BETWEEN BOTSWANA AND NIGERIA’S PETROLEUM INDUSTRY BILL By Sowunmi Olabode III

The UAE got independence in 1971, that’s not news. The news is that at about that time they came to Nigeria to discuss with the Federal government about help in economic development as a nation. The result in practical terms is that we sent them back basically saying we could not invest in sand! At about that same time, another country came up to visit the government for about the same purpose. It was a Southern African country. President Gowon directed them to the then Minister of Budget & Planning who in turn connected them with a certain Prof Onitiri of the University of Ibadan. It was the Onitiri team that developed the blueprint for this country and they spent over a year in this country to ensure the implementation of the economic principles. That country is Botswana.

To put this in perspective, Botswana has a proven record of good economic governance; she has been ranked as Africa’s least corrupt country by Transparency International more than once. What’s more, Botswana is ranked 3rd among 47 countries in the Sub-Saharan Africa region, and her overall score is above regional and world averages. In empirical terms, many consider her the best economy in the whole of Africa. Many analysts have attributed her success to doggedness at prioritizing long term goals over short terms goals. Is it that simple?

Long-term goals are those that by their very nature influence the overall direction of an organization or in this case, a country. Generally, the ability to achieve long-term goals is a genuine reflection of how well those in leadership can achieve their objectives. Long-term goals are very strategic. They seek to remedy problems on a permanent basis. The most important issues in life can only be achieved effectively by long term planning.

The challenge we have in our milieu is that virtually everything is short-term focused. Our national budget is largely about recurrent and short term expenditure. Our students don’t have a long term view to education with some questioning its purpose entirely! Our young don’t have a long term view to marriage. Our politics is so short term focused that a couple of cents will win people’s votes despite the ugliness of those being voted for. Moving forward, we must acknowledge that without long-term goals there cannot be any great motivation for self-improvement. One area in our environment that significantly needs all kinds of improvement is the Oil & Gas industry and this cannot be possible without long term planning.

With the visible exception of Norway, virtually all Oil rich nations are languishing under a burden ordinarily referred to as the Dutch disease. Nigeria has been classified many times as an illustration of a nation suffering from this resource curse problem. It is not unconnected with the fact that after decades of oil production, many parts of Nigeria have little or nothing to show in terms of social, environmental and economic development. In a bid to break loose from these, attempts were made by the Obasanjo government to upgrade the Nigerian oil and gas legal framework in order to boost real growth and development. The culmination of all that effort is what has come to be known as the Petroleum Industry Bill (PIB). The bill represents the most comprehensive review of the legal framework for the Petroleum Industry since we began commercial operations in the 1960s. It offers radical promises and particularly the opportunity to make gas a main stay for genuine industrialization. One of the promises is further polices and economic initiatives that will allow a cottage industry in each of the 774 LGAs that will rest on the backbone of Natural Gas. This is to be made possible by the full implementation of the thinking behind the Gas Master Plan (GMP). This will include midstream infrastructure development, the development of a culture of those obeying laws and agreements and will be evidenced by the adherence to the gas code and more. At any rate, that’s a matter for another day.

There are two key areas to the controversies surrounding the bill. There are those that are political and there are those that are technical. The core technical issues are such that they have the greatest impact on the industry and by extension the economy. They have all been sorted out and agreed to. The political issues which have their great significance to the practical workings of the industry are the ones making the news. Let’s take some look at two of the issues.

Governance: here the primary focus is ensuring good governance and accountability. In the light, the creation of a commercially oriented national petroleum company has been agreed to. As at today, NNPC as we know it is both a regulator and an operator. The best way to understand that is if the Central Bank begins operating as a commercial bank! To this end two separate regulators have been created and they are the Nigerian Upstream Regulatory Commission (AKA the Commission) which will be responsible for technical and commercial regulation of upstream petroleum operations. The other is the Nigerian Midstream and Downstream Petroleum Regulatory Authority (AKA the Authority) which will be responsible for technical and commercial regulation of midstream and downstream operations in Nigeria. Hence the Commission and Authority are exempted from the provisions of any enactment relating to the taxation of companies or Trust Funds.

FISCALS: the thinking is that there should be an Imposition of up to 1% levy on the wholesale price of petroleum products sold in the country (0.5% each for the Authority Fund and Midstream Gas Infrastructure Fund). Also the NNPC Limited will earn 10% of proceeds of the sale of profit oil and profit gas as management fee while 30% will be remitted to Frontier Exploration Fund for the development of frontier acreages in addition to 10% of rents on petroleum prospecting licenses and mining leases.

Barring any unforeseen circumstances, in a matter of days, the PIB will become an act of parliament. However the law is at best a legal framework for the achievement of pursuits. They are like the white lines on the road which guide us so that we don’t drive our vehicles into the bush. They are not the journey but a vital component. Other protagonists in the journey will include the drivers of the vehicle and their co-travellers. Another way of looking at it is the agreement between two parties. An agreement is no good if any of the parties involved is integrity-challenged. In the same vein, the PIB that has taken so many years to achieve will be of no value if the discipline and long term efforts required to arrive at the goals are not employed. This is not the responsibility of one administration but the responsibility of government as a continuum.

The connection between the development of the economy of Botswana and the success of the PIB lies in the achievement of its long term goals. Without that the PIB may just be another sorry statistic in the history of laws in the nation. We pray this will not be so.

By the way, Prof Onitiri passed on to glory in 2017 largely unsung and his economic brilliance largely underutilized.

Sowunmi Olabode III is an Energy Consultant, CEO of Cabtree & an aide to the President of the Senate.