PIB passage only remedy for recession, militancy – Egbogah
Dr. Emmanuel Egbogah, a former Special Adviser to late President Umaru Musa Yar’ adua on Petroleum Matters, who pioneered the draft of the Petroleum Industry Bill (PIB) and the Amnesty Programme, says in this interaction that passing the PIB will be the most important thing this government can do to get Nigeria out of recession and end militancy. Excerpts:
What is your assessment of the performance of the petroleum industry under the present government?
We know that events in the industry have not been happy events because we are in recession and the government days ago put out plans to get us out of recession which is quite commendable but we are not yet out of the woods. The problem is still there in the industry and I do hope they don’t just put out artificial plans but passing the Petroleum Industry Bill (PIB) will be the most important thing that they can do to even get us out of the trouble we are in now because we have all the ingredients that will change everything there.
At the present, they are doing something but more needs to be done; the first attention should be on getting the PIB passed into law.
You played a key role in designing the amnesty programme that brought down militancy, how did you do it?
What I designed which I gave to late President Umar Musa Yar’adua was the basis for the amnesty programme because we designed how government and the host communities will share in the business of oil and gas in Nigeria; that was why I proposed the 10 per cent that will be given to the host communities so that we and them will be partners in the business.
In fact, if we were sharing in this we will have no problem. You can’t go into militancy to destroy that which is your own. And I had a proviso there that this will be the case and if there is any act of vandalism or militancy that will lead to disruption of oil production; they will lose their own share of the 10 per cent for the whole year.
It is an incentive for them to protect the oil which is going to be yielding a lot of dividends to them and that was the basis of the amnesty programme and that was enshrined in the PIB.
So, you had the amnesty, now we are going to do all these things and the law is going to be passed for this to become effective which we have in the PIB. We submitted the PIB in July of 2008 and this is January 2017 and that bill has not been passed into law. So, many people will be surprised why the resurgence in militancy because what they have been promised is not yet coming. When we did the amnesty programme militancy was so much that Nigeria was down to about 800,000 barrels of oil per day but after we announced the amnesty programme and the plan of this 10 per cent for the host and impacted communities, everything stopped, no hostilities and production went back to 2.5/2.6 million barrels per day and we were doing very well. But now we see new militants like Avengers and the rest, they are all as a result of what we promised them that has not come through and there is no talk about it because the PIB has not been passed.
Is there a way the present government can get a solution outside of the passage of the PIB in dealing directly with the Niger Delta militancy?
In the PIB, if you understand it, we made plans about the reform in the oil industry to have a law to back it up, which is the PIB; it is the legal and regulatory framework which must be passed into law to back up what we said we will do.
What about the suggestion by the current minister of state for petroleum that the PIB was too big and needed to be divided into three or four and passed in bits?
I don’t want to criticize the minister of state. We wrote the bill, when we wrote it there were 36 of us selected from every part of the economy in Nigeria so that we know exactly what we were doing. One person now comes and tells you it is too bulky because they don’t understand what is there. All the changes that are required are there, I will say it is big because 16 laws were encapsulated into one and it captured everything.
To say that it is too bulky is the fact that they don’t understand what it is because if they understand and see that everything has been represented there that will make things work. We covered every aspect of NNPC becoming a commercial entity and the laws to back them up, that is why it is big. It is big and fully comprehensive and representative of what will back up the reforms.
During your time, it was obvious the National Assembly did not buy the idea of quick passage of the bill, why was that so?
No, no! You said they did not buy; they couldn’t buy into what they didn’t understand. First you need to pass what you understand. That time I made presentations to them and told them if you understand what is here it is in the best interest of Nigeria. We said the Nigerian oil industry has not grown because there are no proper laws to facilitate its growth. I gave the case about cash calls every year. Government doesn’t have money because you have joint ventures and we own 60 per cent, therefore you have to pay 60 per cent of everything but in that bill we designed that we need to get out of it because the government has never had money to pay their own share.
So, we need to do something else and form what I call Incorporated Joint Venture (IJV) which means these businesses will be going on as companies operating like Shell, Exxon-like any other company. If they need money they go to the capital market, borrow money and do the project they need to do.
In the past, the oil companies came up and said, this year we need $10 billion to execute exploration, production and others and the National Assembly says we have no money we can find $3 billion for you to manage. You don’t manage; you have to do what is planned. As a result of that they have never been able to do any full programme for growth of our industry. Our reserves are not being grown because there is no exploration going on. So, I said we should eliminate this so that the companies can run with their own money borrowed from the capital market and the government just gets its profit so that it can have money to put into other things the country needs to do but that is still not done.
Why has it not been done?
The IJV is a company like Shell, you own 60 per cent of it and they own 40. You are not to contribute money as capital but the money to do your project and you only share your profit on the 60:40 basis, that is how every company is run.
In fact, because this thing has not been done, in August last year I wrote a letter to the president complaining that this has not been done, that time we were already owing the oil companies about $6.25 billion and I said it was not necessary at all. This is what we can do not to be in this bad position.
NNPC in December said it had exited JV cash call payment to IOCs, how did you receive that?
They say they have exited, I understand the meaning of joint venture and non-joint venture. I do not understand what they said they have exited because if they have exited then they would have formed what I am talking about. They said they have exited but we still don’t have IJV. Tomorrow they still tell you they are owing this money on this.