Engaging Reform Of The Oil And Gas Sector
Since the inception of the current administration, efforts have been made to reform the oil and gas sector in Nigeria with the restructuring on the Nigeria National Petroleum Corporation (NNPC) and the repositioning of the corporation’s staff for optimum performance, the ambitious attempt at revamping the country's ailing refineries, the commencement of a review of deep offshore production agreements, the review of the nation’s oil swap agreements, effort to split the Petroleum Industry Bill among others. All these coupled with the global happenings in the sector and the ongoing anti-corruption posture of the President Buhari-led administration, presents a great opportunity for stakeholders' particularly civil society groups to engage the process.
President Muhammadu Buhari on 13th August, 2015 cancelled the controversial offshore processing and oil swap deals initiated by the administration of Dr. Goodluck Jonathan, initially billed to last till December 2016. A new short term oil swap contract was later entered into promising to soon engage in direct sale of crude and direct purchase of refined products. The Africa Network for Environment and Economic Justice (ANEEJ) had in an advocacy position paper sent to the House of Representatives Committee on Petroleum (Downstream), in October 2014, called on the National Assembly to do all in its powers to end oil swap in Nigeria. The issue was discussed at the House but it failed to progress on a motion moved in June 2015 by Michael Enyong (Akwa Ibom) seeking an end to oil swap. The Nigerian Extractive Transparency Initiative (NEITI) had also revealed in one of her audit reports that crude oil swap arrangements are not cost- effective, especially when compared to product prices and proceeds paid to the NNPC.
Despite this encouraging move, it is regrettable to note that since the new oil swap contract was entered into, no details have been made public and Nigerians are still also concerned that the terms of such contracts remain top secret. Moreover, the same old Swiss oil companies like Tranfigura and Vitol which were indicted in the Bern Declaration report are still being used by the government. Civil society groups need to ask the necessary questions and also interrogate these issues in support of a genuine reform process.
In line with the aim of resolving the governance issues in the oil and gas sector as well as at the NNPC, the Minister of State for Petroleum Resources and Group Managing Director of NNPC, Ibe Kachikwu, recently announced the reorganization of the Corporation. The Corporation now has five business entities or major operational zones focused on business: Upstream, Downstream, Refineries, Gas and Power. Ventures that capture all other little companies that were not having proper stewardship have also been created to be managed by individuals who report to the GMD. In order words about 30 independent companies with their chief executive officers have been created and given measurable targets to achieve. The leadership of these new entities have already been announced.
The NNPC now has the challenge of explaining to Nigerians and indeed the international community, how this re-organisation will translate to an efficient and cost effective Corporation that can bring about the much desired change in the petroleum industry. Civil society groups and other well meaning Nigerians as well should be proactive to follow up with the process to see that the much awaited “change” is achieved. There are also emerging labour issues which need to be properly discussed and agreements reached on it so that it will not result to full- blown industrial dispute half way into the re-structuring process.
The petroleum industry bill (PIB) is also being reviewed by the present administration and there is the possibility of splitting the bill into different parts. Already, the Petroleum Industry Governance and Institutional Framework Bill have been prepared. Engaging the federal government and as well encouraging them to accelerate action on the process of reviewing the new bill is good option at this point for CSOs and other industry players so that the current National Assembly can pass the bill(s) before the expiration of their tenure. The issue needs to be taken to a larger group and other CSOs should be encouraged to study the already prepared Petroleum Industry Governance and Institutional Framework Bill and ensure they make input to get a near perfect document at the end. CSOs can also sensitize the public on the reforms and the proposed bills and the need to engage the government on the issues, stressing the urgency in the matter.
Nigerians will not forget in hurry, the intrigues and delays that characterized the attempts by previous administrations to reform the petroleum industry in Nigeria. The Oil and Gas Sector Reform Implementation Committee was set up and the outcome of the committee's work formed the basis for the initial draft PIB. The bill was re-drafted by Dr. Goodluck Jonathan's administration and re-introduced to the National Assemble with a definite assurance that it will be passed. The 6th and 7th National Assembly in the heat of it all, amidst civil society agitations, protests and blockade of the entrance of the National Assembly, ended up not passing the PIB.
Now that a new administration has come on board, with a promising outlook in terms of the political will and capacity to surmount the mountainous challenges facing the petroleum industry in Nigeria, the Africa Network for Environment and Economic Justice has set up a civil society task force to engage the ongoing reform in the sector. The task force met in Abuja, February 2016 and agreed on an action plan which detailed some of the emerging issues and how they intend to the engage the present administration on the reform process. It is equally important to encourage other civil society groups to work collectively in engaging president Buhari's administration as he attempts to overcome the seemingly impossible task of reforming the oil and gas sector in Nigeria.
Written by Innocent Edemhanria, a Programme Officer with ANEEJ.