…sheds more light on gray areas
First, let me commend the 9th NASS for doing what the 6th, 7th, and 8th NASS could not do. Secondly, I must also commend the executive team for staying the course with commitment and political will to support passing PIB 2020.
This was made known by the OMOWUMI ILEDARE, PhD, GNPC Professor & Chair in Petroleum Economics & Management UCC Institute for Oil and Gas Studies, Cape Coast, Ghana Chirota & Emmanuel Egbogah Distinguished Professor of Petroleum Economics & Executive Director Emmanuel Egbogah Foundation & Director, SPE Africa Region, Abuja, Nigeria. He is also Professor Emeritus, LSU Center for Energy Studies, Baton Rouge, USA.
“I must also display my deep satisfaction having been an active participant, over the years, in the PIB debate. Certainly seeing a passed PIB on its way to the Presidency for signature is gratifying”, he said.
“Having expressed all the above commendation , I look for consistency, equitability, and constitutionality over some key provisions keeping posterity in view as we race towards the finish line and enter the implementation stage”, he maintained.
“First, the Institution of the Minister is of great concern. I hasten to say that the capacity in the Ministry of Petroleum is limited and not equipped to support the functions of the Office of the Minister in PIB 2020. The ministry needs a reconfiguration, restructuring and rebounding in order to support the PIB demand for policy sustainability beyond a one term Minister in the office”, noted Iledare.
“Second, the Bill seems to have settled for two regulatory institutions and I like the fact that some coordination among the institutions are envisaged, but I do not see where it is mandated. Perhaps in the general and related sections, a mandatory coordination section may be appropriate. I also think the Board of the Authority geopolical fulfillment beyond qualifications seems like jobs for the “boys”.
“Regarding administration, I am still in shock as to the size of the blocks in this day and age. Onshore block area of 350 Square Km is about 18 times the 5800 acre-size in the US GOM and shallow water is about 45 times. While the deep water block is about 60 times. Wa o!
The Professor of Petroleum Economics stated that the expected voluntary conversion clause impact has been significantly reduced with events prior to the passage of the bill. “The rush of the so many uninformed renewals, renders the PIB less impacting on old leases. The renewal of terms as this passage was on course remains shocking to PWI”.
“Regarding the host community development, the framework in the PIB is laudable. However, even if NASS settled ay last for 5% of the preceding year OPEX, it will not resolve the ownership agitation. I just cannot comprehend why it is constitutional to surrender 30% of PSC PO for frontier explorations but NASS cannot surrender 10% of royalty for HCD instead of 5% of OPEX. It seems like selective interpretation of the constitution to me”.
“Please don’t take the above remarks to imply I am in support of 30 % earmarked for frontier exploration. That is a petroleum revenue management issue with federation fund being significantly affected”, stated the Executive Director.
Shedding more light on the 30% of PO share for NNPC frontier exploration, he said, “however, let me quickly make some comments on the provision of 30% of PO share for NNPC frontier exploration. Well, it is not 30% NNPC profit that is earmarked. It is also not a coup against any section of country please, as suggested by some analyst trying to sow seeds of discord, in my opinion certainly the optics look unbelievable to sound minds including PWI. As an educated elite, with 40 years following the industry policy and technical operations, this earmark reflects a sort of political power arrogance in the minds of the minority. It is perceived to be a display of the arrogance of the political power of the majority setting a funding mechanism to “chase the wind.”
“Apart from the conjectural constitutionality of spending federation money before it gets into the federation account, it does not seem to make economic sense. More so, with the results energy transition dynamics looming larger than life. Even if it seems to be politically expedient for now, the expediency may not be sustainable beyond a political cycle. Political power is just too transient for such sentimental actions to be sustainable. The provision needs to be expunged”, maintained the Professor.
“Regarding NNPC limited, it is a noble idea. But I do not see the removal fully of its agency role at all. I am also shocked at the prescription of 10% management fee, which was rejected in the PIGB. Of course forcing NNPC to incorporate IJVs does not to me show a commitment to the full commercialisation of NNPC with limited political interference. I know NNPC was fully engaged in this process, perhaps, he who pays the piper ended up dictating the tune”, opined Iledare.
“Finally, please I stand corrected, if my opinions are wacko to you. They are nothing more than a perspective of a Professor Emeritus in a subject matter, as follows:
First, the 9th NASS even though succeeded where the 8th failed, I think I see the flaws in this Bill that could have been avoided if the 9th NASS had allowed its technical advisory team to continue the journey with them to the end.
2 . The fiscal framework looks generously competitive, attractive, and progressive as well, but I do not see fiscal neutrality and pare to optimisation of mutuality of interest. It is badly too skewed to the investors at the expense of the government. No HT for a relative derisked deep water all because there is now a progressive deep-water royalty scheme with a cap of 7.5 % irrespective of fiscal arrangements.
Of course I understand it was zero before this reform but It should have been progressively set at 10% for investors in a concessionary arrangement framework.
Third, the government should have used this reform to get out of the direct EP funding through JV or PSC altogether. An Asset Management company outside NNPC would enhance NNOC effectiveness and perhaps efficiency. That was what the 8th NASS did!
Too much government involvement, more than sixty year after the first oil, beyond governance, regulatory, and administration, is no longer good for Nigeria Oil and Gas. Of course a National Petroleum company for commercial national energy security might be tolerable.
In conclusion, I am not in any way asking to sacrifice a good bill for a non-existing perfect bill. I have only brought out some observations for consideration in order to achieve equitable, efficient, effective and ethical implementation strategy. Congratulations. These are the views of the Professor Emeritus.