Years of distrust hurt chances of Nigeria oil reforms

ABUJA – Nigeria’s parliament is considering legislation that will drastically transform Africa’s largest oil and gas sector, but years of political distrust and corruption are likely to delay passage for months if not longer.

President Umaru Yar’Adua in August sent parliament an energy reform bill that restructures its state oil firm, the Nigerian National Petroleum Corporation (NNPC) into a profit-driven company similar to those in Brazil, Malaysia and Saudi Arabia.
The legislation, which has been in planning in some form for more than a decade, has been touted by the presidency as the answer to many of the sector’s problems like funding shortfalls, domestic gas shortages and budget-debilitating fuel subsidies.
The bill’s drafters, who include Petroleum Minister Rilwanu Lukman, wanted parliament to pass it by December 2008 to have the new NNPC in place by this summer.
But many within the government and industry believe that, even under the most favourable conditions, it will take many months before there is enough political support to pass such a bill. A few doubt the legislation will pass at all.
This is a very serious bill so there is nothing to be in a hurry about,’ said Bassey Otu, chairman of the House of Representatives Committee on Petroleum. ‘But it will eventually be passed for the good of all.’
The restructuring bill will break up NNPC into a handful of autonomous units and allow its new national oil company to raise funds by investing in capital markets, instead of relying on government revenues.
The reforms envisage a Nigerian oil company operating like former Brazilian oil monopoly Petrobras, Malaysia’s government-owned Petronas, which has dozens of subsidiaries or Saudi Arabian state oil giant Saudi Aramco.

CORRUPTION
NNPC, as it is currently run, has been plagued by corruption for decades with billions of dollars of oil money going to a few well-connected Nigerians, while the rest of the country lives on less than US$2 a day.
Many industry experts believe it will not be easy to sway these politically powerful and wealthy Nigerians to change the status quo.
There are issues about the capacity of members to come to terms with the details of the bill and of pressure from vested interests to delay its passage and dilute its contents,’ said Antony Goldman, head of PM Consulting, a London-based risk analysis firm specialising in West African energy.
If the government can push the bill through this year, it will amount to a major achievement.’
His critics say Yar’Adua, a northerner has given senior government oil jobs to northerners who will be responsible for implementing the reform bill should it pass.
There is an understanding among Nigeria’s political elite that the presidency rotates between the north and south and that all 36 states have at least one minister in the government.
Some experts warn the bill’s ultimate survival will depend on whether Yar’Adua is able to serve his entire four-year term and keep pressure on lawmakers to pass it.
The 57-year-old Nigerian leader is known to have a chronic kidney problem and has regularly sought medical treatment overseas, the most recent in Saudi Arabia last August.
– Nampa-Reuters