The Chairman , House of Representative Committee on Petroleum Resources (downstream) , Honourable Dakuku Peterside is optimistic that the Petroleum Industry bill (PIB)which has suffered delays  for over 8 years  due to lack of harmonization of contending interests,  would be passed into law before the end of the 7th  legislative  regime .  He  spoke with our Acting Energy Editor, Anayo Korie  on  wide range of issues concerning the downstream sector of Nigeria’s oil industry. Excepts:

What is the House of Representative doing to ensure that Federal Ministry  of Finance settle subsidy claims of oil marketers  to avert fuel scarcity now that Christmas and 2015 General Elections are  fast approaching?


Peterside Dakuku

The commitment of National Assembly is  to serve  the interest of all Nigerians by making good laws  for the governance of the country  and for the welfare of the citizens, as  most of the oil marketers are Nigerians. For the fact they are Nigerians they  are serving  the interest of Nigerians .Therefore, our  interests    in  payment of importers claims   is  for them to continue  to import fuel  which is an interim measure   to sustain the running of Nigerian economy.

On the long  term , we  will not support the importation of fuel into the country  when regulatory frame work is okay to guarantee the refining of petroleum products  in-country .For now that is one of the measures   that keep the nation moving .The marketers will  continue to import fuel for the nation  to have uninterrupted supply of Petroleum products ,because if they stop   importation of fuel today there will be crisis ,none of us can imagine  the  dimension of the crisis. .If the downstream sector of the oil industry is  shut down today it will affect all sectors of the economy.For instance it will affect homes, industries,transportation  .The reason for  our  interest in the downstream sector  is to protect Nigeria businesses.We don’t  have to throw people out of employment.

Therefore, the question is what are we doing?,  we are doing three things to keep Nigeria  moving on the right track.  One is to accelerate the passage of petroleum industry bill. Secondly, we are engaging the Ministry of Finance to pay for the imported products into the country   .We have told the Ministry of Finance  ,there is no justification for owing the importers .The truth is that the bench mark for crude is  $77.05 ,crude oil price has not fallen below $90 per a barrel ,absolutely there is no justification for the delay in  the payment for now.

The target   at the time we passed  that  budget was 2.3 million barrels per a day ,again the fluctuation of 2.4 million barrels  is not the justification for owing the marketers. When we approached the Ministry  of Finance to pay, they complained of not having money. Therefore, in this issue of corruption, they are  delaying things ,we have to investigate the matter properly again. We know of the incidence of oil theft, but not to the extent of saying ,there is no money to pay for service rendered.

On the preparation for the payment for importation, I want to commend Petroleum  Products Price Regulation Agency  PPPRA for their role in the area of processing  and  documentation for the marketers who imported  fuel . The   House of Representative  is pleased  with  their conduct.

We are still talking to Ministry of Finance  on the best way  to pay marketers  for fuel imported  into the country. The House of Representative is searching  for the best approach to handle the subsidy regime. We  have observed that subsidy in itself is not sustainable. No matter how we look at it, the initiative cannot last for long  ,Addressing it  with legislation now  is not the appropriate time. For now,  we have to block some loopholes. We are not resting on our oars, because whatever  happens now will impact on the economy. We don’t want Nigerians to suffer or the economy to be grinded to a halt.

You will understand  that we are approaching 2015 General  Election , which is critical to  Nigerians.  If we get it wrong,   the nation will begin to witness demonstrations  and riots all over,  thereby   affecting Christmas celebration and  most importantly, 2015 transition .We don,t  want such negative vice    to happen to the nation.  We are committed  to ensuring that  peace  thrives.

What  is the National Assembly’s role in mitigating the risk undertaken  by oil marketers  in fuel importation?

Every business  venture comes with  its  associated risks.  An entrepreneur is  the one   who takes risks. One of the   risks associated with business is  that of anticipation.  If it goes well, will the businessman bring  the profit to national purse ? The answer is no, or any one of us the answer is also no. They   should have the ability to absorb the shock. In the interim ,the National Assembly will not do anything  to combat the risk associate with  anticipation.

Very soon  when the House of Representative resumes  from recess, the  PIB would be laid on the floor for deliberation  and approval.   The Senate will follow suit ,before it will presented to the President for ascent  . There is transitional legislation for PIB that will  take care of Pre and post PIB  regime .For instance,  downstream regulation is done  by multiple agencies such as Department of Petroleum Resources, (DPR ) and the Petroleum Products  Price Regulation Agency  (PPPRA) to an extent. If you talk of the quality of petroleum product that is regulated by  DPR, the importation of Fuel is regulated by PPPRA,there  are some aspects of regulation done  by Petroleum Product Marketing Company (PPMC), and Nigeria National Petroleum Company.



Now in the new post   PIB regime, it will be one –stop  shop down stream  to regulate the demand and consumption of fuel in Nigeria. Between that  time,  the PPPRA will transit to DPRK  After that transition, regulation will take  care of what  is happening now.

The importation of  fuel will still continue even when PIB is passed into law,that is when regulation will be paramount. The fact that the   PIB   becomes law  does mean that refineries would be built immediately.   Certainly not. The fact is that we will continue to import fuel while regulation will cheek quality to avert oil traders going to bring substandard fuel to the country .In post PIB, the players will still remain the players because they have the facilities  already.They  have tank farms, trucks, marine vessels   and other logistics that will enable distribution of fuel nationwide .What will happen is the change of operation.

However, for any importer to bring petroleum  product  into the country  there is the need  for him to have import license in order to bring the right quality.  We have  to know the source of the fuel, and to know if the products  meet our specification.

When will Nigeria stop importing fuel, considering the  fact that she is one of the largest producer of hydrocarbon  in Africa?

We are not happy that Nigeria is still  importing fuel to meet our domestic  needs, We are not pleased that the nation is also importing , almost all the components used in the formulation of lubricants. That is not where  we desired to be ,or wanted to be.  That is not our vision.  It never makes us happy, We are concerned like every other Nigerian .The reality is that , though  it may not be palatable that today ,we don’t have refineries to  produce these  derivatives locally. Our refineries are not working  to our desired level .

However, in the short term, we have to import fuel  because we  cannot  build refineries over night . The most important thing we want  to do is to provide the regulatory business environment  for investment to flow in to the  country . We are making efforts to provide that environment .In terms of power, you know that we are not getting it  right,in terms of regulation. We are still grappling with PIB.

In the area of funding, most Nigerian banks are not interested in long term funding .It’s not blaming government alone,  both government and the private sector should partner to develop  the nation.

Licenses were awarded to private sector to  build 18 refineries , but not one was  built today. A lot of   factors   was responsible for that.  One is regulatory  environment: marketers were mandated to sell at a particular  price. The importing environment is tight.

In terms of security, you are  aware  of the prevalent challenges.  Every day, the oil pipeline is vandalised or destroyed. Even when  you are bringing vessels ,piracy is there to contend with. We have not got the issue of security right .There is  a lot of things we need  to put in place to get our bearings  right. You must be aware of government plans to build green refineries in Bayelsa,Lagos  and Kogi  states. Have you asked why those refineries have not started producing fuel?  The model  is that government wants  to own maximum of 40 percent ,while private investors 60 per cent. You understand that government is not a good business man.We need private sector inputs not   only to drive efficiency and effectiveness but also  ensure that business is run efficiently  to guarantee returns   on  investment .The investment  should  be run  efficiently to avoid people coming to claim the business are their political patronage or dividend of democracy.  We don’t have private investors.  To that extent, private investors are insisting that certain regulatory policies must be addresse.  Nobody puts his funds down for investment for mere  fun of it. Investors invest to earn profits.  The issue of corruption in downstream sector has to be addressed. The question is,  are we okay with the situation we find our self now ,and are we addressing it?  We  are using PIB legislation  and other  legislations  to address  the challenges.

Why  are private investors shunning investment in the downstream sector?

Why private investors are shunning  investment in the downstream sector  is due to heavy regulation.  It is a fact that deregulation  will  not solve our problems, but that is critical  to moving the sector forward. If we go to international lenders to borrow funds for investment, we have go there with  a balance sheet on how the borrowed funds will be re-paid .We have  to show how their money will be re-paid over time including profit.  I don,t   see any investor  committing his funds if the  challenges of regulatory environment  are not addressed.

We have to  find  a way to stop importation of fuel which is creating jobs for the citizens of the exporting nations .Nigeria is affected due to this  practice with  its  negative  impact  of job loss  that affects  citizens  of Ngeria. Of course, our role  in Africa will be undermined. Like the saying that one of every four  black man in Africa is a Nigerian, they are looking unto Nigeria for assistance and we will not fail them.

When  are we  expecting the passage of PIB?

When the bill is laid on the floor of the house of Representatives ,it will be circulated  to members , observation and correction will  made.   After studies, it goes to  third reading and committee stages,  subject to the Senate adding their inputs . Thereafter, the bill would be forwarded  to the President for his ascent .Hopefully, by the grace of God  before the end of May 2015 which is end of the 7th  legislative period,  it  will  become one of the laws of the land.

The passage of the bill would definitely drive the efficiency of the operation of the downstream of the petroleum industry , develop individual and corporate businesses,  and create wealth for Nigerians  via employment opportunities etc.


Source: DAILYINDEPENDENT

See what is holding the passage of the bill :

' Demonstrating their bitterness towards the
president, the senators shut down the Senate as
they boycotted legislative activities by adjourning
sitting without considering a single item on the
Order Paper.
Although plenary was adjourned till Wednesday,
the senators also vowed to repeat the same
action today, threatening that the trend would
continue indefinitely until the president addressed
their grievances.
The action is, among others, meant to frustrate
the consideration and prompt passage of the
2015 budget and Petroleum Industry Bill (PIB), as
they threatened to also shut down the
government in pursuit of their personal goals.'