As the National Assembly commences legislation on the outstanding aspects of the Petroleum Industry Bill (PIB), Senate President Bukola Saraki Tuesday warned international oil companies (IOCs) operating in the country and the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) not to induce lawmakers during the consideration and passage of the Fiscal and Host Communities Bills – the fiscal and host community components of the omnibus PIB legislation – before the National Assembly.
Saraki, who stated this when the leadership of the IOC/OPTS visited him in the National Assembly, said the leadership of the 8th National Assembly had made it clear to all lawmakers involved in the process to live above board.
His warning was timely given the history of the PIB: Other versions of the bill, which was first presented to the National Assembly in 2007, never saw the light of day, following allegations that operators in the oil and gas sector had colluded with some legislators to stifle the legislation.
It took the current legislature to resuscitate the bill and commence its passage piecemeal.
According to a statement issued Tuesday by his Chief Press Secretary, Sanni Onogu, the Senate President called on the leadership of the OIC/OPTS to report any lawmaker who attempts to seek personal favours when the process of considering the bills commences this month.
Saraki was quoted to have said: “Let me also use this opportunity to just make some ground rules clear: We as the 8th National Assembly – I told you at the beginning that the two Houses will be on the same page on the remaining bills. I think we have shown that with the first bill (Petroleum Industry Governance Bill) that we passed.
“I am confident that for these other bills too, we will do the same. I want to assure you that it is in our own interest, and the leadership has made it clear to all the members involved, that this must be a transparent process.
“We are doing it in the interest of the country. The National Assembly leadership is not going to tolerate any hanky-panky. No favours, no gifts. Nothing must be given to get this work done.
“And we want to mandate you that if you see any of these you should be able to bring it to the attention of the leadership. All we want to see are bills that are in the interest of Nigeria, and we have read the riot act to all our members that nobody should approach anybody for any interest towards any benefit and I want to make this very clear.
“This is the position of the leadership on this issue. We must ensure that everything is above board because these are not just bills for today, but for future generations. We must make sure that in our time it is done properly.”
Saraki said that after the passage of the PIGB by the National Assembly, which is now before President Muhammadu Buhari for his assent, the process for the passage of the Fiscal and Host Communities Bills would soon commence – to pass legislations that will be a “win-win” for all stakeholders.
“This is where we are now and this is where it concerns those of you who are operators to see that we can pass a petroleum bill that is a win-win for all.
“A petroleum bill that will be a win for Nigeria on the revenue side, investment side and jobs creation; and it is also a win for those who are investing in Nigeria because we appreciate that it is a very competitive world out there and we must make Nigeria competitive.
“The only way we can do that is through engagement. We cannot do it by just passing a bill and just putting it on your doorstep, because we are not the ones that will do the investments.
“So, it has to be a bill that we all believe is in the interest of all those who are involved,” he added.
Responding, the leader of the delegation of the IOC/OPTS and Managing Director of Shell Nigeria Limited, Mr. Osagie Okunbo, said the visit was essentially meant to assure the leadership of the National Assembly that the IOC/OPTS will make its memorandum on the Bills available to the relevant Committees of the National Assembly during the public hearing.
He said that it was important to ensure that the PIB that is passed is one that will promote investment.
“Our primary concern is that at the end of the day, we both lay the years of uncertainty to rest, but even more importantly, that a bill that is passed eventually is one that we can all be proud of and the one that we can say will encourage investments in all parts of the oil industry,” Okunbo stated.
Oil Price Volatility
Meanwhile, as Nigeria continues to enjoy a favourable economic environment on the back of high oil prices and stable production, some members of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) have stressed that the country’s exposure to oil price volatility remains a concern.
This is just as they disclosed that the level of non-performing loans (NPLs) in the banking sector stood at 16.21 per cent as of February 2018. According to them, the development clearly showed that a lot of efforts and strategies needed to be put in place to improve the banking sector performance.
These were some of the observations made by the members at the last MPC meeting on April 3 and 4 and posted on the central bank’s website Tuesday.
In his remarks, Prof. Adeola Adenikinju said with rising international oil prices, the subsidy on consumption of refined products continues to grow, with implications on the budget’s implementation.
According to him, while the shift to external debt would likely provide a breather to domestic investors who have been crowded out of the credit market, the rise in external debt comes with its own risks to the economy, especially with commercial debts.
“The share of interest debt payments in the 2017 budget and 2018 Appropriation Bill are significant and higher than allocations to some human capital development sectors.
“The continued depletion of the Excess Crude Account, the monetisation and sharing of oil revenues, and foreign debts without any effective stabilisation fund should be of concern to policymakers,” Adenikinju said.
More worrisome to him was the potential spike in domestic spending that has been a regular feature of past election cycles in Nigeria.
He noted that “all of these factors, plus the rising debt profile of the government, will increase inflationary outlook for the economy”.
To put Nigeria on the path of low-inflation induced economic growth, Adenikinju urged the federal government to ensure the synchronisation of fiscal and monetary policies and call for the commitment by the fiscal authorities to sustain an effective, functional and well resourced stabilisation account that would provide the needed buffer for the economy, an increase in the non-oil tax to GDP ratio, horizontal and vertical diversification of the oil sector, speedy passage of the 2018 budget, and payment of contractors’ debts to reduce the NPLs of banks.
He also called for the “provision of more credit to the economy by the banking sector, reduction in the maximum lending rates by banks, and the maintenance of adequate foreign reserves as a hedge against reversals in portfolio investments and cyclicality of the global oil market”.
In her contribution, the newly appointed CBN deputy governor, who is also an MPC member, Mrs. Aishah Ahmad, said the continued improvement in the country’s external reserves position, currently at about $48 billion, gives the central bank greater flexibility in exchange rate management.
But she also noted the risks to capital flows, exchange rate and macro-economic stability.
“Notwithstanding the foregoing positive developments, the economy remains exposed to potential global economic headwinds, whilst high lending rates and low private sector credit growth threaten the fragile recovery in domestic output.
“Approaching monetary policy normalisation in advanced economies, as inflation rises to long-run targets, have potentially negative implications for capital inflows as the competition for international investment flows intensifies,” Ahmad warned.
According to her, despite the relatively strong bank balance sheets and the stable outlook for the industry, the high and rising NPLs concentrated in a few sectors was worrisome. “Whilst the macro-prudential measures being implemented by the CBN are helping to proactively manage this risk, a stronger and resilient economic recovery remains crucial to reversing this trend,” she added.
Another MPC member, Robert Asogwa, in his contribution expressed concern over what he termed “emerging signs of banking sector fragility”.
According to him, “Besides the reported increases in NPLs which by the CBN staff report had increased to about 16.21 per cent in February 2018 (arguably still at moderate levels for now), the rise in average daily requests of deposit money banks from the Standing Lending Facility (SLF) window and the continued reliance of many banks on operations in the government debt market to remain solvent are all early warning signs of future threats in the banking industry.
“While the gradual recovery from the economic recession may rectify some of the causes of the increases in non-performing loans, the current preference of banks for the SLF not only sends public signals of interbank fear and caution, but also introduces constant volatility in the interbank rates, and when unchecked may unnecessarily be expanding the balance sheet of the central bank.
“Increasing arbitrarily the rates on the SLF as a strategy to discourage banks from utilising the window may also not be a good policy as this would unjustifiably expand the margin between the rates on SLF and that of the Standing Deposit Facility (SDF).”
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