• Moving debate to 2021 trouble stakeholders
• Buhari faces fresh attack on petrol price hike
• Citizens lament poverty, inflation, unemployment
• Stakeholders decry poor resources utilisation
• Don asks President to increase minimum wage
Nigeria’s National Assembly is still temporizing with passage of the Petroleum Industry Bill (PIB) and this is a source of worry to oil and gas stakeholders.
Two years after President Muhammadu Buhari declined assent to the bill, the document, coming as executive bill, was last month transmitted to the National Assembly. This comes as the president faces fresh attack on petrol price hike.
Expected to scrap the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Products Pricing Regulatory Agency (PPPRA), the bill proposed new bodies, including Nigerian Upstream Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Nigerian National Petroleum Company Limited.
But the Minister of State for Petroleum Resources, Timipre Sylva, had said that deliberations on the Petroleum Industry Bill 2020 by the National Assembly had been shifted to the first quarter of next year (2021), stressing that the lawmakers had cited the need to focus on the 2021 appropriation bill as priority.
Some industry players said the move could be in the best interest of the industry — insisting that there was need to carefully study the much-talked-about proposed law— considering that it was coming from the Executive.
They also argued that the 2021 appropriation required urgent attention and lawmakers would need to focus on its passage. Yet, others insisted that the bill had faced similar fate for more than two decades without progress. The Nigeria Extractive Industries Transparency Initiative (NEITI) had said Nigeria recorded losses to the tune of $200 billion for failing to pass the bill.
Coming at a time COVID-19 pandemic has caused unpleasant stir in the oil industry and the nation’s economic outlook not healthy, experts noted that the document required urgent attention.
PROJECT Coordinator at the Nigerian Natural Resource Charter (NNRC) Tengi George-Okoli, said the urgent need for Nigeria to reform its petroleum sector, to optimise revenues from its finite resource remained a priority.
“Now, this will all be delayed yet again, leaving available resources untapped by Nigeria and allowing other economies to have better positioned access to those investments,” Gorge-Okoli said.
She lamented that Nigeria did not appear to have an appreciation for the urgent need to pass the bill.
According to her, the PIB delivers some legal and institutional reforms that support sustainable deregulation, especially the repeal of PPPRA and PEF acts.
The Mineral/Energy Resource economist and former president of the Nigerian Association for Energy Economists (NAEE), Wunmi Iledare saw the delay as necessity if lawmakers would get the best from the document.
Iledare said the sector should be worried if lawmakers failed to do due diligence before passing it.
For a document that took the executive nearly two years to prepare, the professor said it would have been irresponsible for NASS to pass such a massive bill in two months. “The industry must be happy and it is a reflection of some level of seriousness of NASS, Iledare said. He added, “Perhaps, NASS wants its technical team to have enough time to study the bill so as to be properly advised.”
According to him, investors must also be contented with the development, noting that it would give the industry time to study the document.
“No need to hurry if we have waited 20 years. We must do it correctly so that we are all on board. Waiting to ensure that NASS committee digest what has been presented is the right thing to do,” Iledare said.
ANOTHER energy expert with the Facility for Oil Sector Transparency (FOSTER), Michael Faniran, noted that it was necessary for the legislators to focus on the 2021 budget.
He noted that the technical committees of the National Assembly didn’t stop work on the bill .
Like Iledare, Fanira insisted that getting the document was much more important than passing it into law.
MEANWHILE, president Buhari again came under intense attack from economists, energy experts and civil society organisations over his Independence Day speech, which justified recent price increase of petrol. They accused him of using flawed parameters.
Buhari had, in his speech, insisted that per litre cost of Premium Motor Spirit (PMS) in Nigeria should be as high as it is in Saudi Arabia, Egypt, and other countries.
But describing the President’s argument as “biased analysis,” they said the President only succeeded in increasing the frustration of citizens, who found it hard to cope with the prevailing economic hardship.
They said the right thing Buhari would have done was to douse the tension in the land by disclosing measures his government was putting in place to cushion the effect of the hike.
In Saudi Arabia, about SR350 is reportedly enough for an average citizen to settle household utilities, including electricity, water, and gas. SR350 is about N35, 000.
In 2019, Saudi Arabia’s estimated unemployment rate was 5.93 per cent. GDP per capita on purchasing power parity (PPP) in the country stands at about $22, 533. Inflation rate is only 1.96 per cent. In 2019, the average inflation rate amounted to 1.21 per cent. Minimum wage for Saudi nationals is SR 5,300. SR5,300, which is about N540,472.
Nigeria’s minimum wage is N30,000. Unemployment rate is 27.1 per cent, indicating that about 21.7 million Nigerians remain unemployed. Three-bedroom apartment outside city centre is over N500, 000 and three-course meal could take about N8, 000 in mid-range restaurants. The nation’s inflation rate is currently 13.22 per cent. GDP per capita on purchasing power parity (PPP) in Nigeria is expected to reach $4,900 by the end of 2020, according to Trading Economics Global Macro Models and analysts expectations. Current inflation rate in Egypt is 5.86. GDP per capita PPP in Egypt is expected to reach $10,500 by the end of 2020, according to Trading Economics and analysts’ expectations.
REPORTEDLY, cost of living in Egypt is 2.41 per cent lower than the trend in Nigeria. In terms of rent, the cost in Egypt is, on average, 78.94 per cent lower than what obtains in Nigeria. Meals for two in mid-range restaurant for three-course is about EG£335.00. That is about N8, 000. In May 2020, Egypt’s unemployment rate stood at 9.6 per cent.
In response to COVID-19 pandemic, KPMG revealed that Saudi government’s support targeting the private sector alone stood at $61 billion. The packages include exemptions and postponement of some government dues ($18.6 billion), a $13.3 billion package to support the banking and SME sectors, a $13.3 billion allocation to ensure government dues to the private sector are paid in time and a wage subsidy of 60 per cent, it noted.
The kingdom paid about 60 per cent of the salaries of Saudi employee in the private sector for a period of three months. The total payment hovers around $2.39 billion.
Professor of Economics at Babcock University, Segun Ajibola, said while prices could be compared across borders, Buhari only did the comparison in an isolated manner.
“This is because the economic fundamentals differ from jurisdiction to jurisdiction. To draw such comparison in commodity prices such as petroleum, we must consider the ability of the citizens of different countries to pay,” the Economist stated.
According to him, the only way Nigerians can be made to pay same price for petrol as it is in other countries under reference is to raise the minimum wage of Nigerian workers to what obtains in those other countries. It is N540, 000 for Saudi citizens working in the private sector.
Without such measures, the comparison would be incomplete and faulty, Ajibola said.
EXECUTIVE Director, Civil Society Legislative Advocacy Centre (CISLAC), Auwal Rafsanjani, also faulted Buhari’s comparisons, stressing that it failed to take into account the spending power and minimum wage, among other socio-economic indices of citizens in the mentioned countries.
“Despite being a crude oil-producing state, Nigeria’s oil and gas sector has been plagued with severe maladministration and deplorable outcomes, including but not limited to the huge losses in maintaining unproductive refineries to the tune of N1.6 trillion in five years, the massive average spending of $7 billion on fuel subsidy annually and the unaccounted revenue from crude oil sales, to mention a few,” he stated.
Rafsanjani noted that unlike the referenced countries, Nigerian also has higher tax burdens to the detriment of the citizens.
Executive Director, Order Paper Nigeria, Oke Epia, did not also find the President’s comparison good enough. He pointed that the countries referenced, unlike Nigeria, have palliatives for their citizens.
“There are no clear indications that citizens are not being further thrown under the bus when questions around local refining capacity remain hanging,” he stated.
The Director, Centre for Democracy and Development (CDD), Idayat Hassan noted that unlike Nigeria, Saudi Arabia runs a welfare state.
“The minimum wage in Nigeria is around 10 per cent of Saudi. So the comparisons are completely unwelcome. Our oil resources have never been managed to benefit our citizens at any point like some countries of the world, like Kuwait, Saudi and others, have done,” she stated.
Iledare, said unlike other resource-rich countries, Nigeria’s oil money rather than benefiting citizen had gone into running governance.
He said: “The weak and opaque institutional governance of the oil and gas sector has created too much leakages in the economy and in the process, maximising the social welfare loss of the society in an aggregate sense,” he said.
The concern for PricewaterhouseCoopers’s Associate Director, Energy, Utilities and Resources, Habeeb Jaiyeola, was the need for government to properly invest the proceed from crude oil. To him, deregulation of the downstream petroleum sector in Nigeria requires to free up government revenues for economic development and reduce wealth inequality in the country.
Jaiyeola said sustaining subsidy and price-fixing regime would maintain price disparity and encourage movement of subsidised products across border for sale in neighbouring countries where prices were not subsidised and hence sold at higher prices compared to domestic Nigerian subsidised sales prices.
“However, the Federal Government needs to ensure savings from a deregulated sector is channeled into provision of infrastructure to ease the impact of possible general increase in prices. The clear strategy in achieving this needs to be the focus, which should be the long-term economic gains, rather than short-term gains, which a subsidised regime provides,” he stated.
Follow our socials Whatsapp, Facebook, Instagram, Twitter, and Google News.
