-Moving discussion to
2021 bothers stakeholders.
-Buhari faces a new assault
on the rise in petrol prices.
-Ctizens complains about
hunger, inflation , unemployment.
-Stakeholders oppose poor
use of capital.
-Don asks the President
to raise the minimum salary
The National Assembly of Nigeria is only temporarily implementing the Petroleum Industry Bill
(PIB) and this is a source of concern for stakeholders in oil and gas.
Two years after President Muhammadu Buhari refused to authorize the bill, the
text was transmitted to the National Assembly last month as an executive bill.
This comes as the president faces a new
assault on the increase in the price of petrol.
The bill proposes new bodies, including the Nigerian Upstream Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the
Nigerian National Petroleum Company Limited, to scrap the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Products Pricing Regulatory Agency (PPPRA).
But Timipre Sylva, Minister of State for Petroleum Resources, said that deliberations by the National Assembly on the Petroleum Industry Bill 2020 had been moved
to the first quarter of next year (2021), stressing that the legislators had cited as a priority the need to concentrate on the 2021 appropriation bill.
Some industry players said the change might be in the industry’s best interest, insisting that the
much-talked-about draft law had to be carefully considered, taking into account that it came from the executive.
They also argued that immediate attention was needed for the
2021 appropriation and lawmakers would need to concentrate on its passage.
Others insisted, however, that the bill had met a
similar fate without success for more than two decades.
The Nigeria Extractive Industries Transparency Initiative (NEITI) said losses of $200
billion were recorded by Nigeria for failing to pass the bill.
Coming at a time when the COVID-19 pandemic created an unpleasant stir in the oil industry and the
economic outlook of the nation was not good, experts noted that urgent attention was needed for the paper.
Tengi George-Okoli, PROJECT Coordinator for the Nigerian Charter of Natural Resources (NNRC), said that the urgent need
for Nigeria to reform its oil sector remains a priority in order to maximize its scarce resource revenues.
“Now, this will all be delayed yet again, leaving available resources untapped by Nigeria and allowing other economies to have better positioned access to those investments,” Gorge-Okoli said.
She regretted that the urgent need to pass the
bill did not seem to be understood by Nigeria.
According to her, several legal and institutional changes promoting sustainable deregulation are being
introduced by the PIB, in particular the repeal of the PPPRA and PEF acts.
Wunmi Iledare, the Mineral / Energy Resource economist and former president of the Nigerian Association for Energy
Economists (NAEE), saw the delay as a requirement if the document would have the best for lawmakers.
Iledare said the industry should be concerned if,
before passing it, lawmakers failed to do due diligence.
The professor said it would have been reckless for NASS to pass such a large
bill in two months for a paper that took the executive almost two years to prepare.
“The industry must be happy and it is a reflection of some level of seriousness of NASS, Iledare said. He added, “Perhaps, NASS wants its technical team to have enough time to study the bill so as to be properly advised.”
Investors must also be pleased with the production, according to him,
noting that it would allow the industry time to review the paper.
“No need to hurry if we have waited 20 years. We must do it correctly so that we are all on board. Waiting to ensure that NASS committee digest what has been presented is the right thing to do,” Iledare said
Michael Faniran, ANOTHER energy expert with the Facility for Accountability in the Oil Sector
(FOSTER), noted that it was important for legislators to concentrate on the 2021 budget.
He noticed that the National Assembly ‘s technical
committees did not stop working on the bill.
Fanira argued, like Iledare, that it was far more important
to get the document than to enact it into law.
Meanwhile, President Buhari was again heavily criticized by economists, energy experts and civil society
organizations during his speech on Independence Day, which explained the recent rise in oil prices.
They accused him of
using parameters which were faulty.
In his speech, Buhari insisted that the cost of Premium Motor Spirit (PMS) per
litre in Nigeria should be as high as in Saudi Arabia, Egypt, and other nations.
But describing the President’s claim as a “biased interpretation,” they said the President was only able
to raise the anger of people, who found it difficult to cope with the economic misery prevailing.
They said the right thing Buhari would have done was to douse the tension in the
land by revealing steps put in place by his government to cushion the hike ‘s impact.
Approximately SR350 is reportedly adequate for an average person in Saudi
Arabia to pay for household services, including electricity, water , and gas.
The SR350 is
roughly N35, 000.
In 2019, the projected rate of
unemployment in Saudi Arabia was 5.93%.
The country’s purchasing power parity (PPP) GDP
per capita stands at around $22, 533.
The rate of inflation
is just 1.96 per cent.
In 2019, 1.21 percent
was the annual inflation rate.
For Saudi nationals, the
minimum wage is SR 5,300.
SR5,300, which
is roughly N540,472.
The minimum Nigerian
salary is N30,000.
The rate of unemployment is 27.1%, suggesting
that about 21.7 million Nigerians are still unemployed.
A three-bedroom apartment outside the city center is over N500, 000
and in mid-range restaurants, three-course meals will take around N8, 000.
The inflation rate for the
nation is currently 13.22 percent.
According to Trading Economics Global Macro Models and analysts’ projections, GDP per capita on purchasing
power parity ( PPP) in Nigeria is estimated to hit $4,900 by the end of 2020.
Egypt’s estimated inflation
rate is 5.86.
According to Trading Economics and analysts’ forecasts, the GDP per capita PPP
in Egypt is forecast to hit $10,500 by the end of 2020.
REPORTEDLY, living costs in Egypt are
2.41% lower than the trend in Nigeria.
In terms of rent, on average , the cost
in Egypt is 78.94 percent lower than what Nigeria gets.
Meals for two in a
three-course mid-range restaurant are around EG£335.00.
That would be
around N8, 000.
Egypt’s unemployment rate stood at
9.6 per cent in May 2020.
KPMG disclosed in response to the COVID-19 pandemic that the funding of
the Saudi government targeting the private sector alone stood at $61 billion.
It stated that the packages provide waivers and postponements of some government dues ($18.6 billion), a $13.3 billion package to help the banking
and SME sectors, a $13.3 billion allocation to ensure that private sector government dues are paid on time, and a 60% wage subsidy.
For a period of three months, the kingdom paid about
60% of the wages of Saudi workers in the private sector.
The overall payment is in
the range of $2.39 billion.
Segun Ajibola, Professor of Economics at Babcock University, said that while prices could
be compared across borders, only in an isolated way did Buhari make the comparison.
This is because the economic
basics vary from jurisdiction to jurisdiction.
We must consider the willingness of people of different countries to pay to
draw such a distinction in commodity prices such as petroleum,’ the Economist said.
According to him, the only way for Nigerians to pay the same price for petrol as in
other countries is to increase the minimum wage of Nigerian workers to what they earn in those countries.
For Saudi citizens employed in the
private sector, it is N540, 000.
The comparison would be incomplete and
faulty without such steps, Ajibola said.
EXECUTIVE Director, Auwal Rafsanjani, Civil Society Legislative Advocacy Center (CISLAC), also failed to compare Buhari, stressing that, among other
socio-economic indices of people in the aforementioned region, it did not take into account the spending power and minimum wage.
“Despite being a crude oil-producing state, Nigeria’s oil and gas sector has been plagued with severe maladministration and deplorable outcomes, including but not limited to the huge losses in maintaining unproductive refineries to the tune of N1.6 trillion in five years, the massive average spending of $7 billion on fuel subsidy annually and the unaccounted revenue from crude oil sales, to mention a few,” he stated.
Rafsanjani observed that Nigeria also has higher tax burdens
to the detriment of people, unlike the referenced countries.
Oke Epia, Executive Director, Order Paper Nigeria, did
not find the President’s analogy good enough either.
He pointed out that, unlike Nigeria, the
countries listed have palliatives for their people.
There are no strong signs that while concerns regarding local refining capability
remain hanging, people are not thrown further under the bus, “he said.”
Idayat Hassan, Director of the Centre for Democracy and Development
(CDD), noted that Saudi Arabia, unlike Nigeria, runs a welfare state.
“The minimum wage in Nigeria is around 10 per cent of Saudi. So the comparisons are completely unwelcome. Our oil resources have never been managed to benefit our citizens at any point like some countries of the world, like Kuwait, Saudi and others, have done,” she stated
Unlike other resource-rich countries, Iledare said Nigeria’s oil cash
had gone into running government rather than benefiting people.
He said: “The weak and opaque institutional governance of the oil and gas sector has created too much leakages in the economy and in the process, maximising the social welfare loss of the society in an aggregate sense,” he said
The problem for the Associate Director, Energy, Utilities and Resources of PricewaterhouseCoopers, Habeeb Jaiyeola,
was the need for the government to better invest the proceeds from crude oil.
To him, deregulation of Nigeria ‘s downstream petroleum industry needs freeing
up government revenue for economic growth and reducing the country’s wealth disparity.
Sustaining the subsidy and price-fixing policy, Jaiyeola said, would preserve price inequalities and promote the cross-border movement of subsidized goods for sale
in neighboring countries where prices were not subsidized and were thus sold at higher prices compared to Nigerian domestic subsidized sales prices.
“However, the Federal Government needs to ensure savings from a deregulated sector is channeled into provision of infrastructure to ease the impact of possible general increase in prices. The clear strategy in achieving this needs to be the focus, which should be the long-term economic gains, rather than short-term gains, which a subsidised regime provides,” he stated
Source: THE GUARDIAN NEWS
