Dr Olisa Agbakoba, Senior Advocate of Nigeria and former President of the Nigerian Bar Association, has delivered a strong critique of the Petroleum Industry Act (PIA), calling for its repeal.
Agbakoba, who spoke during an appearance on Arise TV’s The Morning Show on Thursday, monitored by Arbiterz, argued that the current framework has failed to address fundamental issues in Nigeria’s oil and gas sector
The legal luminary advocated for a complete overhaul of the system akin to the model used by Saudi Aramco.
The Argument Against PIA
Dr Agbakoba’s critique of the PIA is rooted in his belief that the Act has not delivered the promised benefits.
“The big question is, if the PIA is such a fantastic bill, why are we having the problem of fuel scarcity that I first experienced in 1972? Why is it continuing? Something is wrong,” Agbakoba stated.
He questioned the notion that commercialisation and privatisation necessarily lead to efficiency, citing examples from China and Saudi Arabia, which operate under state capitalism models.
Agbakoba highlighted sections of the Nigerian Constitution to bolster his argument. He referred to Section 14, subsection 2B, Section 16, and Section 44, subsection 3, which collectively vest sovereignty and the control of natural resources in the people of Nigeria.
According to Agbakoba, the PIA, rather than empowering Nigerians, has allowed private interests to dominate the sector.
The Flaws of Commercialisation
Agbakoba’s primary contention is that commercialisation and privatisation have not led to the anticipated development.
“I would challenge anybody to show me one successful privatised entity since this started in 2000. What has happened is that the state enterprises have been privatised into the private pockets of individuals. Nothing has come to us as specified in Section 14, and we remain very poor,” he argued.
He pointed out that the commercialisation model, as implemented in Nigeria, has often led to the enrichment of a few at the expense of the broader population.
Agbakoba criticised the PIA for perpetuating this trend, citing Section 64 of the act, which allows the NNPC to draw money outside of Section 162 of the Constitution. This, he argued, contradicts the principle that all resources should be paid into the federation account.
Inefficiency and Overlapping Agencies
A significant part of Agbakoba’s critique is the inefficiency and redundancy created by the numerous agencies established under the PIA. He noted that the proliferation of agencies with overlapping functions has led to confusion and inefficiency.
“PIA is designed to be a sharing thing. I am positive that the surrender of our natural resources to IOCs in the context of production sharing contracts or joint ventures contradicts the meaning of my sovereignty given to me in Section 14,” Agbakoba asserted.
He contrasted this with the Saudi Aramco model, where the Saudi government maintains tight control over its oil resources, allowing for greater efficiency and national benefit.
In Saudi Arabia, international oil companies (IOCs) operate as service providers rather than co-owners, which ensures that the benefits of the oil resources remain within the country.
The Call for a New Model
Agbakoba’s solution is a complete overhaul of the current system. He advocates for a model similar to Saudi Aramco, where the government retains full control over the oil resources, and international companies are brought in only as service providers.
“We should move from contract oil, which is all about sharing, sharing, nothing about development. There is not a word in the PIA, apart from the host communities, that talks about the people of Nigeria,” he stated.
He emphasised the need for Nigeria to learn from successful models in other countries. According to Agbakoba, Saudi Arabia’s approach to managing its oil resources offers valuable lessons for Nigeria. He argued that by adopting a similar model, Nigeria could ensure that its oil wealth benefits the entire population rather than a select few.
The Government’s Stance
The federal government, through the Nigerian North Stream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Commission, had defended the PIA. They argued that the act is a significant achievement that has brought much-needed reforms to the oil and gas sector.
The government maintained that the PIA provides a framework for greater efficiency and transparency in the sector.
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However, Agbakoba remains unconvinced. He contends that the PIA has failed to address the core issues facing the sector and has instead perpetuated a system that benefits private interests at the expense of the Nigerian people.
“I thought that the PIA would solve the problem. It doesn’t solve anything,” he said.
The Issue of Corruption and Incompetence
A key part of Agbakoba’s argument is that the problems in Nigeria’s oil and gas sector are rooted in corruption and incompetence. He believes that the current model has allowed these issues to flourish, resulting in poor management and a lack of development.
“Whether you say it’s corruption or I say it’s incompetence, what’s important is, what is the impact on Nigerians? Do I see the impact of oil on Nigerians? I don’t. That’s why we have such poverty,” he stated.
He argued that the failure to manage Nigeria’s oil resources effectively has led to widespread poverty and underdevelopment.
Agbakoba pointed to the Saudi model as an example of how effective management can lead to national development. He stressed that Nigeria needs to develop its own capacity to manage its oil resources and reduce its reliance on international companies.
The Way Forward
Agbakoba’s call for the repeal of the PIA and the adoption of a new model for managing Nigeria’s oil resources is a bold and controversial stance. It challenges the status quo and calls for a fundamental rethinking of how the country manages its most valuable asset.
His critique highlights the need for a more effective and inclusive approach that ensures that the benefits of Nigeria’s oil wealth are shared by all its citizens.
Dr Olisa Agbakoba’s arguments about the failures of commercialisation and privatisation, the inefficiency of the current system, and the need for a new model that benefits all Nigerians offer a compelling case for rethinking the PIA.
As Nigeria continues to grapple with the challenges of managing its oil wealth, Agbakoba’s insights provide a valuable perspective on the way forward.
