Nigeria’s oil bill faces delays over demands for big changes
A week before the latest deadline to pass Nigeria’s long-awaited oil overhaul bill, demands for big changes, including from community leaders seeking an increased share of revenues, could push its passage into late this year, four sources told Reuters.
The last-minute wrangling over the package – which aims to
modernise Nigeria’s petroleum industry and attract a shrinking pool of global
fossil fuel investment dollars – has disappointed those who hoped the political
alignment of the presidency and the National Assembly would break the cycle of
failure that has stalked overhaul efforts for 20 years.
Among the changes are proposals to publicly sell shares in
state oil company NNPC and implement market-based prices for gas to power.
At acrimonious meetings in the nation’s capital, Abuja, this
week, community leaders revived demands to increase their share of petroleum
produced in their regions to 10% – up from 2.5%.
Communities with oil exploration in northern Nigeria’s Lake
Chad region and the middle of the country are also seeking a greater share of
oil revenues.
The National Assembly goes on recess in early July, so if
the package is not approved within the next two weeks, it cannot become law
until September.
Lagos-based consultancy Financial Derivatives Company
Limited said the failure to pass an oil overhaul has cost some $15 billion
annually in lost investment.
“With the global shift from fossil fuels to renewable forms
of energy picking up pace, the passage of the (overhaul) may just be too little
too late,” FDC wrote. “It is unlikely that Nigeria will be able to make up for
either the lost time or the lost investment.”
Two sources, speaking on condition of anonymity, said
Petroleum Minister Timipre Sylva had backed floating NNPC shares, which could
allow the financially strapped company to raise money and operate more
efficiently.
But the diminished state control that a float would bring is
expected to scupper its chances.
Sylva also pressed for market-based prices for gas in the
power sector, which experts say would boost investment in Nigeria’s sclerotic
power sector. However, since the measure would also be likely to increase
electricity prices, it too could fail.
A spokesman for Sylva did not comment on the proposed
changes or expected passage of the bill.
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