Experts’ pessimism over PIA

The long-awaited signing into law of Nigeria’s Petroleum Industry Bill came last August, but without the expected letters. With agitations dogging the new act, experts doubt that investors will find it attractive, writes EHIME ALEX

The Petroleum Industry Act, which provides legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities and related matters, has continued to draw the attention of stakeholders across board, since President Muhammadu Buhari assented to it on August 16, 2021.

At a webinar on Thursday organised by ThistlePraxis Consulting Limited, on the theme, ‘Petroleum Industry Act: Implications for Businesses, Local Communities and Sustainable Development,’ experts took turn to highlight the issues around the PIA and its implication for the Nigerian economy.

Challenges

The challenges noted include infrastructure decay, weak policies and institutional framework, unfriendly business environment, insecurity in the Niger Delta and other concerns that might hinder effective implementation of the PIA.

The Managing Director/Chief Executive Officer, 11Plc (formerly Mobil Oil Nigeria Plc), Mr Adetunji Oyebanji, said there was need to have proper corporate governance in whatever the country is doing, as it could help to sniff out good investors from the bad ones.

Oyebanji noted that one very big challenge in the industry had been the issue of liberalising the petroleum sector.

“There has been absolutely no shortage of diesel in the Nigerian market for a very long time. Since the price was liberalised, the product certainly has become available, though it is more expensive today, at least you are able to get it when you need it.”

According to him, the fact that PIA has now liberalised the price of gasoline, making it subject to market forces, could encourage a lot of people along the value chain.

The oil magnate stressed that in the past, people were reluctant to invest in the sector, simply because the prices were set by the government and in some cases were not set at the level that allows investors to recover their cost, let alone make returns on investment.

Nigeria has suffered a lot over the years on the fact that there was little or no private investment, as the government owned all the major refineries, he said.

“The fact that this act now encourages investment in refining, definitely it will be something that will lead to creating more jobs for Nigerians, reducing the pressure on the naira and providing more local refineries,” he added.

Urging the country to focus on exploring the vast gas resources it has to attract investors, Oyebanji disclosed that stakeholders were concerned about the implementation of the PIA by the committee set up for the task.

“They need to consult very closely with active players in the industry, so that at the end of the day, the guidelines and directives do not end up being counter-productive,” he added.

On his part, the Visiting Professor, London School of Economics, Kenneth Amaeshi, said the assumption that capital would flow into Nigeria because of the PIA should be subject to critique.

He noted that international businesses tend to gravitate to the kind of institutional environment that fits their culture and strategies.

His words, “So, if you are in a weak environment in the sense that you do not have a strong government, market and civil society, you are unlikely to attract investments in those kinds of situations.”

Amaeshi said the business environment in the Niger Delta, where Nigeria currently has its oil, was not encouraging. “So, if the institutional arrangement is not good enough, we may not attract the investors. We need to have an ecosystem that supports it.”

Speaking on gas sustainability, Amaeshi added that the choices made would have a great consequence. “As much as we talk about the benefits, let us also highlight the consequences, so that people can make much more informed decisions.”

The bright side

Partner, Energy and Projects at Templars, Dayo Okusami, argued that despite the physical incentive the PIA presents, Nigeria still had a fragmented gas infrastructure.

“What the PIA has done, including allowing people to go into infrastructure development and other numerous physical incentives, brings investment. For me, the physical incentive for the gas is where the future of the country is and that is the most prominent thing,” he said.

Despite the clamour for renewable energy, he believes that the world will still need the black gold for a long time to come.

“We are moving to solar; but let us be realistic that crude oil and gas are not going anywhere in a long time. Nigeria is a gas country, and we must look for innovation to use the gas we have and the money we can make from it to drive sustainability. For me the PIA is more of the physical incentive that will lead Nigeria to become one of the richest countries in the world if it is properly managed.”

According to the Vice President, Association of Sustainability Professionals of Nigeria, Ini Abimbola, sustainable development talks about where the world is and what is happening within the country.

“Are we in line?” she queried.

Abimbola, who said she agreed that it would take years for Nigeria to really come up and meet other country in moving from internal combustion engine to electrical, added, “When the issue of sustainable development is mentioned, we should go beyond the sustainability of the oil and gas sector to talk about the issues of the development of the country.”