The Petroleum Industry Bill (PIB), which passed its first reading in the Senate last month, has been delayed yet again and will not now be debated in the House of Representatives until the first quarter of 2021. Addressing a joint executive-legislature leadership retreat this week at the Presidential Villa in Abuja, Minister of State for Petroleum Resources Timipre Sylva said lawmakers currently need to focus on the 2021 Appropriation Bill that must be passed before the end of December. He expressed confidence that a consensus existed within the National Assembly to expedite passage of the PIB and that it would emerge for presidential assent early next year. Sylva’s announcement will disappoint contractors hoping that greater institutional and fiscal clarity in laws governing the sector might incentivise incremental onshore developments and trigger final investment decisions for major deep-water projects, such as Bonga South West-Aparo. Participants in Nigeria’s ongoing marginal fields licensing round may conclude the awards process before reforms are passed, but the new legislation would impact suitors seeking acreage under the next conventional licensing round, set to follow the current exercise.

A Nigerian Army colonel has been abducted by bandits after running into an ambush along Abuja-Kaduna highway. The Peoples Gazette reported that SB Onifade was on a road trip at about 03:00 hours on 27 September when he was abducted. He has not been found and no arrests have been made in connection with the violence, which occurred near Olam Farms. The officer was not in military uniform when he was kidnapped, military sources said. The Gazette claimed that the Nigerian Army Headquarters, in reaction, issued a warning to officers to be wary of road trips. Across the country, troops have rescued five expatriates from suspected militants at Yellow Island in Rivers. The victims, three Russians, one Ukrainian and one Equatorial Guinean abducted on 9 May, were freed by a joint team from Forward Operating Base Bonny, Nigerian Navy Ship Pathfinder and troops of 146 Battalion. Defence spokesperson, Major General John Enenche, said the men were presently at NNS Pathfinder Medical Centre receiving medical attention. The troops also raided four identified militants’ hideouts at Ibiakafemo, Idinkiri, Tombie and Ogboma. The identified camps were subsequently destroyed to deny the pirates freedom of action. The joint team also intercepted two large wooden boats laden with an estimated 350,000 litres of suspected stolen illegally refined diesel and about 10,000 litres of stolen crude oil. The stolen petroleum products have been recovered to the base.

The National Bureau of Statistics (NBS) says 68% of Nigerian households experienced moderate or severe food insecurity in August as a result of the COVID-19 pandemic. According to the national longitudinal survey on the socio-economic effects of COVID-19 on Nigerian households, conducted by the bureau in August, 51% of households used loans taken after the pandemic began to pay for food items. “About one in four households were already indebted prior to the pandemic while nearly one-third have taken out new loans since the onset of the pandemic,” the report read. “The food security situation in Nigeria remains precarious, even as the lockdown restrictions continue to be loosened.” The statistics bureau said the share of households experiencing moderate or severe food insecurity remained high at 68% in August. Indebted households reported that 55% of the loans were obtained from friends or relatives. “Loans obtained from more formal sources were far less frequent with only 9% of respondents reporting loans obtained from banks and microfinance institutions and 16% from cooperatives and savings associations,” the report explained.

The West African regional bloc, ECOWAS, announced Tuesday that it was ending sanctions imposed against Mali after a military coup in August, saying it wished to back the return to civilian rule. In a statement, the Economic Community of West African States said “heads of state and government have decided to lift sanctions” after noting positive steps towards a constitutional government. The 15-nation group imposed tough sanctions against one of Africa’s poorest countries after President Ibrahim Boubacar Keita was ousted following mass protests. The coup was bloodless but triggered widespread alarm among Mali’s neighbours. The ECOWAS sanctions, imposed on 20 August, included border closures and a ban on commercial trade and financial flows but not basic necessities, drugs and equipment to fight coronavirus, fuel or electricity. On Monday, Malian authorities had released 180 Islamic extremists from a prison in the capital and flown them to the country’s north, fuelling speculation that a prominent opposition politician held by jihadists could soon be freed after more than six months in captivity. The militants who abducted Soumaila Cisse back in late March were believed to be seeking a prisoner exchange with the Malian government. Some 70 men were released on Saturday and another 110 on Sunday, an official who spoke on condition of anonymity told foreign media due to the sensitivity of the matter. Cisse, a 70-year-old who has run for Mali’s presidency three times, was campaigning ahead of legislative elections not far from Timbuktu at the time of his abduction. His bodyguard was killed in the attack, and the only proof of life has been a handwritten letter delivered back in August. 

Commentary

  • The postponement of the consideration of the PIB by the National Assembly will re-awaken old fears about efforts to make changes to the governance and fiscal regimes of the petroleum industry. This time was supposed to be different with both the Minister of State for Petroleum Resources and key leaders of the National Assembly promising the expedited consideration of the bill in order to rapidly improve the business climate for oil and gas sector investments.  The fear now is that the loss of momentum in considering the bill could lead to negotiations that would result in a significantly watered down version of the bill or the truncation of the process as happened with previous efforts. With the delay, participants in the ongoing marginal field bid round are left in the lurch as the uncertainty regarding when the bill will be passed throws in doubt the timeline for the conclusion of the bid round and the conditions under which the fields would be operated. The prospect of a bid round for prospecting leases next year appears to be slimmer and prospective bidders may make alternative plans anticipating another extended delay to reforms that have become all too frequent. Finally, IOCs and Independents looking to sanction new projects next year due to the improved fiscals in the draft PIB circulated will put the brakes on those plans with this new delay.
  • The abduction, which occurred about 30km from Kaduna, illustrates how dangerous road travel along the Abuja-Kaduna highway still is, with the government almost entirely ceding this important communications route to bandits and kidnapping gangs. This is clear from the emphasis placed on rail travel by commuters and the government, and the hints of a soon-to-be-launched air shuttle between Abuja and Kaduna, which we talked about two weeks ago. This attack, though, does not suggest a targeted attack at the military – Col Onifade was not in uniform – but rather a case of the officer being at the wrong place at the wrong time. However, the warning by the Army HQ to its officers to avoid road trips could increase anxiety among citizens who expect the military to be more secure on those roads. How effective this warning will be – considering how deeply involved the military is in internal security operations: from the North-East and the North-West to the Niger Delta, where militants are increasingly turning their attention and weapons to crude oil theft which is then sold on the high waters, is something that we wait to see.
  • A 2019 SBM survey showed that Nigerians spent up to 56% of their monthly income on food in the best parts and over 100% in states like Borno and Yobe on the average. What this already indicated was that people were borrowing just to eat. So there are no surprises that a combination of poor policy making like the border closure and the COVID-19 pandemic has resulted in more than half of Nigerians borrowing to eat. Additionally, the report highlights the much lower proportion of loans from formal institutions which “reflect barriers faced by Nigerian households to obtain formal loans in the face of a crisis and that many households instead must turn to friends and relatives for loans.” As we have repeatedly said, the current definition of food security by the government that harps on producing what we eat is faulty. Food security means the people can access nutrition and adequate caloric needs at an affordable level. It will only get worse if these damaging policies are not quickly reversed.
  • The Mali compromise may look like a win for the ECOWAS which has been very firm with the military officers that carried out the coup and ran the country for a couple of months. The firmness of their approach is an understanding of the fact that allowing the junta to remain in place was likely to set off a cycle of coups and counter-coups, which could further destabilise the country and the wider West African region, especially in the light of how Bamako is struggling to regain control of the northern and eastern parts of the country from militant groups. ECOWAS’s move is an acknowledgement of compromise with the Malian junta, encapsulated in the fact that it conceded to the nomination of Bah Ndaw, a retired Colonel, as Mali’s interim president as well as Moctar Ouane, a former Foreign Minister, as the country’s prime minister. The junta’s appointments have set in motion a transition government expected to last up to 18 months, which will lead the country to an election. As part of this compromise, at least four cabinet posts (defence, national reconciliation, security and territorial administration) have been given to military officials, with one of the coup leaders serving as the defence minister. Any economic sanctions would have made a military government’s tenure many times more difficult. However, there are still many risks. Islamist militants are active throughout northern and central Mali, though they typically launch local attacks on the Malian military and U.N. peacekeepers. A 2013 French-led military operation dispersed the jihadists, who then regrouped and have expanded their reach in the years since. There is also the risk, given that ECOWAS did not meet all its goals, that a group of soldiers in another West African state (Burkina Faso, Guinea and Cote D’Ivoire come to mind) could decide that the risk is worth it.