WIKIPEDIA Encyclopedia defines Quo-Vadis as a Latin Phrase meaning, 'Where are you going'' or 'whither goest thou', which literally translates to ' The Petroleum Industry Bill (PIB) - Where are we going''. In my opinion it means the 'Petroleum Industry Bill (PIB) - which way forward'' and the timing auspicious, coming at a time there is an increasing pressure on the National Assembly to pass the PIB.I need not over-emphasise the importance of the oil and gas sector (Downstream/upstream) to the Nigerian economy. The energy industry is the vehicle that propels the Nigerian economy. Oil is the singular, most important export earner for the Federal Government of Nigeria.The PIB was an executive bill conceived and introduced by the administration of Former President General Olusegun Obasanjo in the year 2000 to address the myriad of problems bedeviling the oil and gas industry (downstream/upstream) and to create a one stop, comprehensive, robust, accountable and transparent oil and gas industry for the benefit of all stakeholders including investors.In September 2007, the Umaru Musa Yar'Adua administration inaugurated the Oil and Gas Reform Implementation Committee (OGIC). Based on the report of the OGIC, the Yar'Adua administration in December 2008 forwarded the PIB to the National Assembly. But curiously, the sixth National Assembly wound up its legislative tenure without passing the PIB.The Goodluck Jonathan administration reintroduced the PIB before the seventh National Assembly, suffice to state at this juncture, that the National Assembly will ultimately do the right thing and hopefully pass the PIB this time around with appropriate amendments if need be, in order to finally end the impasse.However, only recently the Federal Government has set up a special task force to fast track the passage of the PIB and the National Assembly has earmarked the PIB as Priority Legislation. It is, therefore, time to walk the talk.The Objectives of the PIB include inter-alia:' To enhance exploration and exploitation of petroleum resources in Nigeria and to promote petroleum production for the benefit of all Nigerians;' Significantly increase domestic gas supplies for power generation and industrial development;' Create a peaceful business environment for petroleum operations;' Establish a progressive fiscal framework that encourages further investment in the petroleum industry while increasing accruable revenues to the government;' Create a commercially viable National Oil Company;'Deregulate petroleum product prices;' Create efficient regulatory entities;' Create transparency, good governance and sustainable economic development;' To promote Nigerian Content;' In line with global best practices to protect health, safety and the environment;' Creation of a strong environmental management and remediation regime that complies with international standards;' Finally, the PIB sets new rules for petroleum prospecting licenses and petroleum mining leases, marginal fields and revocation of licenses.It is instructive to note here that the PIB is an over 200-page document and so, I will try to condense and highlight the most important provisions of the PIB under different sub-headings as follows:Federal Government ' Limited government roleUnder the PIB, there will be less government involvement in policy, regulation and commerce. Cash injection from Nigerian government will stop. The Federal Government would no longer be called upon to provide cash calls for funding joint venture projects. Nonetheless, more revenue will accrue to government from royalties and taxes to fund infrastructural development projects and services for the Nigerian people.Nigerian National Petroleum Corporations (NNPC)NNPC will no longer serve as a regulatory, quasi-commercial and policy-making organ of the government in the industry. NNPC octopus ' like structure to be split for better performance and result. NNPC will be replaced by a National Oil Company to be incorporated as a Limited Liability Company under the Companies and Allied Matters Act 1990 (CAMA) as a successor company to the assets and liabilities of the extant NNPC. NNPC will be split into independent/professional self sustaining units outside the civil service structure. The new National Oil Company to be run on a commercial basis and would be able to raise money for its operations.Furthermore, it has been suggested that most of the joint venture agreements between NNPC and multinational oil companies are lopsided and skewed against the government. The PIB will provide a level playing field for both government and investors and bring about more balanced and fairer adjustments to the joint ventures.Joint venture agreements between NNPC and multinational oil companies may need to be restructured to allow them to raise/provide capital.Consolidation of all lawsA plethora of laws, statutes and regulations will be consolidated into one document/statute called the PIB. Under the PIB, laws and information will become more accessible and provide the much-needed clarity to all stakeholders. All existing legislations will be streamlined to provide and deliver a fairer economic return for Nigeria as well as for investors.A new fiscal regimeUnder the PIB, there are provisions for new and revised tax regimes/royalties. Also, there are provisions for various incentives and reductions in the fiscal burdens of companies that have substantial Nigerian interest. PIB would increase the amount of revenue the government would take in the form of royalties and taxes.Environmental issuesUnder PIB, gas-flaring and environmental pollution will be a thing of the past. PIB would introduce and enforce a robust integrated health, safety and environmental quality management system to ensure compliance with international standards. Also, PIB will introduce reporting obligations binding on multinational oil companies in respect of their operations. Finally, the new government policy to monetise gas flaring will be tailored to align with the PIBNiger Delta problem/host community's equity participationThe bill strives to give host oil producing communities a renewed sense of belonging in the oil and gas industry. Henceforth, they will be equity stakeholders and hold 10 per cent equity stakes in profits from oil produced in their areas, PIB will also provide employment and educational opportunities for host communities. Under PIB, oil companies will ensure and encourage development programmes and infrastructural development in the Niger Delta region. PIB will substantially reduce militancy in the Niger-delta region.Bidding roundsUnder the PIB, there would be more access to information and more transparency, abolition of discretionary awards should improve transparency and make the procedure for the award of licenses clearer and open.Local content provisionsThe PIB has inbuilt local content provisions that would enhance indigenous participation in the industry. Training and compulsory participation of Nigerians in all aspects of petroleum industries including exploration and production. Furthermore, companies holding petroleum mining leases - obliged to ensure that not less than 95 per cent of managerial grades carrying out this functions are occupied by Nigerians.New gas policyFor the first time under the PIB we would have a vibrant, integrated and comprehensive gas policy. The PIB provides tax breaks and incentives to encourage domestic gas production and exports.This will have a spiral/knockdown effect:' Lower domestic gas prices drastically;' Encourage more gas projects and exports.The main attraction for gas production lies in the introduction of low royalties and a special gas allowance known as the hydrocarbon tax - oil producers would not be liable to pay this tax provided they supply gas to the domestic market at low prices.Incentives to foreign oil companiesPIB provides for tax breaks to entice them to refine at least 50 per cent of their production in Nigeria by the end of the decade and also to encourage the development of marginal fields.Restructuring and creation of new regulatory agenciesA new National Petroleum Directorate is to replace the ministry of petroleum resources charged with regulating Nigeria's oil and gas industry under the Petroleum Act 1969.Also, the Nigerian Petroleum Inspectorate will replace the technical and regulatory division of the ministry of petroleum resources.Other new agencies:' Products Regulatory Authority - To replace the Petroleum Products Pricing and Regulatory Authority (PPPRA) - pricing regulator for the downstream products;' National Petroleum Asset Management AgencyAgencies retained in its present form' Petroleum Equalisation Fund;' Petroleum Technology Development Fund.NB: The Product Regulatory Authority and the Petroleum Equalisation Fund will have to be revisited as their roles may no longer be needed under a deregulated downstream system to ensure equitable and sustainable distribution and supply of petroleum products.International obligationsThe government will be mandated under the PIB to the extent practicable, to honour and respect international environmental obligations and other international legislations in the oil and gas industry.Nigerian Local Content Bill ' Nigerian Oil and Gas Industry Content Development Act 2010.Discussions on the PIB will not be complete without a brief mention of the Nigerian Oil and Gas Industry Content Development Act 2010. The PIB cannot be treated in isolation from the Nigerian Oil and Gas Industry Content Development Act 2010. The Act is supposed to complement and augment the PIB. In essence, they are interrelated and inextricably interwoven and are not mutually exclusive.In a nutshell, the law provides that certain categories of contracts in the oil and gas sector, which hitherto were performed by foreign firms now falls under the purview of Nigerians and Nigerian companies. It reserves a certain quota for Nigerians and Nigerian companies. Nigerian companies are now going to participate in big term contracts that were formerly done by foreign companies.TO BE CONTINUED
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