July 16, 2024

FG urged to maximize opportunities in the new PIA

Nigeria lost $50bn in 10 years due to uncertainty over Petroleum Industry – Buhar

Solomon Ezeme

Experts in the oil and gas industry have advised the government to look inwards and take advantage of the opportunities in new Petroleum Industry Act (PIA), as they expressed their optimism in the ability of the PIA to effect a change that will better the future of energy sector in Nigeria, if effectively utilized.

This came during a virtual conference organized Thursday, by the American Business Council, on: “The Future of Energy in Nigeria and its Impact on the economy”.

The panelists spoke on various aspects of the PIA, including gas flaring and conversion to power, ‘Energy Poverty’, improvement in renewable energy, legal policies to attract more investment to the sector, among other issues.

Dave Williams, Co-Founder, D’Carbon Africa, advised the government not to neglect any energy source, in the process of implementing the Act.

“I think this is the Decade of Gas. We must consider climate impact in all we are doing, as well as infrastructure which is very critical.

“Getting the infrastructure and trying to increase the ratio of renewables inside the Energy Mix is going to be critical. So, focus should not be on one but on all. It should also be act upon quickly,” he said.

PwC’s Fiscal Policy Partner and Africa Tax Leader, Taiwo Oyedele, explained that the PIA would yield better results if the FG could allow professionals to manage the implementation.

“There is the issue of capability and capacity for the institution, within the PIA. I wasn’t very excited when I heard that a politician appointed for this.

“I wish we can get professionals and technocrats who had run an organization profitably to be in charge of things. We still hope for the best. At the end of the day, whether we are going to be competitive is not just about the legal risk, it will be the risk adjusted returns.

“People will be considering all of this risk, bearing in mind that we have specific risk that are still present in our country. Insecurity is one of it. So, over all, we need to avoid these pitfalls,” he said.

He also commended the government for making haste in amending the Act and carrying stakeholders along, during the process.

“The reason why Nigeria has not attracted much investment for the past 10-20 years was mainly due to legislative uncertainty about the legal framework. But now, to a large extent, that has been addressed.

“I wasn’t expecting there was going to be an amendment immediately, and that’s positive because, once you start going back to the National Assembly for this or that, there will be further delay. And that will add to the uncertainty. You don’t want to worsen the situation with what I call “regulatory and analysis uncertainty”. If the processes are getting too cumbersome, that’s a potential pit fall. Or not even involving enough stakeholders, including domestic and potential foreign investors.

“You must be careful so as not to delay in issuing those guidelines and regulations,” he said.

Hamilton Esi, speaking on behalf of Dipo Faulkner, President, American Business Council, said that the Nigerian government must use the PIA as an instrument to device better ways to tackle Energy Poverty, noting that energy transition in Nigeria will take different forms, as time goes on.

He said: “Yes the PIA may be coming late, but we have to welcome it, regardless. It gives us an opportunity to address real issues. One of them is ‘Energy Poverty”.

“We see that in our communities where the access to energy is expensive, people have now resorted to using things like firewood for cooking. And we know that wood burns ten times more than gas. So we have an initiative where we are transitioning gas to power.

“We are currently flaring, but we have broadened our gas turbines that pass out gas to help generate electricity for communities first, and then for other users, later on.

“As we progress in this age of renewable energy, then we will see that transition take other forms. But the reality is that, as a country, we are sitting on a huge resource of gas. That resource must be exploited while we also put renewable energy in consideration too.”

He also advised the government to use the new Act to attract more foreign and local investments, by creating policies that encourage competitiveness and lend clarity to what is obtainable for any potential investor, in the country.

“One of the things the PIA does is that it creates clarity – there’s a lot more clarity now for investors. There’s a playbook for the investors as to what the environment is going to be like when they invest.

“In terms of competitiveness, the provisions of the PIA in Nigeria are a lot more competitive than that of our neighbours in the Gulf of Guinea, in terms of the tax rate.

“I believe Nigeria’s tax rate is low when compared to those of our neighbours. So, the combination of the tax rate, the provisions of the PIA and the clarity makes it more competitive for Nigeria,” Mr. Esi said.


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