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PIB: Anger as Senate slashes host community share to 3% of oil profit

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(FILES) In this file photo taken on March 26, 2018 a gas flare burns at the Batan flow station operated by Chevron under a joint-venture arrangement with the Nigerian National Petroleum Corporation (NNPC) for the onshore and offshore assets in the Niger Delta region. – Nigeria’s parliament on July 1, 2021 voted to approve a long-delayed oil and gas law that aims to attract new foreign investment to the OPEC country’s petroleum industry. The Petroleum Industry Bill or PIB had been under review in the National Assembly for nearly two decades, beset by disagreements, including over how much revenue should go to local communities in oil-producing regions. (Photo by PIUS UTOMI EKPEI / AFP)

Reps maintains 5% for host communities
• PANDEF, host communities reject 3/5% equity shareholding
• Despite PIB, FG to spend N900b for subsidy in 2022

At long last, the Senate yesterday passed the much-awaited Petroleum Industry Bill (PIB), with 30 per cent of profits accruing from Oil and Gas operations by the Nigeria National Petroleum Corporation (NNPC) now to be set aside for exploration of oil in the frontier basins.

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All exploration of frontier basins shall fall under the purview of the Upstream Regulatory Commission. Similarly, three per cent has been reserved for the development of host communities.

However, the Senate reached these decisions amid uproar due to disagreements on the right percentage of oil revenue for host communities.

The report of the Senate Joint Committee on Petroleum, which processed the bill, had proposed five per cent for host communities, while stakeholders had in the original bill proposed 10 per cent. But when the Senate began clause-by-clause consideration of the bill, it was reduced to three per cent.

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The decision caused a moment of stalemate as Senators from the Niger Delta region rose against it. Senator James Manager (Delta State) proposed an amendment to retain the provision of five per cent in the report but he was defeated.

As Senate President Ahmad Lawan hit the gavel to re-confirm the three per cent host community provision, Senator George Sekibo ((River State) called for a division. His motion challenged the ruling of the Senate President and the floor again became tensed up.

Fearing the consequences of embarking on a division, the Senate leadership swiftly resorted to pleading with Sekibo to withdraw his motion. Senate leader, Yahaya Abdullahi, said the Senate would be ‘heading to Armageddon’ if it allowed that division to happen.

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Lawan also supported the Senate leader and preached the gospel of patriotism to Sekibo who later agreed and withdrew his motion.

Chairman of the Senate Joint Committee that processed the bill, Sabo Muhammed Nakudu (APC, Jigawa West), while presenting the report explained that “the Joint Committee’s recommendation recognises the need for the country to urgently and aggressively explore and develop the country’s Frontier Basins to take advantage of the foreseeable threats to the funding of fossil fuel projects across the world due to speedy shift from fossil fuel-to other alternative energy sources.”

On the initial recommendation of five per cent for host communities, the committee said it is aimed at ensuring adequate development of the host communities and reduction in the cost of production.

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The Bill has equally established the Upstream Regulatory Commission to among others regulate upstream petroleum operations, including technical, operational and commercial activities and ensure compliance with all applicable laws and regulations governing upstream petroleum operations.

The Commission is also to ensure that upstream petroleum operations are carried out in a manner to minimise waste and achieve optimal government revenues; promote healthy, safe, efficient and effective conduct of upstream petroleum operations in an environmentally acceptable and sustainable manner.

THE House of Representatives also passed the PIB yesterday. This followed the adoption of the report of the Mohammed Monguno-led Adhoc committee on PIB at the plenary with Deputy Speaker of the House, Ahmed Wase presiding.

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Monguno, who is the House Chief Whip while eliciting the support of his colleagues, explained that the proposed legislation contains 319 clauses aimed at ensuring transparency and openness in the oil and gas industry.

Monguno said it was unfortunate that Nigeria recorded losses in terms of direct foreign investment due to the archaic and obsolete laws in the oil and gas industry over the years. This, he said forced investors to move to other jurisdictions like Chad, Cameroon, Angola and Ghana to the detriment of the country.

Highlights of the Bill include transforming the Nigeria National Petroleum Corporation (NNPC) into a profit-oriented company devoid of political interferences. He disclosed that the House endorsed five per cent as operational cost share for the host communities as against the 10 per cent canvassed by leaders of the oil-producing communities.

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Shedding light on the contentious issue of the definition of the host community, he said: “It has been finally resolved. The definition of the host community is not restricted to the oil-producing areas alone. Host community is now defined to include communities where pipelines pass through them.

“For example, if you go to Cross River State, which is not an oil-producing area in the strict sense of the word but they have a lot of pipelines that traverse the state and even some part of Edo State. Sometimes, there are leakages there which will make the people in those areas lose their means of livelihood. So, the definition of host communities is now extended to include where pipelines run through.”

THE passage of the bill, which will be the second time in the last two decades, if assented to by the president, would according to stakeholders drive investment into the nation’s oil sector and jumpstart the industry’s operations in the face of pressure against fossil fuels.

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Energy expert, Michael Faniran, noted that the development is a great milestone that has unfortunately taken many years to achieve.

“Of particular interest and commendation is that both chambers of the National Assembly worked together in harmony on this, which ensures that there will not be any long delays in harmonising the bill,” he noted.

Faniran added that while it is expected that the President would not delay the bill, the bill may not be an end in itself but only a means to an end.

According to him, although there was still disagreement on the percentage of OPEX for the Host Community Trust Fund, there was a need to run with what has been passed, adding that “any required changes can come in form of an amendment bill.”

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Managing Partner, The Chancery Associates solicitors, Emeka Okwuosa, said while the passage of the bill is a game-changer and a watershed in the oil and gas sector, the movie is coming late as the rest of the world is moving away from oil. “We have already lost billions of dollars due to non-passage of the PIB,” he said.

Okwuosa stressed that 30 per cent reserved for the frontier basins should be a good thing if applied judiciously and objectively, and not skewed to favour any region. Noting that the development of the sector is paramount, Okwuosa added that the three per cent for host communities remained below par.

The President, Petroleum Products Retail Outlets Owners Association of Nigeria, Dr Billy Gillis-Harry, said although the passage is a little late, it remains a welcome development. He commended the effort of the National Assembly and the Minister of State for Petroleum Resources, stressing that if assented to, it would enable the industry to thrive.

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Another energy expert, Henry Adigun, said the bill would drive investment into the nation’s oil and gas sector and create certainty for investment in the sector.

Adigun said while Presidential assent is critical before the sector rolls out drum for celebration, “there is likely going to be an increase in investments in the upstream oil and gas.”

Executive Director, Centre for Transparency Advocacy (CTA), Faith Nwadishi, said sections of the bill make provisions for contract transparency, disclosure, and outlaws gas flaring. She, however, said the bill did not take cognisance of gender, adding that the host communities are still held responsible for any kind of sabotage to oil facilities.
MEANWHILE, the National President, Host Communities of Nigeria Producing Oil and Gas (HOSTCOM), Chief Benjamin Tamanarebi, has said it was insulting for the Senate and House of Representatives to cede only three and five per cent equity shareholding respectively to the oil and gas producing communities in the PIB passed.

Tamanarebi said it is unacceptable to the host communities. “Imagine for over 63 years of neglect, deprivation and marginalisation of the aborigines who have suffered untold hardship in the midst of wealth, for the first time after many years of agitation, asking for only 10 per cent equity shareholding and the NASS leadership is considering five per cent and three per cent, thinking they have done us a favour. This is unacceptable and we reject the offer.

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“It is our sole right as the aborigines, it is our land and waterways. Why deny our rights to benefit, right to have a clean environment, right to have potable water to drink, good hospital, electricity and good roads? We will study other areas in the Bill to address it in due course,” he said.

Also, the Pan Niger Delta Forum (PANDEF) has rejected the three per cent approval for the development of host communities by the Senate. National Publicity Secretary of PANDEF, Ken Robinson, while reacting to the approval, said stakeholders in the region are waiting to see if President Buhari would ascent to the bill as approved by the Senate.

He said the government cannot transform the oil industry without transforming the communities in whose backyard the industry is operated.

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“The region is the biggest victim of the fraudulent Nigerian Constitution we are using and the lopsided nature of the country. So, what played out today (yesterday) is what is playing out in every aspect of the country, particularly under this president.”

DESPITE the Bill and in what appears a reversal of policy, N900 billion is being planned for fuel subsidy next year as the Federal Government is projecting a total budget package of N11.907 trillion for 2022.

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At the presentation of the 2022-2024 Medium Term Expenditure Framework (MTEF) yesterday, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said crude oil production for 2022 will be 1.88 million barrels per day with a price benchmark of $57 per barrel.

Some other fundamentals include an exchange rate of N410.15; FG’s share of federation account: N5.513 trillion; FG’s share of VAT: N339.3 billion and a projected deficit of N4.6 trillion while projected revenue is N8.359 trillion.

The Minister regretted that as much as N850 billion was monthly paid in subsidising imported petroleum products into the country, saying such a huge amount of money could go into providing services that would have more impact on the vulnerable population of the country, better than a subsidy for fuel, which only the rich with plenty cars benefit from more.”

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