PIB delay: Nigeria loses $15b oil revenue yearly – Kachikwu

UPDATE: Nigeria loses $15b yearly as a result of absence of the much touted Petroleum Industry Bill, PIB: ‘better not announce reform than to broadcast flamboyantly you are passing PIB and then relapse’. 

Emmanuel Kachikwu was appointed group managing director in August this year by President Muhammadu Buhari, who tasked the former ExxonMobil executive with rooting out corruption and mismanagement at the Nigerian National Petroleum Corporation.

Nigeria should split its proposed petroleum industry law into parts to avoid further delays to reforms that have been stuck in parliament for seven years, Kachikwu said. The Petroleum Industry Bill, PIB has been before the House of Assembly since July 2012. Indeed, former Senate president, David Mark, in his End-of-Assembly speech, admitted the lawmakers failure to pass the Bill.

“As long as we continue to want to pass a holistic PIB, it’s going to be a major challenge,” said Emmanuel Kachikwu, managing director of the state-owned Nigerian National Petroleum Corp., on Wednesday. PIB refers to the Petroleum Industry Bill, which aims to consolidate a slew of oil and gas legislation and help make Nigeria’s oil industry more transparent.

“Once you begin to break it up into critical aspects, you begin to make a faster run to passing the PIB,” said Kachikwu. He was speaking at a Senate hearing to vet his suitability for a yet-to-be identified cabinet position he’s been nominated for by President Muhammadu Buhari.

The Senate resumed the screening of ministerial nominees on Wednesday with the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, the distinguished alumnus of the University of Nigeria (UNN) and Harvard University, tipped to be the star attraction.

Kachikwu is appearing on the same day controversial nominees like, the former Rivers State Governor, Rotimi Amaechi and former Lagos State Governor, Babatunde Raji Fashola are to be screened.

The Senate has confirmed 18 ministerial nominee, just as the lawmakers postponed the screening of Rotimi Ameachi and Barrister Bayo shitu. But, the nomination of Musa Ibeto was withdrawn by President Muhammadu Buhari. 

Among those confirmed by the Senate were Babatunde Fashola, Kayode Fayemi, Chris Ngige, APC National publicity secretary Lai Mohammed, Senator Udo Udoma Udo, Abubakar Salami SAN, Ogbonna Onu.

Others were Aisha Alhassan, Abdulrahman Dambazzau, Kemi Adeosun, Solomon Dalong, Audu Ogbeh, Amina Ibrahim, Emmanuel Ibe Kachikwu, Suleiman Adamu,, Ibrahim Usman Jubril.

Responding to questions during the screening, ‎Group Managing Director of Nigeria National Petroleum Corporation, Dr. Ibe Kachikwu, after over an hour’s drilling before the Senate has disclosed that Nigeria losses billions yearly due to the absence of Petroleum Industry Bill, PIB.

He clarified that this would not have been the case if investors had not been exposed to the uncertainties surrounding the passage of the bill.

Kachikwu also revealed that he told himself at the time of taking up the NNPC plum job that he will not allow himself to be constrained by the absence of the PIB in carrying out what needs to be done in the sector.

The proposed petroleum law, first presented in parliament in 2008, has been held up largely by political wrangling and objections by international oil companies, which say the government is demanding too big an increase in its share of the revenue. The delays have caused “a level of uncertainty that no international investor wants to grapple with” and cost the country $15 billion a year in lost investments, said Kachikwu.

Despite being Africa’s largest oil producer, the country of about 180 million people relies on imports for more than 70 percent of its fuel needs. The state-owned processing plants operate at a fraction of their capacity because of poor maintenance and aging equipment.

Kachikwu said the reorganization of oil taxes should provide scope for giving producers incentives to invest when prices are low and for increasing the rates they pay as prices recover. The tax changes for the oil industry can be incorporated into the national tax code, he said.

“The times when oil prices are so low that nobody is willing to invest in your country, you may give some incentives,” he said. “At the time when they’re so high and people are making outrageous profits, you may increase your taxes.”

Nigeria depends on crude exports for two-thirds of state revenue and more than 90 percent of export earnings. A halving of crude prices in the past year has put pressure on public finances, while the currency has declined 7.8 percent against the dollar since January.

Of four state-owned oil refineries, two units at Port Harcourt with a combined capacity of 210,000 barrels a day are currently producing at 67 percent of their ability, Kachikwu said. The Warri refinery in the south is shut down, while Kaduna, a processing plant in the northern part of the country that also hasn’t been operating, will reopen on Thursday after pipeline repairs have been completed, he said.

“At the end of December, we would sit down and say which ones have shown the capacity to consistently perform at levels that make optimal sense. Those that are not, we’ll have to shut down and do complete maintenance,” Kachikwu said.

Buhari, who came to power in May, fired the board and management of the NNPC, which has been dogged by allegations of losing billions of dollars of revenue since the 1970s, as part of a wider crack down on corruption in the industry.

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