The passage of the Petroleum Industry Bill (PIB) into law had no positive impact on the Nigerian Exchange (NGX) Limited’s Oil & Gas index, which remained inert, falling 0.42 per cent in two days.
The Petroleum Industry Bill (PIB) was signed into law by President Muhammadu Buhari of the Federal Republic of Nigeria on August 16, 2021. The bill establishes a legal, governance, regulatory, and fiscal framework for the growth of Nigeria’s petroleum industry and host communities. The bill’s principal goal is to encourage the country’s petroleum resources to be explored and used.
The Oil & Gas index fell 0.42 per cent from its opening price of 376.24 points on August 16, 2021, to 374.66 points on August 17, 2021.
Mr Emeka Madubuike, the former president of the Association of Stockbroking Houses of Nigeria (ASHON), expressed doubts about the PIB’s effects on the economy, claiming that the bill had been doctored.
According to him, the bill’s signing has no direct impact on publicly traded oil and gas businesses on the nation’s capital market, even though whatever impacts the sector affects the economy as a whole.
“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”.
“The passage of the PIB will provide listed Oil & Gas businesses the autonomy to decide on the price of their products,” said Mr Wole Adeyeye, an analyst at PAC Holdings.
He added that the PIB is intended to diminish government autonomy in the oil and gas industry, emphasizing that companies in that sector set the price and profit from market value.
He further stated that in the short term companies are likely to make more money but in a long term, there will be 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 posited that the stock market, may not witness the immediate impact of the policy and that most of the companies that are directly impacted are companies in the off-stream and mid-stream sectors and quoted on the Nigerian stock market; but it will have a direct impact on Oando and Seplat Energy because they play in the Off-stream and mid-stream.
“Looking at the capital market from that angle will not have a serious impact on the market. It may have an indirect impact although most companies to benefit from the development are not quoted on the Exchange”.
According to Adeleke, the majority of the other publicly traded oil and gas firms are in the downstream sector, such as Total Nigeria, Eterna, MRS Oil, and 11 Plc, which may have an indirect impact.