IMF’s comment does not mean bill is without failings

A Lagos-based business law firm, Odujirin & Adefulu, says the International Monetary Fund's (IMF) remarks about the Petroleum Industry Bill is not an endorsement of the fiscal provisions in the bill being proposed for the oil and gas industry.

Charles McPherson, the IMF's Adviser, Fiscal Affairs Department, described the Bill as a professional legislation that is capable of transforming the Nigerian economy for the better when he visited the petroleum minister in Abuja on Tuesday.

However, Adeoye Adefulu, a Partner at the law firm that specialises in Petroleum law, and also familiar with the oil and gas industry reforms in Norway and Brazil, told NEXT that "this does not mean that the details of the document are without fault".

Mr. Adefulu, reacting to Mr. McPherson's comments on Wednesday, said, "My understanding, based on the various reports I have read, is that he was commenting on the whole Bill, and not just the fiscal elements. His comments, seems to me to be about the process of putting the Bill together, and I agree that in general the petroleum bill does exhibit a level of professionalism."

Mr. McPherson and his team visited Rilwanu Lukman, the Minister of Petroleum Resources and the Nigerian National Petroleum Corporation (NNPC) Headquarters, and said there is a need to understand the Bill currently before the National Assembly and the rationale behind it.

Petroleum Bill

In summary, the bill seeks to reform the industry by creating distinct agencies with clear demarcation of responsibilities, create an efficient and economically viable national oil company, and incorporate the Joint Ventures to address issues of long-term funding.

Mr. Lukman said the fiscal aspect of the Bill is geared towards reducing government's expenses and channel more resources into the development of other sectors like health, and education, and the improvement of infrastructure.

The petroleum minister expressed optimism that as the seventh largest oil producer in the world, the Bill when passed, will transform the NNPC into a National Oil Company that will be commercially oriented in the mould of Statoil of Norway, and Petrobras of Brazil.

"The PIB is capable of giving us our rightful place in the oil and gas industry in the world. The truth of the matter is that from what we know we could rise much higher than that level".

"We are going ahead with the NNPC transformation because it is key to the reform and would help in moving her away from the civil service mentality and fully professionalise it".

He said that the bill will create an environment that would help the country achieve its full capacity and make it into the league of the 20 most developed countries in the world, an opinion contested by the IOCs and tax experts, who argue that the proposed fiscal requirements in the bill will effectively hinder long-term investment in the upstream oil industry as well as gas development.

The Minister expressed the readiness of the NNPC to continue to cooperate with the oil companies, noting that they are partners in progress.

In his remarks, Mohammed Sanusi Barkindo, Group Managing Director of the NNPC, said the bill will transform the NNPC from policy formulation and regulation to a commercial National Oil Company that will compete favourably internationally.