Delay in PIB’s passage hurts $100b investment
Delay in the passage of the Petroleum Industry Bill (PIB) by the National Assembly has put over $100 billion investment in the oil sector in abeyance, Managing Director, Financial Derivatives Company (FDC), Bismarck Rewane, has said.
The PIB seeks to establish a legal, fiscal and regulatory framework for the petroleum industry to rejuvenate the sector.
In a report released yesterday, Rewane said delays in investment are also encouraged by market uncertainties due to the unfriendly business environment.
“Investors in the economy are not new to these uncertainties. In the petroleum sector about $100 billion worth of investments is being delayed due to the delayed passage of Petroleum Industry Bill (PIB) according to the international oil companies (IOCs),” he said.
He described vandalism and theft of telecom infrastructure as sabotage.
It will be recalled that the Nigerian Communications Commission (NCC) earlier indicated that it recorded about 1, 200 fibre cuts in a few months.
Apart from the financial difficulties this may have brought on the operators, Rewane observed that the state of security for telecom infrastructure is not encouraging for any potential investor.
“Every savvy rational investor considers the safety of his assets when making an investment decision. Unknown to most Nigerians, vandalism of telecoms infrastructure is a major problem. About two to three per cent of Nigeria’s BTS are shut down at any point in time due to vandalism, resulting in a loss of about $50million to $100million every year,” the report said.
He said delays in investment are also encouraged by market uncertainties due to the current antagonistic environment between operators, regulators and the government.
Such uncertainty in the telecoms sector, he reckons, can have a knock-on effect for the consumer, saying the experience in the United States in the early mid 1970s was a perfect example of what market uncertainties can do.
He lampooned the frequent imposition of fines as sanctions on telecom operators by the industry regulators and government using unregulated tax charges, a measure he maintains does not provide the platform needed for investors to commit more funds to capital expenditure.
He said the story of the telecoms sector will mirror that of the petroleum industry if a proper regulatory and fiscal structure is not designed and enforced by relevant stakeholders.
“Evaluating the dynamics of the telecoms environment, it is clear that there is still a strong need for increased capital investment in the industry. The publicised customer satisfaction levels with telecom operators serve as enough evidence for the need for improved services. However, until a solution is provided for the operators to deal with issues surrounding its operating costs, security, and uncertainty, Nigeria may not achieve the telecoms investment per capita observed in some of the emerging economies such as South Africa and Brazil,” he said.
“Well-defined and legally backed fiscal and regulatory framework is needed to eliminate uncertainties about the telecom companies’ operations and potential investment. There is need for a uniform tax and levy framework across the nation which has a legal backing.
“This would protect the operators from exploitative charges as well as the creation of unbudgeted new levies/taxes. Ultimately, a properly designed tax and levy framework will increase the positive perception of due process in the industry. Consequently, investor confidence in the environment will be improved and increase the probability of more capital investment in the industry,” he said.
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