Until Nigeria reviews its strategies and policies relating to the petroleum industry, focusing more on increased domestic consumption of its oil and gas resources and development of the midstream sector of the industry, the industry would continue to make limited contributions to Nigeria’s economic growth, while its impact would always be limited.
This was the view of an energy expert and Senior Partner, Energy & Commercial Contracts of Primera Africa Legal, Mr. Israel Aye, in a presentation to journalists and civil society organizations at a virtual workshop, weekend, on the Petroleum Industry Bill (PIB).
In the presentation titled: Restructuring the Petroleum Industry – Making Hydrocarbon Work For Nigerians,’ Aye bemoaned the fact that over the years, the policy and legislative framework of the petroleum industry had been more export focused and had made little impact to Nigeria’s economic growth and development.
Aye called on the Federal Government to focus more on utilizing the immense opportunities in the midstream sector of the Nigerian petroleum industry to grow the economy of the country.
He advised that the government should exploit the petroleum industry, using it as a stimulant or catalyst to develop the country’s economy.
According to him, efforts should be directed at encouraging increased domestic utilization of petroleum resources and it derivatives, rather than focusing solely on export of the commodity and import of petroleum products.
He further advocated that priority be given to resource governance, as it is an effective means to eradicate poverty, especially as strong resource governance helps mitigate environmental hazards and also safeguard the future of a country.
He said: “Dividends from resource wealth can offer a path out of poverty; but without strong institutions and policies, countries are more likely to fall victim to the ‘resource curse’. The results have become apparent as commodity booms have not contributed to growth and employment creation in non-extractive sectors.
Resource governance matters for the people who live close to extraction sites. Competent management of oil, gas and mining can reduce environmental impact. In countries with poor resource governance, companies are lax in efforts to protect communities and the environment.”
Furthermore, Aye argued that fiscal policy on oil and gas must distinctly provide for upstream, midstream and downstream, adding that these elements of the value chain must be clearly demarcated to allow for broader participation of different players.
“And where vertical integration is required, it must not be at the expense of the state. For example, Offshore Gas Gathering System (OGGS) is an example of state participation in subsidizing gas for exports. Lack of clear definition of upstream petroleum operations, midstream and downstream has been a huge burden on the Nigerian state,” he maintained.
He, therefore, called for a speedy passage of the Petroleum Industry Bill (PIB), noting that the delay in passage of the Bill had contributed in no small measure in slowing down investments in the Nigerian petroleum, as well as hindering the development of the country’s economy.
According to him, the country had lost billions as a result of the delay, adding that the opportunity cost of the delay in terms of industry, infrastructure and value addition to the economy was too valued is too high to continue to toy with the passage of the bill.
He said: “We believe that this time around, the Ninth National Assembly will break the jinx and should be able to pass the Petroleum Industry Bill. Struggling to pay a legislative Bill for 20 years is a shame to us all.”