By 2020 Nigeria hopes to be one of the 20th-largest economies in the world and able to consolidate its leadership role in Africa and establish itself as a significant player in the global economic and political arena. This can be realised through efficient utilisation of our natural resources. After 50 years of oil production, Nigeria is currently in the process of reforming the oil and gas industry with the introduction of policies and legal frameworks that will underpin its energy policies, boost economic growth and spur a sense of optimism for the country’s future.

The Petroleum Industry Bill (PIB) is an omnibus bill, which seeks to harmonise all the existing laws in the industry and will guide operations in the upstream, midstream and downstream subsectors. This historic amalgamation of 26 existing laws has taken over 12 years to redefine and realign. The PIB in essence is reform legislation that aims to put in place a robust framework that establishes clear rules, procedures and institutions for the administration of the petroleum industry in Nigeria.

The PIB seeks to establish a legal, fiscal and regulatory framework that will revolutionise the petroleum industry in Nigeria. It also intends to create a standard for business practice; protect health, safety and the environment during the course of petroleum exploration; and generally enhance exploration and exploitation of this resource in Nigeria.

One of the immediate benefits will be a clear, transparent and accountable framework on which to base the development and revenue derivation for our deep and ultra-deep offshore blocks from where our long-term additional reserves and national revenues must come. At the heart of the PIB is the separation of roles between policy, commercial, and regulation and monitoring operations.

The powers vested in the petroleum minister by the bill are less than those of its counterparts in advanced petroleum-producing countries like the UK, Malaysia and Norway. To check any excesses and abuse of powers, the PIB also empowers the minister to delegate some of his or her powers, which is a vital ingredient of democracy. Section 6(2) of the PIB empowers the minister of petroleum to delegate in writing to any person or institution any power or function conferred on the minister by this act, except the power to issue orders and regulations.

The PIB also outlines a robust regulatory framework. The multifaceted regulatory bodies provided for in the PIB are a result of the complex nature of the industry. One large regulatory entity that hosts two separately run organisations is not a model of efficiency. Therefore, there is a need for a disaggregated system that is robust and can speedily respond to the variety of issues that may arise. The bill also intends to establish the Petroleum Host Communities Funds. It should be noted that it was established to ensure a positive effect on communities and the environment and to foster a more cooperative relationship between the public and oil and gas companies. The provision will engender a direct impact on the communities concerned. The intended outcome is to bring the current spate of pipeline vandalism and crude oil theft to a bare minimum.

The PIB also establishes a flexible fiscal regime that balances risk and reward to enhance the production of this vital resource. The fiscal system is predicated on a risk-reward profile that ensures investors adequate returns while optimising government gains.

The bill is a crucial legislative intervention that is required to address many of the current challenges in the industry. The PIB will trigger increased investments, infrastructural developments across the entire value chain and government revenue when eventually passed. The new legislation is expected to assist Nigeria in boosting production capacity to 4m barrels per day by 2020. As sponsors of the bill, we consider its passing to be above politics. Therefore, we are open to working with all stakeholders to arrive at a legislative conclusion that is beneficial to all.