Milking the Crisis: The progress on Petroleum Industry Bill
In our half-year outlook, we noted that the current crisis has presented the government an opportunity to implement some unpopular policy reforms. So far, strong actions have been taken towards petroleum subsidy removal, FX convergence and a cost-reflective power tariff in the electricity supply sector. Although these policies have been met with some level of opposition by the public and the labour congress, the Federal Government is not backing down.
Recently, President Muhammadu Buhari sent the revised Petroleum Industry Bill to the National Assembly for deliberation. The PIB among many other things is expected to provide a framework to boost oil and gas output, reduce oil and gas royalties, increase transparency, promotes gas monetization, environmental clean-ups and other green initiatives in the sector.
The bill which has been in deliberation for about two decades has been highly anticipated by the public. Most importantly, the passage of the bill is expected to attract more investment to the petroleum industry.
Despite the importance of the sector to the Nigerian economy, capital importation into the sector made up just 0.9% of total capital importation in 2019 and 0.8% in 2018. If this goes through, then it would be safe to say that the government may be really milking this crisis for the greater good.
United Capital Research