Transparency, accountability… Values strategic to PIA’s implementation
After signing the bill into law in August 2021, the Presidency approved a nine-member steering committee to ensure the implementation of the Petroleum Industry Act (PIA) with an implementation structure comprising a steering committee and an implementation working group, as well as a coordinating secretariat.
While steering committee had the job of effective and timely implementation of the law in the course of transition to the new petroleum industry envisaged in the reform programme and ensuring that the new institutions created have the full capability to deliver on their mandate under the new legislation, the implementation working group and coordinating secretariat had the onerous task of developing the briefs (including model contracts and regulations) that would be presented to the steering committee for consideration and approval within a 12-month duration.
The Act is expected to promote transparency and accountability in extractive sector governance, eliminate regulatory/legal hurdles, attract critical investments, unlock financial resources, accelerate local content development, and enhance employment, among other opportunities.
However, to unlock and maximise the potential of the Petroleum Industry Act (PIA), some analysts canvassed the need for political will that fosters the consistent implementation of the provisions of the law and continuous engagement and consultations with all stakeholders toward the success of the law.
Commendably, recent steps have been made towards fulfilling the statutory prescription in the implementation of the Petroleum Industry Act (PIA) in the upstream sector of the oil and gas industry through the consultative forum for regulations held in April 2022, as a critical milestone in the implementation of the PIA.
Worried that the implementation has been footdragging, the Civil Society Legislative Advocacy Centre (CISLAC), the national chapter of Transparency International in Nigeria, on behalf of the Accountability in Extractive Sector (AES) Cluster within the framework of the Strengthening Civic Advocacy and Local Engagement (SCALE) project being implemented by Palladium with funding from the United States Agency for International Development (USAID), recently convened a forum in Lagos to ascertain progress in the PIA implementation process; identify possible factors, actions and inactions that have contributed to delays; and to contribute to the advancement of the effective implementation in the extractive sector.
The forum which harnessed necessary inputs from various stakeholders provided a review and further clarification for six draft regulations to harness necessary inputs to further clarify six draft regulations including, the Nigerian upstream Fee and Rent Regulations, the Petroleum Licensing Round Regulations, the Domestic Gas Delivery Obligations Regulations, the Nigeria Conversion Regulations, and the Nigeria Royalty Regulations and the Nigeria Host Community Regulations, and the eventual firming up of the final regulations for use.
Beyond this milestone achieved, it was the expressed hope of stakeholders at the SCALE consultative forum that deliberate efforts were made by the relevant government body to fast-track the implementation of the law in a manner that best achieves the PIA objectives in line with the yearnings and aspirations of Nigerians.
Among participants at the consultative forum were Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS), and some members from host communities.
In his opening remarks, CISLAC Executive Director, Auwal Ibrahim Rafsanjani said the stakeholders considered the consultative forum important so as to remind the nation about an obligation of the government to make the PIA work for the benefit of the people.
According to him, “The other objective is to see that host communities’ benefits under this new act are taken care of and their entitlements fully implemented because that would go a long way in de-escalating tension, violence, and gross injustice that communities have continued to suffer as a result of the extractive activities.”
Rafsanjani noted that with the new act, the stakeholders believe that a lot of lapses and opportunities for corruption and looting in the sector, including oil theft would have been sufficiently addressed.
He was optimistic that it would equally improve and increase productivity and efficiency in the oil sector, as it was a shame that Nigeria, despite being an oil-producing country, still suffers conditions far more terrible than countries that don’t produce oil.
“We want to see Nigeria utilising the natural resources that God has given it. We cannot continue to have oil and our communities being destroyed, with poverty on the increase in the land, and yet, we keep subsidising corruption.”
Rafsanjani said subsidy is riddled with corruption and the country is suffering gravely from it if its financing is not discontinued. “This is why CISLAC is working with relevant government agencies, especially the committee saddled with the responsibility of ensuring that the PIA framework is implemented.
“We also urge them to engage communities and other stakeholders, and the media in their activities so that Nigerians can appreciate what they are doing and understand their obvious challenges.
“It’s not just enough to have the law. Yes, we struggled for it for 20 years, but we cannot afford to have a dormant law.”
He, therefore, commended the Nigeria Extractive Industries Transparency Initiative (NEITI) for the good job it was doing. According to him, it was through NEITI that CSOs were able to know how many companies are paying taxes. He said that it was also through NEITI’s records that many companies avoiding tax payments were revealed.
“We can know that so much was going on in the extractive sector and more transparency has been created through NEITI records.
“The natural resources are supposed to help in providing more blessings for our country. But due to corruption, natural resources have become a ‘curse’ to our country. This is not good, especially as Nigeria has marked five decades of exploration and this oil has not helped in addressing poverty.
“It has not helped in improving or creating more industries or infrastructure that we are supposed to use as seen in other countries where oil has brought development. In our own country, it has brought more misery; it has exposed more people to corruption. It has also institutionalised laziness” he said.
Speaking on the expectations of host communities from the implementation of the PIA, representative of HRM Oduosa of the Utagba-Ogbe Kingdom, Delta State, High Chief Dennis Ejechi, decried the impact of the activities of oil companies on neighbouring and host communities.
He likewise expressed concerns about the environmental effect of gas flaring, transparency and competence of auditors in charge of the oil company’s account, and how to rightfully determine the 3 per cent ascribed to be paid to host communities by the oil companies as recommended by the PIA, and the company’s compliance level to the dictates of the PIA.
Giving assurances to the host communities and other stakeholders at the forum on the effectiveness of the implementation to cover every concern, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Executive Commissioner, Economic Regulation and Strategic Planning, Dr. Kelechi Ofoegbu revealed that the draft model licenses, licensing conditions and model contracts for the PIA implementation have been finalised and presented to the industry for input.
He equally revealed that the Petroleum Prospecting Licenses (PPLs) are scheduled to be presented to the successful awardees from the Marginal Fields Bid Round 2020 on June 28, 2022, even as Host Community Development Trust Regulations will also be unveiled on that date to give guidance to Operators.
On delineation of acreage, he said discussions were ongoing with the industry operators, and sizing was being done to comply with the PIA 2021 requirement of a grid system based on the Universal Traverse Mercator.
“Delineation is a necessary precursor to the issuance of PPLs and PMLs as prescribed by the PIA 2021,” he noted.
Speaking on the role of the Federal Inland Revenue Service (FIRS) in the implementation of the PIA, Technical Assistant to the Executive Chairman of FIRS, Femi Olarinde, said the Service was responsible for the enforcement of the provisions of chapter 4 of the Act as it was related to taxes.
He said FIRS was also saddled with the task of assessing and collecting hydrocarbon taxes, companies’ income taxes, and education taxes from the oil and gas industry.
“The commission is also to determine and collect royalties, signature bonus and related payments of production shares, profit oil from the upstream petroleum sector.
“We are also the authority to determine and collect all related payments from downstream and midstream sectors of the industry including gas flare penalty. And all monies collected (taxes, royalties, profit oil, signature bonuses, etc) from the petroleum industry due to the government shall be timely transferred to the Federation account.”
Earlier during her welcome address, Director of Finance and Administration, SCALE, Domini Madugu, said the consultation engagement was to help in the area of capacity building by CSOs in Nigeria.
According to her, SCALE has the mandate to build the capacity of the CSOs in Nigeria so that they can push policy reforms in all sectors in the country. She said that SCALE had been working with 17 organisations of CSOs across the country.