The passage of Petroleum Industry Bill (PIB) into law, did not impact positively on the Oil & Gas index on the Nigerian Exchange (NGX) Limited as it remained dormant, declining by 0.42 per cent in two days.
On August 16, 2021, the President of the Federal Republic of Nigeria, Muhammadu Buhari signed the Petroleum Industry Bill (PIB) into law. The bill provides a legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry and the development of host communities. The main objective of the bill is to promote the exploration and exploitation of petroleum resources in the country for the benefit of its citizens and foster sustainable prosperity within host communities.
The Oil & Gas index on August 16, 2021 opened trading at 376.24 points to close trading on August 17, 2021 at 374.66 point, declining by 0.42 per cent.
Speaking on this development, the former president, Association of Stockbroking Houses of Nigeria (ASHON), Mr. Emeka Madubuike doubted the effectiveness of the PIB on the nation’s economy, stressing that the bill has been doctored.
According to him, the signing of the bill does not have direct effect on listed oil & gas companies on the nation’s capital market even though whatever affects the sector affects the economy at large.
Uncertainty Over Fate Of PIB, Electoral Act Amendment Bill
“Even though Oando and Seplat are operating in the midstream and upstream of the Oil & Gas sector, I still do not see the impact on their growth on the Exchange. Mind you, Oando majorly is a downstream company on the NGX.”
Analyst at PAC Holdings, Mr. Wole Adeyeye said, “The passage of the PIB will give listed Oil & gas companies’ autonomy to decide on the price of their products.”
He explained that PIB is meant to reduce government autonomy in the Oil & gas sector, stressing that companies in that sector take control of the price and utilised the benefits in market value.
He added that, “In a short term, these companies are likely to make more money but in a long term, we might see a lot of competition like the telecommunication sector, forcing them to step up their games.”
Also, the managing director of Lancelot Ventures Limited, Mr Adebayo Adeleke said that “The stock market for now may not witness the immediate impact of the policy. Most of the companies that are directly impacted, they are companies in the off-stream and mid-stream sector and not many of them are quoted on the Nigerian stock market. It will have direct impact on Oando and Seplat Enrgy because they play in the Off-stream and mid-stream.”
According to Adeleke, most of the other listed Oil and Gas companies are on the downstream sector, they are retail marketing companies; Total Nigeria, Eterna, MRS Oil, and 11 Plc, they may enjoy indirect impact.
“Looking at the capital market from that angle it will not have a serious impact on the market. It may have indirect impact although most companies to benefit from the development are not quoted on the Exchange.”