Analysts have expressed concern that the Petroleum Industry Bill (PIB) has failed to restrict the presidency from doubling as petroleum minister. They also expressed discomfort over the bill to provide for plans by government to leverage its hydrocarbon resources to build cleaner energy for the future.
They also believe the 30 per cent provision in addition to the 10 per cent rents for exploration of frontier basis would weaken Nigerian National Petroleum Corporation )NNPC)’s contribution to the federation account.
“Aside from the above-highlighted positives that may come with the PIB passage, we also identified some key gaps in the PIB”, said analysts at Afrinvest.
According to them, the new PIB provided that 30.0 per cent of NNPC’s profit in addition to 10.0 per cent from rents on petroleum prospecting licenses and mining leases be committed to exploration in frontier basins. While we are not opposed to capacity expansion, we believe the share of profit committed to frontier exploration will in the immediate term weaken the contribution of the NNPC to the federation account.
Secondly, the bill does not reveal any plans of the government to leverage its hydrocarbon resources today to build a future of cleaner energy that will guarantee steady cash flow for the country in the medium-to-long term. Given the rapid shift of global attention to cleaner energy sources, we think the PIB might have left a major vacuum that may become manifest over the next decade as major oil buyers reduce demand while shifting focus to cleaner energy.