Protocol;
1. The
petroleum industry remains the mainstay of the Nigerian economy. Oil and gas have been, and will likely remain for the foreseeable future, Nigeria’s most important non-renewable energy source.
The industry contributes over 90% of the country’s
foreign exchange earnings.
2. The
industry is therefore critical to the economic and social development of Nigeria. This all-important sector of the economy has for too long performed below efficiency indexes, with government
and investors alike losing significant edge
in the oil and gas investment trends. The case for change cannot be more compelling considering that existing petroleum legal, regulatory and institutional structures are out-dated.
3. It is unacceptable that till
date, we still import over 90% of needed petroleum products (petrol and chemicals), we flare
substantial gas produced, we have damaged our eco-systems
and polluted our communities and cannot supply adequate electricity to our homes and industries.
This situation has undermined our citizens’ standard of living, life
expectancy, our national energy security and has resulted to other
unforeseen fall-outs like: labour unrest; fuel queues; high cost of
delivery of products; high cost of delivery of overall
services in the overall economy; and unquantifiable wastage
of national productivity as a result.
4. The state of the industry globally today, has heightened
and made it imperative that either we comprehensively reform our
local industry to have a chance to keep it alive or become
extinct. The oil and gas industry is yearning for good governance,competitiveness,
transparency, indigenous participation and accountability.
5. The
8th Senate recognizes that the
reason for the dearthof
reform in the industry is not due to lack of trying. Since
2008 when the PIB was first introduced through to
the 7th National Assembly, several versions of the bill have unsuccessfully made their way through
the National Assembly.
While, the PIB was stalling
and its passage delayed at the National Assembly, investment
decisions in the industry continued to suffer, keeping the country’s future in limbo and denying Nigeria the unique opportunity as an oil
and gas leader in Sub Sahara Africa.
6. This history
of the petroleum industry reform effortnecessitated a rethink
by the Senate on their approach and methodology. This gave
rise to the choice of the current reform project by
the 8th Senate. In
our view, the petroleum sector is a politically sensitive industry with diverse and divergent interests. It was therefore
important to recognize that for the reform to succeed,there
was the need to unbundle it into
manageable compartments that could be passed and implemented in tranches.
7. We
were able to achieve this through extensive discussions, collaboration
and the participation of all stakeholders; a process that we at the 8th Senate
commenced as early as mid-August 2015 with a series of informal contributions that have culminated here today.
8. At
this point, let me thank all those who contributed informally in moulding the bill, helping to unbundle its contents so
that it is for this reason and others that we are today looking at the
first of a series of bills arising from the intended reforms of the
industry starting with the
Petroleum Industry Governance
and Institutional Bill.
9. It
is widely acknowledged that major reforms in the governance and
institutional
structure for the sector are necessary and urgent. A major drawback of
the existing framework is the lack of clarity of roles, self-
regulation, conflicts and unnecessary overlaps.
10. The
key objectives of the Petroleum Industry (Governance &
Institutional
Reforms) Bill therefore is to reform this segment of the industry by
introducing international best practices that have led other countries
to success in the development of their various oil and gas sectors. In
doing this the bill will enable us;
a) Create efficient
and effective governing institutions with clear and separate roles for the petroleum industry;
b) establish
a framework for the
creation of commercially oriented and profit driven petroleum entities
that ensures value addition and internationalization of the petroleum
industry;
c) promote transparency in the administration
of the petroleum resources of Nigeria;
d) create a
conducive business environment for petroleum industry operations.
11. This
public
hearing therefore is another avenue for us to further hear from you the
operators, regulators, experts and other stakeholders in the industry
as how best to achieve these objectives and move the industry forward in
a manner that is efficient, effective and
corrective.
12. It is our hope that by the end of your deliberations today, we
13. At the passage of the second reading of this bill, we made a commitment
to the Senate, that along with this Governance bill, we
will begin to tackle the Fiscal Framework and Host Community issues.
14. I want to use this opportunity
to inform you all that we will be starting informal discussions
and just as we did on the governance issues, we will be engaging with a
lot of you for your contributions, advice and opinions.
We believe the two areas, Fiscal Framework and Host Community Issues, truly
depend on your engagement with us.
15. The bills on Fiscal Framework and Host Communities will be a shift from
the previous approach where the government will force its opinion on all parties.
Here at the 8th Senate, we intend
to move away from the way things were done in the past during the consideration of such bills, especially Fiscal Framework
and Host communities, we
will push for a greater partnership relationship resulting in a bill
that is a product of all the
views and comments of the stakeholders so that the bill is a win-win
for everyone; one that works for government, is attractive to oil
companies to come and invest and takes into consideration the concerns
of the host communities.
16. Finally
let me reassure all stakeholders that this is just the beginning. We
will
also tackle the issues of downstream, gas and the environment. We are
poised and resolved that we will deal with all issues related to the
industry, albeit in tranches. This will ensure thoroughness and
effectiveness. As a nation we cannot afford any further
delay in our effort to reform our oil and gas industry.
17. The journey begins now and I assure you that we will guarantee that all
of these bills are passed in record time. I wish you all very fruitful deliberations.
18. I now declare open
the Public Hearing on the Petroleum Industry Governance Bill (PIGB) 2016.
19. Thank you and May God bless Nigeria.
PRESIDENT OF THE SENATE
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