Although Nigeria is not an oil-rich country, oil plays a key role in determining the size of her public revenue and the quantum of her export revenue. Besides, the focus of Nigeria’s politics is fundamentally on who controls the realisable public revenue, which substantially is the oil money. The centrality of oil in shaping the dynamics of her economic growth and as constituting the material basis of Nigeria’s domestic and international politics is, however, not reflected in the casual attitude of Nigerian political leaders to issues pertaining to oil industry governance.
For 20 years (1999-2019), the early recognition by the first post-military civilian regime that Nigeria’s oil industry needs a radical reform has not been translated into practical reality. Since 1999, five civilian administrations and eight National Assemblies have come and gone, yet, there has been no significant progress in achieving the much needed oil sector reform. The periodic audits of the oil sector by the Nigeria Extractive Industries Transparency Initiative and the research-driven benchmarking exercises of the Nigerian Natural Resource Charter have thrown up enormous data and a whole library of informed and specific recommendations and proposals that can aid a significant and positive transformation of the sector. Yet, so far, all we have is a series of fresh starts at legislating the reform process. Looking back, the picture that emerges is one of lack of commitment by the political leaders to developing the Nigerian economy, by modernising and growing its key sector and enabling it to establish forward and backward linkages with the rest of the economy.
This article provides a reminder of where the nation is in Nigeria’s journey to the much needed oil sector reform, a summary of some of the key issues involved, and a suggestion of the proper direction to follow. In doing so, the article relies mainly, on the work of the Nigerian Natural Resource Charter BER 2017, but places its proposals and prescriptions squarely within the context of the Constitution of the Federal Republic of Nigeria, 1999.
The reform of the oil sector in Nigeria, to promote the greatest happiness of the greatest number of people in Nigeria, should be anchored, generally, on the first and second precept of the Natural Resource Charter. In the language of the charter, this means that, first, oil resource management in Nigeria should be done in such a way as to secure the greatest benefit for Nigerian citizens, with the aid of an inclusive and comprehensive strategic plan and clear legal framework. Besides, resources should be extracted and managed following the principles of transparency, accountability, due process and non-tolerance of corruption as elaborated in the NEITI Act (2007) and other relevant laws of Nigeria.
The principles embodied in the two precepts of the NRC find echo, legitimacy and contextualisation in the provisions of the Constitution of the Federal Republic of Nigeria, especially, Chapter II, entitled “Fundamental Objectives and Directive Principles of State Policy”. Of particular relevance here are Articles 14 2(b) 15(50) 16(1c) and 16(2c) Article 14(2b) of the Nigerian people shall be the primary purpose of government. Article 15(5) directs unequivocally that the state shall abolish all corrupt practices and abuse of power. The constitution goes further to stipulate how the economy is to be controlled and managed in order to ensure the security and welfare of the people of Nigeria. Article 16(c) gives the state a key role in the national economy. It states that “without prejudice to its right to operate in any areas of the economy, the state shall manage and operate the major sectors of the economy”. Furthermore, Article 16(2c) provides that the Nigerian State shall direct its policy towards ensuring that the economic system is not operated in such a manner as to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or a group. The precepts of the NRC are more specific to the oil sector, but they should be interpreted in a manner that aligns them to the provisions of the constitution. The new government, under the re-elected President, needs to be reminded that unless and until the needed reform is carried out in the oil sector; it cannot expand let alone help to diversify the entire economy by developing forward and backward linkages.
The all-encompassing Petroleum Industry Bill introduced in 2009, which was revised in 2012, has now given way to four separate, but related bills. First is the Petroleum Industry Governance Bill in which aims at restructuring institutional relationships and streamlining the governance processes in the oil sector, while making it commercially driven. The bill has been passed by the 8th National Assembly but not assented to by the President Muhammadu Buhari. The differences between the executive and legislative branches of government should be quickly ironed out. Government should act immediately, before the end of the 8th Assembly, to kick-start the reform of the oil sector by assenting to the PIGB. This should be followed by the consideration and passage of the Petroleum Industry Administration Bill by the 9th National Assembly which will be inaugurated in June 2019. We expect the passage of the PIA Bill to be done and the bill assented to latest by December 2019. While that legislative process is on, the executive arm should initiate discussions and consultations with a wide variety of stakeholders on how to scale the potentially more difficult hurdle of passing into law the other two bills, namely, the Petroleum Industry Fiscal Bill and the Petroleum Industry Host and Impacted Community Bill which will task the negotiation and lobbying skills of the executive arm of government. To get them passed, the government should therefore begin consultations and seek the cooperation of government agencies and non-governmental bodies, as well as professionals that work in the sector in building coalitions to support the passage of the two bills. It should be borne in mind that the ghost of political restructuring may rise up to haunt the process of passing the two bills.
Apart from urgently passing the four Petroleum Industry Bills, the new government has to show more seriousness and greater determination to tackle the adverse environmental impacts as well as the social, economic and human costs of extraction is carried out in Nigeria. The Benchmarking Exercise Report 2017 of the NNRC indicates that a number of processes need to be modified. Environmental Impact Assessment is no longer adequate; it should be accompanied by a more robust procedure, the Strategic Impact Assessment. There is inadequate coordination among the state agencies that monitor and enforce standards and laws on the environment. These agencies include: the Ministry of Environment, the Environmental Standards Regulatory and Enforcement Agency; The National Oil Spill Detention and Response Agency.
The government’s approach to mitigation of environmental hazards and degradation can benefit from the report of the NRC. First, the Benchmarking Report 2017. The report recommends a heretical framework that privileges prevention but at the same time accommodates among other things timely and adequate compensation, and prevention. This approach also recognises that local community interest may differ from state and local government interests. It therefore stresses the necessity for seeking local community consent and consulting local communities before extraction contracts are signed and exploration and exploitative activities begin.
Besides, government bodies such as the Military of Niger Delta Affairs and the Niger Delta Development Commission need to be sensitised to the necessity of involving local companies and individuals in executing projects and integrating the local labour whose skills have been enhanced into companies that operate at the local levels.
END
Be the first to comment