President Muhammadu Buhari has raised the 2022 appropriation bill by N2.47 trillion, bringing the total budget for the fiscal year to N16.45 trillion. This was contained in a revised Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) sent by the President to the National Assembly yesterday.
In July, the Federal Executive Council (FEC) had approved N13.98 trillion for the proposed 2022 budget sum.
In the letter read by Deputy Senate President, Ovie Omo-Agege, Buhari explained that the needed adjustments were important to reflect “the new fiscal terms in the Petroleum Industry Act (PIA).
“The PIA establishes a progressive fiscal framework aimed at encouraging investment in the Nigerian petroleum industry. This significantly alters the oil and gas fiscal terms and has necessitated changes in the 2022-2024 Medium Term Fiscal Framework,” he said.
Ahead of the presentation of the 2022 budget to a joint session of the National Assembly tomorrow, the President added that the increase in total sum for the 2022 fiscal year was also because N100 billion has been voted for the conduct of the 2023 general elections, among other necessities, while he projected a decline in net oil and gas revenue by N5.42 billion.
Stakeholders in the oil and gas sector have, however, raised fresh concerns over the planned implementation of the recently passed PIA, insisting recent developments may erode projected optimism in the legislation.
Coming amid allegations that ‘Buhari men’ were already hijacking the implementation, turning a serious economic issue to politics and regional affairs, the concerns were more in the areas of appointments into key positions, gender gaps and growing threats to the survival of the new NNPC Limited.
Recall that, in August, the implementation steering committee of the PIA appointed by President Buhari was made up of over 80 per cent members from the North and without a single woman. The boards of the new companies emerging from the legislation followed a similar pattern, including doubtful technical capacity.
Coming at a time the country is almost importing more refined products than the worth of the crude oil and gas it is exporting, the stakeholders are also worried that the country is targeting to pump the nation’s revenue into exploring oil, instead of investing in the downstream sector, which could grow Gross Domestic Product (GDP) and reduce foreign loans.
While the absence of good governance has marred the petroleum industry where Nigeria gets over 80 per cent of its revenue, the PIA was necessary to fix the challenges bedevilling revenue, investment, system, structure, people as well as policy.
Speaking at a roundtable tagged ‘Clarifying the provisions of the PIA: CSOs Perspective,’ organised by the Centre for Transparency Advocacy (CTA), the concern for a leading industry expert, Henry Adigun, was that the new NNPC may face critical challenges that threaten its survival in the next five years, insisting that the ongoing implementation has shown the lack of readiness of the government to make the sector work.
This week, the Senate will deliberate on the appointment of four nominees to the Board of the Upstream Regulatory Commission. The nominees for confirmation include Isa Ibrahim Modibo (Chairman); Engr. Gbenga Komolafe (Chief Executive); Hassan Gambo (Executive Commissioner, Finance and Accounts); and Ms Rose Ndong (Executive Commissioner, Exploration and Acreage Management).
The Senate will also this week possibly confirm the nominations of members of the Board of the Nigerian Midstream and Downstream Petroleum Regulatory Authority. The nominees for confirmation are Idaere Gogo Ogan (Chairman); Engr. Sarki Auwalu (Chief Executive); Abiodun A. Adeniji (Executive Director, Finance and Accounts); and Ogbugo Ukoha (Executive Director, Distributions Systems, Storage and Retail Infrastructure).
For Adigun, the board may not deliver the projections of PIA, stressing that after the tedious efforts of putting the legislation together, the implementation seems to be more of politics than business.
Business tycoon and renowned oil expert, who was the President of the Nigerian American Chamber of Commerce, Olabintan Famutimi, described as ‘madness’, the allocation of resources to exploration through the document.
Famutimi, who is the chairman of Tricontinental Group, insisted it was the height of failure and gross lack of vision, adding that investing 30 per cent of NNPC profit in converting existing resources into refined products and halting import of such petroleum products while unlocking industrialisation through petrochemical remained the viable option.
He stressed that the country would never recover the cost of exploration, adding that chances of oil discoveries are elusive in the in-land basin, noting that the International Oil Companies (IOCs) already have technology that points directly to where oil can be.
“Let them use it to set up petrochemicals and other things that will turn our oil into products for the world to buy. Crude exploration and production add relatively small fragments to the GDP. No value addition. But look at a small country like Trinidad and Tobago, where we have an office. They have just about 1.3 million population. No barrel of oil is exported from the country. They have an industrial base that process everything. That’s the only way Nigeria can create jobs, revive agriculture and industrialise,” he said.
Executive Secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), Orji Ogbonnaya Orji, said the separation of policy, regulatory, administrative, and commercial roles of government in the oil and gas industry fulfil the condition for proper accountability in the sector.
He said the provisions for contract transparency and beneficial ownership disclosure would ensure that contracts would be awarded only through a fair, transparent and competitive bidding process; details of contracts would be published and not confidential, while identities of beneficial owners would be disclosed and published.
Executive Director of CTA, Faith Nwadishi, noted that special attention must be paid to Sections 83, 104, 105 and 108 of the PIA that specifically makes provision for contract transparency, gas flaring penalties and natural gas flare elimination plan respectively.
According to her, while the PIA appears to be a large law with many provisions that citizens do not understand, resulting in numerous protests, particularly over the 30 per cent profit oil/gas for frontier funds compared to the three per cent operating cost for the host community funds, there was a need to clarify the legislation for citizens to understand.
Meanwhile, the Minister of State for Petroleum Resources, Timipre Sylvia, yesterday, in Abuja said there is an urgent need for the judiciary to focus on oil and gas-related litigations to save the nation’s economy. Growing legal battles according to him accounts for part of the reason IOCs may continue to divest their assets in the country.
Most of the IOCs operating in the country have been divesting their portfolio, although the development is being fueled by business remodelling going on across the sector as companies slow down on fossil fuel investments, the country’s harsh business environment, including judicial related bottlenecks are worsening the development.
Speaking at the National Oil and Gas Workshop for Judges and Justices being organised by Petroleum Development Trust Fund (PTDF) in conjunction with National Judicial Institute, Sylvia noted that the country’s current realities require swift actions on oil and gas cases.
According to Sylvia, there are over 200 oil and gas-related cases in court, stressing: “A lot of oil companies are contemplating leaving the onshore of Nigeria and one of the biggest problems we have onshore in Nigeria is incessant court cases.”
Admitting that the recently passed PIA is not perfect, Sylvia said the legislation lends itself to the possibility of amendments like another piece of legislation.Follow us on social media