When the Oil and Gas Sector Reform Implementation Committee (OGIC) began its deliberations in 2000 not many thought the pathway to restructuring the Nigerian oil and gas sector would take nigh on two decades. The hugely ambitious bill which was supposed to encourage investment, be equitable and make fairer provisions for host communities and create a national oil company that was profitable, transparent and accountable.

After a torrid journey which has seen a contorted bill broken up into four component parts, it remains to be seen if a hitherto recalcitrant President Buhari will assent it into law. Whilst the eventual passing of the bill has been celebrated as a victory ofsheer perseverance over bloody mindlessness . The bill itself raises significant issues and frankly in its current guise is not fit for purpose.

The ostensible purpose of the Petroleum Industry Bill is to increase Nigeria's proven reserves to 40 billion barrels and increase production capacity to 4 million barrels per day. The restructure proposed by the bill will see the privatisation of NNPC as a more effective means to enable external fund raising. The establishment of new regulatory agencies which should halt malign interference bygovernment and the social legislation around host communities which issupposed to appease the restive indigenous Niger Delta host communities which in turn creates a more attractive environment for investments.

Arecent KPMG report revealed that Nigeria received only 4% of the total US$70bn investment in Africa's oil and gas industry between 2015 and 2019 despite it being both the largest producer and having the largest reserves .

Getting the engagement formula for host communities right was always going to be adelicate balancing act. The bill provides for Operators to contribute 3% of their annual Operating costs with these proceeds going to a Host Community Trust Fund. The host community will have access to this fund for local projects to the extent that the Operators facilities are not vandalised. However the bill oddly gives no clear definition as to what constitutes a"Host Community" and it is ambiguous in determining whether it is the Authority or the Commission that confers membership of the board of trustees of the host communities development trusts.

Predictably the host communities have rejected the 3% contribution as unacceptable and warned it is highly likely that such a figure would create the very environment that the fund was conceived to prevent.The proponents of restructuring, a topic which has constantly made headlines in Nigeria recently, have agitated for a substantially larger share of their own resource endowment and this does not provide that.

It is baffling as to how the Senate and the House of Reps managed to arrive at contrasting contributions for the host communities trust funds . This provoked an unnecessary debate which has served to stok eresentment and heightened animosities.It is inevitable that such a debate would rapidly evaporate any goodwill the bill would require from the host communities, especially since the lower amount was adopted.

Mele Kyari the GMD of NNPC has guesstimated 2.5% of operating costs would equate to a sum of about US$500 million for the host communities development trusts . For the sake of comparison It would be useful for him to guesstimate the sum being set aside for frontier basinexploration.

The bill provides that the newly incorporated NNPC Ltd set aside 30% of NNPC Ltd.'s profits. Such profits are to be delineated for what many interpret as "Pork Barrel spending" on frontier basins mostly in the geographical north of the country. Setting aside the apparent disparity betweenthe size of the sequestered funds for Host Community trusts and frontier basin explorations, there is far more propitious acreage in the Niger Delta that would provide a vastly more certain return on investment.

Nigeria currently has vast acreage which requires development funding. It is unconscionable that this acreage be wilfully neglected in favour of squandering scarce investment funds on uneconomical liabilities which if oil exists in commercial quantities, will take decades to develop. There is undoubtedly a strong desire to discover oil in the North of Nigeria, but this provision makes no  financial or logical sense.

Furthermore utilising 30% of NNPC's profit in gratuitous exploration amounts to a blythe disregard of the global direction of travel of fossil fuels. Especially at a time when NNPC's strategic imperative should betransitioning to an energy company by prioritising renewables and alternative energy. Something the bill makes no attempt to do.

More worrying is the lack of sensible policy decision making. It is alarming because the opportunity cost of such expenditure has so many far more beneficial priorities for Nigerians.

ThePIB is meant to effectthe separation and clarification of the various roles fulfilled by the Ministry of Petroleum Resources, NNPC and the Department of Petroleum Resources into clearly articulated and separate commercial, regulatory, and policy making institutions. The broad intention is to eliminate years of political interference in the running of NNPC.

In this connection thebillseeks to create an entity called the Nigerian National Petroleum Corporation Limited, aentity incorporated under the Companies and Allied Matters Act. This must be done six months after the commencement of this bill by the Minister of Petroleum.

Section 53 (6)provides that Notwithstanding any provision to the contrary in the Companies and Allied Matters Act and except by way of security, any sale or transfer of shares of NNPC Limited shall be at a fair market value and subject to an open ,transparent and competitive bidding process.

Beyond this, the bill is silent on how the divestment ofthe corporation will be handled. It is vague on the planned divestment of the NNPC Ltd, Thereis no specific plan in the bill to list the NNPC Ltd shares on any stock exchange. The Bill simply states that the shares will be disposed to the public in a transparent manner.

There is good cause for concern as demonstrated by the government'sbotched privatisation of the power sector. Despite seemingly comprehensive legislationit has been a disaster which is creating untoldhardship for Nigerians at this very moment. I fear that NNPC Ltd will end up being owned by interests who will finally complete the task of transferring Nigerians resource endowment from the Nigerian people to private concerns

Ultimately the extent to which the PIB will attract investment fromInternational Oil Companies (IOC) will determine the success of the bill. Nigeria requires tens of billions in investment.Mike Sangster Chief Executive Officer at Total E&P Nigeria Ltd was clear if not predictable whilst addressing a House hearing in January

"The proposed changes in the fiscal framework undermine our investment in Nigeria and are unfair and contrary to the spirit of the 'contract' between the FGN and the Egina investor group. Moreover, the bill will endanger the viability of further developments on the block,".

Can the PIB trigger final investment decisions on such projects as the Shell-operated Bonga South West/Aparo field, Exxon's Bosi, Owowo West, and Uge Orso fields, or the Chevron-operated Nsiko field, orEni's Zabazaba field. These projects represent a combined estimate of around USD$48 billion in investment.Such investments have the potential at peak production to add over 750,000 bpd to Nigeria's production capacity (Nigeria currently produce circa 1.4 million bpd).

I suspect the PIB even if assented by President Buhari will be subject to a raft of amendments. It may well be that public preoccupation is focused on host communities and frontier exploration basins, but if the PIB does not stimulate investment it may all have been mere conjecture.

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