How PIB’ll open up investments in petroleum sector

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With the assent into law of the Petroleum Industry Bill (PIB) Nigeria’s oil and gas sector is now set to be in the path of huge growth and Investments, Prof. Uche Uwaleke, finance and economy expert has said.
He said the assent to the Petroleum Industry Bill at long last will open up the petroleum sector for more investments thereby boosting economic growth.

His words “The Bill makes provision for speedy granting of licenses to investors especially in the downstream sector. This is likely to translate to the establishment of more refineries in Nigeria which will go a long way to meet local consumption with prospects of ending fuel importation and the loss of forex associated with it. This could strengthen the value of the naira in the long run as well as create job opportunities in the petroleum value chain.

“He Bill also provided for the application of cost-reflective tariffs by operators and the commercialization of NNPC Limited. One implication of this is that fuel subsidies will completely be removed. The reality is that fuel subsidy is causing incalculable damage to the economy.
“A situation where the government spends close to N1 trillion subsidizing fuel consumption is counter productive.

First and foremost, the fiscal situation of the government can no longer support it given the rising fiscal deficit. Again, it has been one scheme that is fraught with corruption given the fact that there is no accurate figure of the volume of domestic fuel consumption. More importantly, fuel subsidy is regressive in the sense that it benefits the rich more than the poor. It also crowds out developmental funds which benefit the poor.”

Uwaleke added that there is no doubt that the removal of fuel subsidy will result in some hardship by way of rising inflation in the near term.

But in the medium to long term, it is in the overall interest of the economy as it will free up more resources to fund critical sectors of the economy.

In order to cushion effects, he posits that “To cushion the impact of fuel subsidy removal on the ordinary Nigerian, the government should quickly roll out compensation schemes in the area of Health, such as by expanding the National Health Insurance Scheme, Education and Mass Transportation.

Be that as it may, it’s important to point out that the Petroleum Industry Bill now signed into law still has grey areas. For instance, the PIB made attempt to curb pipelines vandalism and restiveness in the Niger Delta region through various provisions that entitle the Host Communities to a percentage of oil revenue. Unfortunately, this area has not been properly tidied up as the percentage of oil revenue initially proposed for Host Communities was reduced.”

The Daily Times reports that President Muhammadu Buhari signed the Petroleum Industry Bill into law on Monday in Abuja.

The PIB seeks to ensure reforms, promote transparency and attract capital flows into the oil and gas sector.

The bill comprises five major parts, including Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Framework; and Miscellaneous Provisions comprising 319 clauses and eight schedules.

One of the key recommendations of the bill is the unbundling of the NNPC and a revision of the funding mechanism.