How PIB will check corruption in oil and gas sector- Ugolor

2011-03-20
THE PUNCH Newspaper

As the National Assembly delays the passage of the Petroleum Industry Bill into law, the Executive Director, Africa Network for Environment and Economic Justice, Mr. David Ugolor, in this interview with SUNDAY OJEME, says its non-passage would heighten corruption in the oil and gas sector







What are the provisions in the PIB and its likely benefits to the economy?



The PIB is the end product of over 10 years drive to reform the oil sector. You will recall that there have studies in the country that show clearly that the Nigerian oil and gas sector is not properly run, and to a large extent the benefits of the sector are in doubt, particularly against the background that Nigeria, as one of the largest oil producing countries, has unfavourable human development index. You look at the health sector, educational sector and in terms of infrastructural development, Nigeria is lacking. These are some of the problems that led to the agitations in the Niger Delta that gave rise to the violence that almost crumbled the oil industry until amnesty was applied. When you put all these things together with the Nigerian Extractive Industries Transparency Initiative reports, an Act which makes it possible for those operating in the oil and gas sector to disclose what they pay as tax and royalties to the government, you will agree with me that the sector has never been run transparently.



For instance, in the first audit that was conducted from 1999 to 2004, it was very clear that the way the oil and gas industry was run was not transparent. It was also clear that the agencies like the Central Bank of Nigeria, Department of Petroleum Resources, in the Nigerian National Petroleum Corporation, among others, also had institutional challenges.



What are the specific contents of the provisions that will benefit the masses?



If you look into the content of the provisions, which is over 380 pages, there are key positions that deal with host oil communities. As you know, the oil and gas sector, the way it is being operated today, the host communities do not have ownership. The bill seems to respond to those issues. The bill also seeks to address the discretionary power of the petroleum minister in allocating oil bloc. Right now, the NNPC also exercises some commercial powers. They regulate and play in the industry. So you can understand the challenge we have to face in such a situation. This bill is a radical response to make NNPC efficient and be able to compete in the international market, and also to provide changes in the way companies are run to become beneficial to Nigerians. The way they currently lift the oil and export does not earn us any respect in the international community. They do it just like harvesting cassava from the ground and export. There are other things you could produce from petroleum if it is refined that will lead to job creation. For instance, the refineries are not working at optimum level and as a result of that, many Nigerians who depend on kerosene for survival are suffering. People now queue up to get kerosene and the consequence is obvious. That has caused Nigeria so much environmental damage, making Nigeria one of the highest contributors to climate change. This is why the issue of refinery is quite very important. If the refineries were working at an efficient optimum level, you can imagine the job that will be generated. And beyond that, there are intermediate products that can lead to the industrialisation of the country. The only way for that to happen is to ensure that the current institutions, like the NNPC, are reformed. And this bill seeks to do that, to create an institution that will tackle the challenges of the refineries that are not working. It is also the issue of Joint Venture that has been enmeshed in corruption and has not been managed efficiently to the extent that if you want to mention any institution that does not run efficiently and where there is corruption, it is the NNPC. Even as we speak now, the NNPC has not presented its budget to the National Assembly.



Apart from the immediate gains that will accrue to the country, how will the law respond to the international oil market?



The importance of the PIB cannot be underestimated. It is such an important legislation that will help us drive the reform in the oil and gas sector, so that Nigerians can benefit from high price of oil in the international market, so that the old laws that currently guide the industry can be reviewed. It is also to remove the secrecy and lack of transparency, which is making the industry not to function very well. To a large extent, this has also affected international investment and the international oil companies. Oil companies want to invest in a climate that is transparent, and that is what the PIB seeks to address. If you recall, all the multi-national oil companies that are currently operating in the country are signatories to the Extractive Industries Transparency Initiative. So it is quite an important legislation that will help us drive the reform required in the oil and gas sector. Now, if the NNPC runs as a commercial entity, it should be able to go to the international market to raise finance to do business whether in the area of exploration, production, in the upstream or downstream sector, and if they function very well, that will grow the economy. Once the economy is growing, it will impact on the people’s lives. And if the government has access to more resources, it will be able to embark on massive infrastructural development, provide an enabling environment where private sector can grow the economy.



Apart from the NNPC, which other agency will be reformed through the PIB?



The way the Department of Petroleum Resources is currently being run, it lacks the capacity to respond to the international oil companies and the NEITI report has also confirmed that very clearly. That is why we are saying that the PIB will complement the effort of NEITI. Today, every oil producing country has reviewed their laws, the rules and regulations guiding their oil sector to maximise the benefits. And once government is able to tap into more resources and use it genuinely to kick-start the economy, and the economy is doing well and unemployment reduced, there will be a better climate for the international oil companies to do more business. Today, as we speak, the Federal Government has refused to release some of the oil lease, and this is making the Nigeria oil sector to play a second fiddle to Angola. Because of the non-passage of the PIB, people are scared, the banks, financial institutions are scared to put their money into an uncertain market. It is imparting negatively on the economy. We hear from time to time that the economy is growing by six or seven per cent, but the question is, in whose interest? Who does it impact on? Because the particular sector that is responsible for this growth hardly employs Nigerians. The oil and gas sector is a technical sector. So if the PIB is passed, more jobs will be created to benefit a larger number of the people. This will reduce the tension that we are experiencing today.



You talk about the PIB being able to check corruption in the sector not taking into cognisance that the people who are currently running the system are human beings who are still likely to be there even after the bill has been passed into law. How is the PIB going to check this?



This is the first time that civil society groups are taking more interest in the PIB. I am appealing to other CSOs to understand how the oil and gas sector works so that they can follow the disclosure policy of the government and eventually hold the government accountable, if anything goes wrong. Now, when you talk about human nature, I completely agree with you. But you also agree with me that before now, certain information was not disclosed to the public, but now, we are beginning to understand how the industry operates. Sometimes, companies will say they have paid certain amount but the government will come out to say they have not received it. This is because of bad interface among these agencies and the government is losing a lot of money as a result of this. What happens here happens in some other countries, but the only difference here is the culture of impunity. Most people who commit offences at the top level are not brought to justice. Once this culture of transparency and accountability is applied in the country and people are held accountable, certainly, it will reduce or minimise the level of corruption in the industry. And the citizens have to be engaged just as we in the PIB campaign are saying that the bill should be passed into law. If it is passed into law, we are equally going to carry out a dramatic engagement to ensure the implementation of the provisions of the law. And as you know, there are laws guiding these things and it now depends on us as the citizens of this country to begin to study those laws and see how we can use them to correct those ills in our society. If those in these agencies know that if they are caught, they will face trial, it will reduce the culture of impunity in the country.



How will you assess the role of the President in the process of passing the PIB into law?



President Goodluck Jonathan has told the whole world that the PIB would be passed into law, and we expect that as the President he should be a man of his words. Imagine what happened at the National Assembly. Because Nigerians came out to protest peacefully, the senators decided to step down the bill. We were there and we interacted with the policemen, and because of that they refused to debate the bill. They should look at the benefits of the bill rather than looking for excuse to step down the bill. If you look at the characters of the people resisting the bill, for instance, the Shell vice-president, who once told Nigerians that the PIB was anti-investment. The companies are not here for charity, they are here for business to make more money for their shareholders.



For the international oil companies, it is very clear. They raised fiscal concern about the provision, which we expect from them, and I think it is the duty of the Nigerian government to take decisions and have the political will to implement that decision. In taking that decision, they should encourage the foreign investors because they also bring in the technology and capital. As you know, the substantial part of the technology used in driving the oil sector is foreigners; we should not fail to recognise that fact. But at the same time, as the international oil companies are declaring jumbo profits, nothing stops us too from making the same jumbo profits. So, you can understand the resistance of the international oil companies. To a large extent, the Wilkileaks cable report has also come to reaffirm how the oil companies have placed themselves in government circles where they can easily influence certain decisions.


 

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