PIB’s tortuous journey

Frequent break down of Nigeria’s four refineries in the last two decades as a result of neglect, general inefficiencies and outright sabotage meant that Nigeria paid oil marketers subsidy to refined import products and sell at a government fixed price inside the country. A joint Senate committee had in 2016 probed the subsidy regime from 2006 to 2015 and found that the country spent N10 trillion as subsidy paid to NNPC and private oil marketers.

Streams of reports and audits by government agencies and governmentappointed auditors documented a dismal legacy of lost revenues, inefficiency and corruption that trailed the management of the subsidy regime but little was done to punish those found culpable. In January 2012, President Goodluck Jonathan announced the stoppage of subsidy payment but the spontaneous social and political upheavals that greeted the removal prompted the House of Representatives in January 2012 to set up an Ad-hoc Committee headed by lawmaker Farouk Lawan to probe the subsidies. The committee’s 202 page report made far reaching findings including recommending the prosecution of many government officials and oil company executives who were found to have committed billions of Naira subsidy fraud. The committee chairman was however enmeshed in scandal where a video surfaced of him receiving bribe to exclude an oil firm’s name from the report.

Then Finance Minister Ngozi OkonjoIweala constituted a subsidy review committee chaired by Mr. Aigboje AigImoukhuede. The committee submitted its report on 13 July 2012 indicting 20 oil firms and government officials but very little has happened since then. Then came the Malam Nuhu Ribadu led Petroleum Revenue Special Task Force which chided NNPC’s practice of deducting amounts for subsidy-related expenses prior to remittance of these revenues to the Federation Account.

The Nigeria Extractive Industries Transparency Initiative (NEITI) has in the last decade published several reports that corroborated past audits: its Fiscal Allocation and Statutory Disbursement Audit 2007-2011; 2012, 2013 and 2014 Oil and Gas Audit Report, among other policy briefs also captured the malfeasance that trailed the subsidy regime. There was the February 2015 forensic audit conducted by PriceWaterHouse Coopers (PwC) on allegations of unremitted funds into the Federation Account by NNPC. The forensic audit established cases of fraud in NNPC’s handling of subsidy. Some other audits found that certain marketers collected subsidy of billions of naira on petrol that from records available were not supplied.

Most of the officials indicted in these reports are either walking freely or have taken up higher jobs in government.

According to current Minister of State for Petroleum Resources Mr Ibe Kachikwu, over N1trillion was spent as subsidy on fuel yearly. Had these subsidy bills been properly channelled, it could have financed the entire investment required to build refineries for the country or even achieve the Vision 20:2020 target of 50 per cent national refining capacity of crude oil produced in Nigeria. It could have stimulated employment and economic growth and ensured significant reduction in the federation’s foreign exchange expenditure for petrol imports.

In January 2016 the Buhari Administration stopped subsidy payments to oil marketers, who then stopped importing fuel and left NNPC to do the task alone. Subsidy is now replaced by NNPC making huge losses to import fuel and sell at controlled prices, to the tune of hundreds of billions of naira. Nigeria has since the return to democratic rule in 1999 been on a perpetual voyage with the Petroleum Industry Bill (PIB). The journey began 18 years ago when President Olusegun Obasanjo inaugurated the Oil and Gas Reform Committee (OGRC) on 24 April 2000. Four years after, the committee produced the National Oil and Gas Policy (NOGP).

On 21 June 2005, the government constituted the Oil and Gas Implementation Committee (OGIC) to develop strategies for the implementation of the policy documents developed earlier by NOGP. However, a draft law was not submitted to the National Assembly before the Obasanjo administration’s tenure ended in 2007. President Umaru Yar’Adua approved the NOGP on 5 September 2007. A draft bill was presented to the 6th National Assembly in September 2008. But the bill stalled over disagreements on the sharing of oil profit among the IOCs, host communities and the federation.

Four years later, the process started again. In January 2012, then president Goodluck Jonathan set up a special task force to fast-track the passage of the PIB. In July 2012, the committee’s report was again submitted to the National Assembly after approval by the Federal Executive Council. But this time, disagreements over the provisions of the bill yielded dierent versions of the same bill representing dierent stakeholder interests.

A revised version was again presented to the National Assembly in 2014. This “fresh version” again failed to pass, having been considered only by the House of Representatives, and at the tail end of the tenure of the 7th Assembly. The 8th Senate came in 2015 with its own version but compressed the PIB into different parts. The first part termed the Petroleum Industry Governance Bill (PIGB) scaled first reading in the Senate in April 2016. However on June 13, the Senate suspended debate on PIGB but later passed it just as its counterpart in the House of Representatives also passed it. PIGB is currently said to be undergoing a harmonisation process after which it is expected to be assented to by President Muhammadu Buhari. Time is already running out on the PIB as nothing has been heard about the remaining aspects of the bill.