July 6, 2021

Africa

NIGERIA: Southern governors draw lines in the sand on PIB, presidency

BY Malte Liewerscheidt

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( 3 mins)

Even though both houses of the National Assembly passed the notorious Petroleum Industry Bill (PIB) last week, there is a potentially protracted period of suspense in the offing before a harmonized version emerges for President Muhammadu Buhari to sign. In their meeting on 5 July, governors from across southern Nigeria voiced sharp opposition to some of the PIB’s key terms, echoing fierce criticism from the oil-producing Niger Delta region. Furthermore, the governors weighed in on the nascent Buhari succession debate by categorically stating that Nigeria’s next president should hail from the south. The unanimous statement by governors across party lines sends a strong warning to circles in both major parties that may be scheming to retain the presidency in the north.

As expected, the PIB versions passed by both the Senate and the House of Representatives contain more industry-friendly provisions than initially tabled, particularly concerning royalty and tax terms. The PIB’s passage by both houses is a truly historic moment; however, it is too early to tell whether this concludes the bill’s journey of some twenty years. In fact, certain key clauses inserted at the final moment still have the potential to become major stumbling blocks.

Unsurprisingly, these mainly concern the allocation of revenues between north and south, particularly funding for a so-called frontier exploration fund tasked with promoting oil and gas exploration in areas outside the Niger Delta, especially the north-east. While an earlier version suggested dedicating 10% of rents on petroleum prospecting licenses and petroleum mining leases to the fund, a provision was added which stipulated that, in addition, the state-owned Nigerian National Petroleum Corporation (NNPC) should contribute a hefty 30% of its annual profits. Conversely, funding for so- called host communities in the Niger Delta was raised only mildly from 2.5% to 3% (Senate version) or 5% (House of Representatives) of industry operators’ annual operating expenditure.

A joint committee is now tasked with ironing out the remaining inconsistencies between the versions passed in each house, before a consolidated version can be sent off to Buhari for signature. Rather than being a technicality, this could now become a protracted political affair. Traditional Niger Delta leaders organized in the Pan-Niger Delta Forum (PANDEF) have already opposed the cited clauses, calling them “unjust, satanic and provocative” and adding unsubtle threats to block International Oil Companies (IOCs)’s access to their local production sites.

Furthermore, the southern governors’ forum, a group of 17 governors from both the ruling All Progressives Congress (APC) and the main opposition People’s Democratic Party (PDP), has weighed in. Amid other things, the forum sided with the House of Representatives concerning the host communities fund proposal and flatly rejected propping up frontier exploration funds with NNPC profits.

Beyond the PIB, the governors addressed several other issues, most importantly reminding everyone of the unwritten rule of Nigerian politics to rotate the presidency from a representative of the north to a southerner after two terms. That the governors felt the need to make such an explicit statement suggests that rumors that northern elites intend to cling to power beyond 2023 are substantiated. However, drawing a bipartisan line in the sand on the issue sends a strong message that any such efforts would ultimately be frustrated.

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