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THE OUT-OF-THE-BOX APPROACH TO OIL INDUSTRY REFORMS

By NBF News
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By OLABISI ALADE
EVEN with the country's  incurable overdependence on oil, the commodity could have served Nigerians better if the proceeds had been better managed over the years to achieve better linkages and funding of national infrastructure.

That is the visible difference between Nigeria and other oil-producing countries; where at the very least, basic socio-economic infrastructure is taken for granted, with substantial savings as sovereign national wealth.

The bid to reform the oil and gas industry in Nigeria is therefore an imperative for any visionary and focused government. The product of that was the Petroleum Industry Bill, PIB, sent to the National Assembly in 2008 after elaborate preparatory work. At one stakeholder engagement on the bill I attended in Abuja, the then Petroleum Resources Minister made the benefits of the bill clear enough: 'The implementation of these reforms will strongly open up the Nigerian oil and gas sector to new local and international investors for competitive growth and sustainable development in line with international best practices, in particular, when the PIB is passed into law, it will help in:

•The creation of a modern petroleum legal framework

•Alignment of the Nigerian oil and gas sector to international best practice

•Enhancement of transparency and an open framework

•Establishing good governance practices and processes

•Reinforcing linkages between the oil and gas industry and other sectors of the Nigerian economy

•Support the energy objectives of government'.
But after some three years of strange excuses, the bill died. Or was it killed? The bill, which had generated a lot of interest among Nigerians, did not go beyond the first stage of clause-by-clause consideration in the two chambers before the Sixth Assembly wound up in June last year.

Clarity in government policy
Either way, the bill died at enormous cost to the country, including a lull in investment in the industry by operators who waited endlessly for clarity in government policy which the bill would have provided. The industry lost over $28 billion in investments because billions of dollars of potential investments had since been put on hold.

The death of the bill has been adduced to many factors, among them, the existence of different versions as explained to by the National Assembly. The Assembly's leader and Senate President, David Mark, confirmed this during the inauguration of the Senate Committee on Petroleum (Downstream) when he said the existence of different versions of the controversial oil industry reforms bill had been the major stumbling block to its passage by the two arms of the National Assembly.

For an executive bill to end up this way is evident of political and economic intrigues deployed by contending stakeholders. It is also true, as President Goodluck Jonathan once pointed out, that some contentious issues were still outstanding. But he said: 'The interest of Nigeria is paramount in the bill, we are looking at those areas of disagreements and I believe in the first quarter of next year, we will present the bill again to the Assembly, and I am optimistic that it will sail through'.

Considering the fate of that bill, it was only proper for the Petroleum Ministry to ensure that a revised bill is passed, even with the likely existence of saboteurs. In situations like this, a system necessarily requires a taskforce. Consequently, the Special PIB Task Force can only be seen as a child of necessity. The task force is headed by Senator Udoma Udo Udoma, with Senators Tunde Ogbeha and Lawan Shuaibu, Chibudom Nwuche, Abdullahi Gumel, Habeeb Fashinro; President of Trade Union Congress, Mr. Peter Esele, as members and Legal Adviser in the Petroleum Ministry as Secretary.

The Special Task Force, which works with a Technical Committee, is reviewing all versions of the bill to produce a new draft, and also working with the National Assembly to facilitate a buy-in and quick passage of the bill into law. People who know Senator Udoma well are agreed that he would not put his name on anything funny. Same for the key members of the committee.

I know Senator Udoma closely to understand his determination to keep his family name squeaky clean. Among others, he is a two-term member of the Nigerian Senate, where he served variously as Chief Whip, Chairman of the Committee on National Planning, Revenue Mobilisation and Poverty Alleviation, and Chairman of the Appropriations Committee. He served as the first Chairman of the Corporate Affairs Commission in 1991-1992 and is currently the part time Chairman of the Securities and Exchange Commission. He has also served the nation in other roles such as Special Adviser to the Minister of Petroleum and Mineral Resources (in 1993).

Declaring her motives for Udoma's Task Force and three others recently at the Nigerian Oil and Gas Conference, Petroleum Resources Minister, Diezani Alison-Maduake, said recently, the challenges of the industry 'are not new but it is our job as leaders to fix them and the time to act is now.'

She also explained her approach: '…In a bid to enhance our solutions to a number of targeted critical challenges, I have adopted an 'out-of-the-box' approach and reached out to patriotic Nigerians with undisputed integrity from outside the industry to enable us derive the benefits of a different and more varied perspective, and also to ensure that a broader spectrum of all stakeholders, not just the government, have the opportunity to provide input into the solutions'.

The Task Forces are:
•Dotun Suleiman's Committee to design a new corporate governance code for ensuring full transparency, good governance and global best practices in the NNPC and other parastatals; a blueprint to eliminate all rent-seeking opportunities and arbitrage in the NNPC system; and design a blueprint for professionalism in the parastatals, as well as a roadmap for transition into the Petroleum Industry Bill (PIB) regime.

•For the epileptic refineries, Kalu Idika Kalu's Committee is conducting a high-level assessment of all four, reviewing all past reports and assessments to produce a diagnostic Report complete with a Change Journey Map; and to recommend ways of improving efficiency and commercial viability.

Commercial viability
•And in keeping eyes on the money, Nuhu Ribadu's Petroleum Revenue Special Task Force will enhance probity, transparency and accountability in the operations of the petroleum industry. The body will among other things, also work with consultants and experts to determine and verify all petroleum upstream and downstream revenues, which include taxes, royalties, dues and payables to the government.

Like Senator Udoma, leaders of these Task Forces are men of integrity who are protective of their names. For example, Dotun Suleiman, a respected management consultant, is one of the brightest products of the good old Arthur Andersen, who took over from Dick Kramer in 1993 and remained Country Managing Partner for both Arthur Andersen, the Audit and Tax firm as well as Andersen consulting until 1999 when with the complete separation of the consulting business from the Arthur Andersen Worldwide Organisation, he became the Country Managing Director of Accenture. Recently, he headed the committee on the review of Nigerian capital market structure and processes.

For their visibility in public offices, people like Kalu Idika Kalu and Nuhu Ribadu need no introduction, but I readily recall Kalu's recent message about his age-long principles to a columnist. He wrote: 'I have been fully consistent from leaving graduate school to at World Bank, private consultancy, through Buhari (Commissioner of Finance, Imo) to IBB (Minister of Finance, National Planning, Transportation) and back to Abacha (Minister of Finance) and Chm BGL plc!'

As humans, the committee leaders may have their personal weaknesses, but certainly these are men of integrity. Although doubts have been expressed about some members, they are all well known Nigerians. Besides, considering the composition of the committees it is most unlikely that one or two individuals could over-ride the majority.

The eventual passage of the PIB will birth a world-class oil and gas industry, and it would seem that the other Task Forces are to get the key areas in shape for the new dawn. For example, the Dotun Sulaiman Committee is to develop a blueprint for professionalism in the parastatals and design a roadmap for transition into the Petroleum Industry Bill, PIB, regime.

Also the Minister has noted that there are 'reforms we had already began to put in place over the last few months and we want to anchor them very critically on the PIB which as we all know is the most critical piece of legislation to have come out of the oil and gas industry in the last 50 years or so'.

Contrary to the argument of the other school, the major problem the Ministry, the task forces, and indeed government, as stated elsewhere, is not the quality or relevance of the committees. It is evolutionary public distrust.

Nigerians have been conditioned by repeated poor government performance and by prolonged socio-economic suffering to believe that government is unfaithful and unresponsive. I have heard people say, 'nothing changes in Abuja'. But some things need to change for Nigeria to be a country of our dreams.

Transparency and efficiency
With the thirst of people for change, more transparency and efficiency in the oil industry, this is an opportunity for government to demonstrate its commitment to its transformation agenda.

The Minister alluded to this when she said: 'I think we can all see the need for transformation and change, it's obvious we are beginning a new phase of transformation in our petroleum industry as we turn a new page. We have listened to the voices of Nigerians over the last few weeks as they spoke in unison asking for accelerated reforms in Nigeria's oil and gas industry'.

Obviously, the use of task forces and EFCC's involvement are important. What else is required from this point on is the political will of government to walk the talk of the task forces. As a person, Alison-Madueke is a very courageous person and that will be helpful in the reform process.