REMARKS BY HIS EXCELLENCY, SENATOR DR IFEANYI OKOWA, GOVERNOR OF DELTA STATE, ON MONDAY, JUNE 13, 2016, AT THE NATIONAL STAKEHOLDERS’ SUMMIT ON LEGISLATIVE FRAMEWORK FOR PETROLEUM INDUSTRY REFORM IN NIGERIA AT THE INTERNATIONAL CONFERENCE CENTRE, ABUJA.
Members of the House of Representatives
It is with a deep sense of responsibility that I address you today. I must first commend the Speaker and the entire leadership of the House of Representatives for this initiative. It is not only welcome, it is very appropriate and timely. This Summit could not have come at a better time given the prevailing negative economic trends occasioned by the slump in the global price of oil, exacerbated by the exchange rate volatility and the unfortunate resumption of hostilities in the Niger Delta region.
- It goes without saying that we are at a cross roads in the history of our nation. The current economic crisis requires creative thinking, bold action, courage to do the right thing, and a willingness to sacrifice on the part of all.
- The Petroleum Industry Bill is, in my view, one of the urgent steps we need to take to put the country on the path of economic recovery. And I consider it an honour to be called upon to contribute to the library of thought and information on this all important subject. Thank you, Mr Speaker, for this honour accorded me.
- There is hardly anybody who doesn’t agree that Nigeria’s oil and gas sector is long overdue for reform. But the political will to initiate and implement the reform is another matter entirely. Indeed, it is regrettable that the Petroleum Industry Bill conceived to enable the country benefit maximally from her vast oil and gas resources has suffered inexplicable delay since it was introduced to the National Assembly in 2008. It has curiously been the subject of debates, arguments and, quite frankly, needless controversies. It is my considered view that one of the major reasons why the PIB has suffered this setback is because it was initiated and driven exclusively by the executive arm of Government.
- You may recall that the bill for the legal framework to drive the growth of Nigerian content in the petroleum industry also languished in the National Assembly for so many years until the initiative was taken over by law makers who sponsored the bill. Today we have a Nigeria Content Act and a Board superintending the development of Nigeria Content in the petroleum industry. This is the same commendable strategy that the House has adopted in the case of the PIB and it is my firm persuasion that this is not only the best approach, it is also the strategy that will yield the best result. Therefore, I wish to commend the House for exercising leadership in this matter of urgent national importance.
- I believe that the House has a more critical role to play in the making of this far reaching legislation. It is to ensure that it comes up with the “best” PIB. The best PIB is a legislation that will not only address the problems of the Nigerian petroleum industry but also take cognisance of the aspirations and needs of Nigerians, especially those from the oil producing communities. To put it succinctly, I urge the House to ensure it produces a Bill that will maximise the net economic benefit of our oil and gas resources to the nation; a Bill that will enhance the social and economic development of our people; and a Bill that will engender a peaceful operational environment in which oil companies, host communities and other stakeholders work and live in peace and harmony.
- Mr Speaker, I was an active member of the Joint Senate Committee on the Petroleum Industry Bill in the Seventh Senate. Based on my personal experience both in that Committee and as Governor of a major oil producing state, I will proffer some insights and advice as to what should be the essentials of the PIB.
- The shortcomings of the subsisting legal framework for the Nigeria oil and gas industry are well known; the industry is characterised by an outdated and inefficient legal, regulatory and institutional framework, an inadequate upstream acreage management system and a vastly regulated downstream coupled with a lopsided fiscal regime, all of which are aggravated by an opaque organisational arrangement that abhors transparency and accountability. Such a regime cannot but engender inefficiency, incompetence, and corruption.
- Distinguished guests, Nigerians want a PIB that will promote efficiency in the governance of the petroleum sector. The present institutional arrangement where there is multiplicity of regulatory agencies for the industry creates confusion for companies, investors and new entrants into the industry.
- I am aware that the fiscal terms of the PIB have remained a bone of contention. However, this honourable House owes it a duty to Nigerians to insist on new taxes and royalties that ensure that Nigeria benefits maximally from the deep water production sharing contracts, which is currently skewed in the disfavour of government. It is only in Nigeria that oil companies do not pay royalties in the deep offshore. Therefore, the House must utilise this opportunity to ensure that Nigeria derives optimum benefits in terms of enhancing government revenue especially in the deep water oil blocks. It is also imperative that the final PIB is one that is a win-win for all bearing in mind that the objective of the Bill is not to scare away investors.
- Mr. Speaker, distinguished guests, Nigerians are also looking up to you to utilise the PIB as an instrument for peace building in the Niger Delta. The most viable way of doing this is by making petroleum producing communities partners in the process of oil and gas production. The House can do this by inserting clauses in this Bill that will create a formal process of giving communities equity in the profit of companies whose oil producing licences or oil mining leases impact their location.
- Let me reiterate that this has been a component part of the PIB from inception. Therefore, I urge you to retain this peace-building instrument and enhance it in order to promote peace in the Niger Delta and ensure a peaceful environment for all petroleum operations.
- Nigerians want a PIB that will create employment for our teeming youths. As you are aware, oil and gas have been - and will remain for years to come - Nigeria’s most important non-renewable energy, contributing a lion share of the country’s foreign exchange earnings. But this critical sector only contributes about 10% of our GDP and employs only a handful of Nigerians. Therefore, as lawmakers, you and the entire leadership and Members of the House of Representatives must find creative ways of using this Bill to generate employment for our youths.
- Another issue the House must tackle is that of enhancing indigenous participation in the industry. A cursory examination of our petroleum licencing practice and acreage management system shows that a few oil companies are holding onto several large parcels of oil blocks that have remained undeveloped. The House must use the opportunity presented by the PIB to free-up these acreages and put them in the hands of Nigerian indigenous companies who have the capacity to develop them.
- Mr Speaker, honourable Members and distinguished ladies and gentlemen, let me also draw your attention to the issue of the damage that has been done to our environment and our communities by the activities of the oil and gas companies, the more prominent example being Ogoni land. This situation could have been avoided or mitigated if there were effective subsisting laws to deter oil companies from the grievous harm and destruction to the environment occasioned by their operations in the Niger Delta.
- Part of the problem is that existing legislations are not only insufficient to ensure good corporate behaviour and social responsibility, they are also patently confusing as to which agency is responsible for environmental regulation. In addition, our laws do not provide for strict liability in holding oil companies responsible for the damage to our environment and livelihood arising from their operations. I will, therefore, urge our legislators to insist that oil companies operate in an environmentally-friendly manner and that stiff sanctions are put in place to dissuade errant operators. Effort must also be made to guarantee full remediation and compensation to impacted communities and people.
- Finally, as you begin the process of passing this Bill, I urge you to embark on a massive public enlightenment campaign regarding the provisions of the Bill and its benefit to Nigerians. This is necessary to mobilise and sustain public support for the Bill. Right now, most Nigerians are still ignorant about the provisions of the Bill and how it is supposed to benefit the country and serve their interests. As a result, the impression has been created in certain quarters that the PIB is all about oil blocks allocation and acquisition; of competing interest groups locked in a battle to gain control of the nation’s oil and gas resources. Nothing could be farther from the truth. The PIB is about a holistic reform of the oil industry sector and Nigerians through the media have to be made to understand this fact. The absence of such knowledge has enabled some vested interests to muddy the waters and create confusion in the minds of the general public.
- Ladies and gentlemen, let me conclude by summarising the attributes and contents of the “best” PIB that I have highlighted above. It includes creating independent, efficient and effective regulatory institutions; developing fiscal framework that significantly increases government earnings from the oil and gas sector; the promotion of peace-building in oil producing communities through community equity and participation, job creation and provision of employment for our youths; the enhancing of indigenous participation; and erecting a system of efficient and effective environmental regulation and management. These are the attributes Nigerians want in the PIB and I urge the House to produce a legislation that meet these aspirations of our people.
- On this note, I want to thank you for your time and attention, and wish you successful deliberations.
- God bless the Federal Republic of Nigeria.
- God bless us all.
Office of the Governor