New (Production Sharing Contract) Act: A land-mark, But more to be done

separate but complimentary and non- antagonistic arms of government. However there is more to be done. This new amendment should not be one-off passing fad but enduring process to reinvent the oil and gas sector. Nigeria must urgently erase the “black hole” perception of our oil and gas industry to realize the benefits of expected improved revenue from the amended Act.

There is the need for more transparency and accountability in the oil and gas sector as envisaged by the Petroleum Industry Bill ( PIB) that is still gathering dust. The Nigerian National Petroleum Corporation (NNPC) namely, the Nigerian Petroleum Assets Management Company Limited (NPAMC), the National Oil Company, the National Gas Company (NGC) must operate within the framework of the Fiscal Responsibility Act (FRA) and Public Procurement unbundle the NNPC now, make taxable refineries work, create sustainable taxable decent jobs.

Future of Nigeria lies in diversified value adding oil and gas sector not in extraction and export of crude oil no matter the percentage of government take in percentage tax. Sustainable fiscal regime that would benefit Nigeria must be based on value addition and production in oil and gas sector not necessarily tax on oil extraction. Nigeria must learn from other oil producing countries that have maximized national benefits from the entire oil and gas value chains through enhanced national revenues, transparency and accountability, creation of sustainable decent jobs and growth of national domestic product. This underscores the need for government to revisit the Petroleum Industry Bill (PIB). PIB represents a great opportunity for Nigeria to ensure a solid legislative foundation on which the future of oil and gas operations in the country will rest.

Petroleum is central to the nation’s economy, accounting for 40% of GDP and 80% of Government revenue. Nigeria is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves. However the story is entirely different when you look at per capita petroleum reserves. Even at that, the benefit of this resource is largely felt in the negative by the Nigerian people.

Living conditions are generally poor with an average life expectancy of 47 years. We are 153rd out of 186 countries in the UN Human Development Index (HDI) behind such countries as Ghana and Equitorial Guinea. The PIB therefore presents an opportunity to make the petroleum resource with which we have been endowed work for and benefit the Nigerian people.

The PIB is meant to create a legal and regulatory framework that is 21st century compliant and engender sweeping reforms of our oil and gas sector - create new institutions to govern the operations of the industry; break the NNPC into three main companies with a fully-capitalised and profit-oriented National Oil Company; and institute a new fiscal regime amongst others. The Petroleum Act, which is the principal legislation for the industry was enacted in 1969, over 40 years ago.