The coming of the Petroleum Industry Act drew the ire of the host communities and other stakeholders. Joe Nwakwue, a policy analyst and immediate past Chairman, Society of Petroleum Engineers Nigeria Council, in this interview with EHIME ALEX, says there is more to gain in the Petroleum Industry Act than regret
What are your thoughts about the Petroleum Industry Bill that was recently signed into law by President Muhammadu Buhari?
I am elated at the passage and assent. I congratulate Nigeria, specifically the President, the Minister of State for Petroleum, and the National Assembly. This is a major positive step for our industry and country, as it provides an opportunity to reset the industry for growth and value addition. While there may be some misgivings about the act, we must recognise that there are no perfect laws. This act is a vast improvement from where we are today. However, the real work begins now, as implementation will be much more taxing and crucial. A good law, poorly implemented, is actually not much better than a bad law. I believe that this act, if implemented well, will move the industry along the path of growth and value addition, while addressing most contemporary challenges of emission reduction, host community agitation, environmental stewardship, cost control, investment efficiency and overall sustainability
The Petroleum Industry Act has been greeted with mixed reactions. What, in your view, are the major issues of concern?
It really depends on perspectives and level of knowledge of the issues. Significant doses of politics and uninformed grandstanding have been injected into the debate. Of course, there are areas I wish we handled differently. Note that it is not about any one person, but about a country and its peoples. I still think the role of the Nigerian National Petroleum Corporation has not been sufficiently addressed and could pose challenges in the future. I would have gone for unbundling and privatisation of the unbundled entities. I also have a preference for a single regulator as against two provided in the act. I do not see that the role separation and clarity of objective was quite achieved. For instance, fund management (in the Mid/Downstream Infrastructure Fund) is not a regulatory function and should have been placed with the National Stripper Well Association. Best practise is that non-regulatory functions should not be handed to regulators.
On the flip side, there are lots of positives. For the first time, we have a clear framework for delivering benefits to the actual oil-producing communities. We now have an attractive and competitive fiscal framework, an enhanced regulatory framework that provides for and includes economic regulation, a revamped industry governance, institutional and administration framework, greater focus on midstream development especially around gas, etc.
What are your suggestions on how those issues should be handled, as stakeholders look forward to the implementation of the act?
The act has given the minister and the regulators sufficient latitude to implement its provisions. I expect them to do what is in the best interest of the industry and country. Definitely, amendments would be made in time to address specific challenges.
How long do you think it will take to really clear up the mess in the Nigerian oil and gas industry, and why?
It will take some time because there are some challenges, but this is a good opportunity to actually develop an oil and gas industry. We didn’t quite have one. What we have always had is an extractive industry with minimal value addition and capture. This explains why sectoral contribution to Gross Domestic Product is 8.5 per cent, even as contribution to revenue is about 70 per cent. The PIA presents an opportunity to change that narrative. It is generally believed that sectoral contribution could rise to 15 per cent with the PIA.
Let’s look at the PIA’s key objective, which is to overhaul and transform the oil and gas industry. What do you foresee will constitute bottlenecks to the achievement of this objective?
The most likely challenge I see is poor implementation of the PIA itself. There are many reasons that could happen; hijack of the implementation process by special interests, incompetence, etc. One hopes that we are able to faithfully implement the law with its objectives in constant view.
A steering committee has been set up to work towards the implementation of the act with a 12-month mandate. How achievable do you think this will be?
It is very achievable. I imagine much of the transitioning activities would have been accomplished before the one-year mandate is over. No question, implementation will still be ongoing post their one-year mandate.
What is your advice to the steering committee? What should it prioritise?
Change is typically painful and there would always be some friction. My advice is that they should develop a detailed roadmap for both the transition period and post-transition period and carry along critical stakeholders as they implement. The key to successful implementation would be consultation, communication and collaboration. Implementation should look beyond the brick and mortar issues; the “soft issues” such as capacity building should never be overlooked. They will determine the long-term success of the reforms.
As we hope to see investment opportunities opening up in the oil and gas sector, what other things would you like to suggest?
As investments flow in, I hope we will be disciplined enough to apply proceeds to unlock value across the entire petroleum and related value chain and diversify across the other sectors of the economy – what I call “diversification within and without.” We also should focus on capacity growth (human and otherwise) and sustained increase in national content.
