BS: Petroleum Industry Bill and Nigeria’s economic prospects
It is not news that the petroleum industry feeds the entire nation due to the neglect of the agricultural and mineral sectors. From 2007 till date, the proceeds from the sale of crude oil have accounted for about 75 percent of Nigeria’s total earnings.
The contribution of the oil industry as a percentage of the gross domestic product (GDP) hovered from 21.3 percent in 2007 to 25.1 percent in 2011. On the contrary, the contribution of the non-oil sector as a percentage of the GDP oscillated between 6 percent in 2007 and 6.3 percent in 2011.
From 2009, the non-oil weight in the gross revenue fell from 6.6 percent to 6.3 percent at the end of 2011, according to data provided by the Central Bank of Nigeria. On the contrary, the weight of the proceeds from oil increased from 12.7 percent to 25.1 percent within the same period.
Based on the global developments wherein more countries have discovered crude oil, coupled with the technological advances and innovations which have made difficult terrains to be explored for oil, the Nigerian government may be working behind schedule if it doesn’t speed up the passage of the Petroleum Industry Bill (PIB).
Ghana, Niger Republic, Sierra Leone, Cameroon, Chad and Angola are some of the countries that a decade and half ago were not commercial crude oil producers but the story is different today. The most disturbing news is that by 2030, Nigeria’s largest buyer with regards to crude oil sale, the United States of America will become a net exporter. By then, the US will surpass Saudi Arabia which is the largest producer of crude oil among the members of the Organization of Petroleum Exporting Countries(OPEC). The country has been able to achieve this feat by revolutionizing is shale gas technology.
The politicking that has always followed every version of PIB that is introduced to the national assembly is a manifestation of the extent to which the country is heavily dependent on crude oil proceeds. Every state or local government feels threatened whenever a clause is not favourable to it in the short term whereas if allowed to be passed in the PIB might benefit it in the long run. Therefore, one of the things that Nigerian leaders should do now is to devolve power among the three tiers of governments that will permit each region to look inward for the exploration of natural resources (especially mineral resources) within its reach.
Meanwhile, the Nigerian masses expect so many things from the PIB. Of importance is to put to an end the corruption in the sector.
The partial removal of fuel subsidy in January this year exposed the rot in the sector.
Based on the reports submitted by the various committees set up by the FG, the country has lost tens of billions of dollars in the oil industry through indiscriminate awards of oil licenses and cut price deals struck by oil companies and government officials. The probe of the administration of fuel subsidy revealed about N700 billion never got to the targeted masses but end up in the pockets of the super rich.
The rising cases of crude oil theft are conduits the PIB must completely block. It was reported recently that Nigeria loses 200,000 barrels of crude oil per day. At the rate of $100 per barrel, this translates to $20 million (N3.1 billion) on daily basis! Even if the country produces crude oil for 300 days in a year, the loss will amount to N948 billion. This is more that the combined budget of about twenty states in Nigeria, which means this recklessness, must not continue.
Pipeline vandalisation and illegal bunkering must be stopped if the PIB will have the desired impact on Nigeria’s economic prospect. The theft of oil comes with a severe penalty for companies operating in the sector. ExxonMobil reported it spent about $15 million on the repairs of vandalized oil pipelines.
The Joint House Committee on Petroleum (Upstream) announced that between 2000 and 2004 it expended $1,241,800 to repair broken oil pipelines; $62,900 between 2005 and 2009 and $975,700 between 2010 and 2012 on repairs and maintenance of oil facility damaged during attacks on Addax Petroleum which lost several barrels of crude oil due to pipelines vandalisation and illegal bunkering during the same period.
