Oh what a surprise. Not.
The most important piece of legislation proposed for the reformation of the single most lucrative and needy sector in Nigeria has fallen at the first hurdle. After positive noises have been heard from government sources over the past 4 months, many actually believed that the wait would at last be over. But no. No such luck. You guessed it, the Petroleum Industries Governance Act (PIB) will be signed in to law now earlier than the end of 2017.
Delays around legislation are common enough in Nigeria's fragile and fickle political system. But it stings particularly smartly with the PIB because of it's history. For newcomers to the oil and gas sector in Nigeria, some history: In 2000, accutely aware of the need to revamp the workings of the oil sector in Nigeria, the Obasanjo Government took a big decision. They would design legislation that would revamp the regulatory framework of operations in the sector in order to make them better clarified and aligned: the Petroleum Industry Bill. The PIB was a solid piece of umbrella legislation that promised to free up the exploration market, deregulate the downstream sector, incentivise indigenous player sand make the NNPC commercially viable.
In the 10 years that have passed since the legislation was proposed, we are still no closer to having this much-needed breath of fresh air. And the delays now is presenting a bigger issue than ever because the industry is in recovery mode. Buoyed by the successes of a handful of local players, confidence is returning to the homegrown suppliers all down the value chain. What's frustrating is that Buahri's government has spent the last several month building confidence by showing progress towards the PIB's passing. Fanning the flames of that confidence has been the repeated promises about implementation: first we expected it in March, then in April. Local firms got excited, projects gathered steam. But now the local firms have jumped, but the government-supplied parachute hasn't opened.
And it's not as if this issue hasn't been spoken about reasonably, patiently and extensively. As early as January this year, prominent businessmen in Nigeria aired their frustrations at the delays and the risks of not passing the PIB promptly. At the beginning of the year Benedict Peters, the CEO of Aiteo Group, wrote a piece for Energy Voice that recognised the strengths and limitations of the PIB but most emphatically called for it simply to be passed. Progress brings progress. Stagnation brings stagnation.
And Aiteo Group are right to worry. They and the other booming indigenous oil firms are those that stand to lose out. In May, the licences for oil exploration and mining blocks will be issued and the lack of a reliable and reformed sector infrastructure could see promising and ambitious local firms overlooked in favour of oil majors who can survive without the changes. With firms like Aiteo Group achieving enormous results like tripling production at their production blocks, local firms this year have come into their own this year. These delays are some reward.
The government now says that the PIB will pass before the end of the year. But is this just being realistic, or the next broken promise we can look forward to? Either way, this is the wrong direction for the administration's reform agenda and a missed opportunity for President Buhari to change the nation's course.