LCCI laments FG inability to tap into $75b African Oil and Gas Investment

The Lagos Chamber of Commerce and Industry (LCCI) recently expressed worry over the inability of the federal government to attract reasonable investment based on take $75billion African oil and gas investment framework, with a pitiable 4percent performance in the past four years.

It identified non-passage of the Petroleum Industry Bill (PIB) by the Nigerian Government as a major factor which the group argue will continued to impact the country negatively, especially as it makes the country’s oil and gas space less attractive to the investors.

LCCI Director General, Dr Muda Yusuf, in a document, said Nigeria’s economy can do much better given the volume of crude production embarked upon annually, and urged the relevant authorities to be proactive.

He said, “The oil and gas industry is a major contributor to the Nigerian economy and government revenue. Nigeria, with the largest oil and gas reserves in Africa, has huge untapped potential to achieve its economic development goals including gas-to-power ambitions.

“However, despite having the largest reserves in Africa, Nigeria only received 4% ($3 billion) of $75 billion invested in the continent between 2015-19. This underscores the need to create a competitive environment to attract investment to the oil and gas sector.

The LCCI notes that unless the relevant agencies restrategize in the areas of critical operational, administrative, structural and marketing retooling, more so at a time the global economy is faced with the worsening challenges  of COVID-19, future prospects could be more adversely affected.

It further urged the federal government take urgent steps to secure the viability of ongoing and future projects and provide the right market curve through fierce and cutting edge competitive tools in an already shrinking and scarce global oil and gas investment market.

To achieve above, Yusuf further advocated modern legislative tools necessary to strike the right chord and global crude investment dynamics. These the group argues will promote redemptive actions that will insulate Nigeria’s petroleum industry general and specific in-country challenges, including Joint Venture Funding and Arrears, regulatory overlaps, insecurity and other inadequate infrastructures for domestic gas development.

“The fundamental shift in global energy markets driven by advances in unlocking unconventional petroleum resources and increasing traction for cleaner energy sources has resulted in a global oversupply of crude oil, putting pressure on prices.

“The Lagos Chamber of Commerce & Industry is fully supportive of the Government’s efforts to drive industry reform through a new Petroleum Industry Bill.

“The key objectives of the PIB 2020, amongst many others, including reforming the institutional and fiscal framework, developing Nigeria’s gas sector further, creating a framework to support the development of host communities and foster sustainable prosperity, and further bringing in new investments to grow the country’s production capacity.”

The document further states: “The current Bill marks positive steps toward achieving its stated goals. The Bill mandates that ministries, departments, and agencies to consult with the Commission prior to introducing overlapping legislation which will impact the oil and gas industry.

“It also allows for consultation with industry stakeholders before making regulations. The commercialisation of NNPC aims to improve business efficiency and effectiveness, especially in relation to Joint Venture activities.

While acknowledging certain local improvements in the marketing dynamics to shore up our competitiveness in the global crude stage, Yusuf however identified some laid-back instances in the PIB Bill, which he suggests is capable of creating value erosion in defined markets, and which he said must be urgently reviewed and addressed, for Nigeria to be able to engage more profitably.

“However, some of these improvements appear insufficient to deliver the true value to Nigeria, which the Bill aims to achieve. Some provisions in the bill could adversely affect the growth of the industry and the overall economy.

“We firmly believe that based on constructive co-operation between the Nigerian Government and other stakeholders, Host Communities and Industry, the objectives of reform can be successfully met.”

“The PIB should seek to protect existing investments from value erosion. The assets and operations from these investments are the foundation upon which new projects can be built. It is, therefore, crucial that projects already underway be able to maintain the conditions under which they were designed and approved.

“Doing so will incentivise the launch of new projects; grow production and revenue for the government and stakeholders, thereby guaranteeing long term sustainability of our oil and gas industry.”

The LCCI boss said specific areas that need to be amended in the PIB includes the Preservation of base business &rights (Sections 92.3, 92.4, 93, 302.3, 311.9.c, 317.4, Third Schedule), Deepwater (Section 267, Seventh Schedule), Segregation of Upstream deemed assets (Sections 302.2 and 317.4), Capital allowances and deductions (263, Fifth Schedule), Domestic Gas (Sections 110, 167, 168) and Administrative burden of compliance; adding:

“The Lagos Chamber urges the National Assembly to put in place a law that will promote a more effective and efficient governance, administration, host community development and fiscal framework for the petroleum industry. A competitive Bill would help preserve the integrity of the existing projects, whilst also encouraging future growth of production and make Nigeria an investment destination of choice.”

Legislators in the Nigerian Senate have pledged to break the “jinx” around the Petroleum Industry Bill (PIB) and bring about reforms in the oil sector.

It will be recalled that the PIB is one of the longest inconclusive bills in the annals of the Nigerian legislative business, which has suffered several reviews, and about the most controversial piece of legislative document since independence in 1960.

A fresh a new version of the PIB comes was submitted just before the end of last year, and was touted as holding reforms prospects for the Nigerian oil industry.

As usual, legislators in both the Nigerian Senate and the House of Representatives have pledged to break the “jinx” around the Petroleum Industry Bill (PIB) and bring about reforms in the oil sector.

Senate President, Ahmad Lawan, commenting on the latest development said the senate will “work with every stakeholder” and “provide the oil industry legislation that will make it more effective and efficient at the end of the day”.

Also, Speaker of the House of Representatives, Femi Gbajabiamila said both houses will work with the relevant authorities to pass the PIB into law within the shortest possible time. It is believed that the two lawmakers have met with the Nigerian Minister of State for Petroleum Resources, Timipre Sylva and the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Engr. Mele Kyari.

President Muhammadu Buhari is the Minister of Petroleum Resources. A former minister of petroleum, President Buhari has witnessed the steady balkanization of the Nigerian petroleum industry which is believed to have run for several years on deficit, and the non passage of the PIB.

He inherited the hydra headed PIB upon assumption of office in 2015, while its passage and the fate of the petroleum industry together, has remained an intractable embarrassment.

When President Buhari recently resubmitted the latest PIB draft, Lawan said. “We want to see an oil industry in Nigeria that is properly regulated, an oil industry that not only sustains the investment that we have but attracts even more investment, an oil industry that is very competitive.”

This is even as Gbajabiamila said the House of Representatives has assembled a “crack team of legislators” to look into the Bill, which was submitted alongside the 2021 national budget.

Analysts believe that the need to sustain certain official bureaucracies and sustain corruption have been responsible for the non passage of the PIB. The PIB which has been under discussion in various forms since 2007 has suffered several legislative ambush and presidential rejection.

Interestingly, the current Houses of Parliament led by Lawal and Gbajabiamila passed a version of the bill, the Petroleum Industry Governance Bill (PIGB) in 2018, but President Buhari was believed to have declined ascent until it ran out of time.

Though long in the mills, the bill has not been made public, and is believed to have circulated within the limited circle of official political office holders, like a stolen diamond is closely guarded by the lords of the underworld.

Those who have the privilege of seeing the document report that the bill advocated the unbundling of some agencies in the industry, and also mapped out outright scrapping of others.