, outcomes and not efforts by industry players, remove third party barriers, and ensure a level playing field across the oil and gas value chain.

He noted that for Nigeria and Nigerians to enjoy the maximum benefits of oil as citizens of other oil-producing nation’s are doing, then the country, most especially, the government must aim at unit cost excellence, move towards full drill or drop philosophy in the upstream licensing process and ensure a market driven downstream sector.

“Similarly, the federal government must redesign the upstream/midstream sector to focus on more domestic utilization and indigenous participation in terms of local content, and since energy consumption (including oil and gas) is what fuels economies, our oil and gas policies and laws should, therefore, provide the framework to achieve that.

“Government must deregulate the downstream and move from price control to price regulation to serve as incentive for sustainable investment and development in the downstream,” he added.

According to him, since the world is now a global village, Nigeria’s oil and gas outlook must always anticipate trends and events in a very competitive global market.