PIB and oil sector transparency
The Petroleum Industry Bill (PIB) was introduced to the National Assembly in 2007. Contrary to all Nigerians’ expectations, the Bill, in its wholesale form, has survived three presidents and four convocations of the National Assembly. But its passage will not sacrifice thoroughness on the altar of speed, because it will be in the nation’s best interest and we all believe this is the time to pass it.
Everyone has been waiting for the passing of the Petroleum Industrial Bill. This is the bill that is on the lips of every Nigerian whether he knows anything about petroleum or not and it is the most popular in the country.
Why it became the most popular is because oil represents the live wire of our state and remains one of the most important pieces of legislation that the country needs. The passage of this very important piece of legislation will give room for meaningful progress to be made in the oil and gas industries in particular, and Nigeria in general.
Nigeria is host to the world’s 10th largest Petroleum reserve at about 25 billion barrels with Gas reserve of 166 Trillion Standard Cubic Feet (TSCF). It is indubitable that Nigeria with the largest reserve in Africa has significant untapped hydrocarbon potential available to advance her economic goal.
Before PIB being forwarded to the National Assembly in 2007, Nigeria does not have a comprehensive law for the administration of the sector but has about 16 Petroleum Acts many of which overlapped in functions and responsibilities.
Albeit, a splinter Bill named the Petroleum Industry Governance Bill (PIGB), which was passed in 2018 by the 8th National Assembly, failed to receive the prerequisite Assent of the President of Nigeria and thus could not become law.
It is a projection of the Organisation of Petroleum Exporting Countries (OPEC) that by 2040, the oil industry sector is going to be playing less and less a role in global energy usage. If the projection comes true, in the next 20 years from now the world’s dependence on oil would have reduced to 50 per cent. So, whichever way you look at it, it appears that the days of oil are numbered. Regardless of this projection, the nation’s oil and gas sector needs comprehensive legislation that will help the country to generate more revenue because Nigeria has lost so much revenue that could have accrued to government coffers, as existing investments are stalled and potential investors are scared of coming.
The bill also seeks to address the problem of administering petroleum resources in line with global best practices, and to provide for efficient and independent sector regulation. PIB is also to promotes safe and efficient operation of the transportation and distribution infrastructure for the petroleum industry and the framework for developing third-party access arrangements to petroleum infrastructure.
The proposed law (PIB) has top priorities for Host Communities which it seeks to protect and hasten their development. Section 234 is meant to enhance peaceful and harmonious coexistence between licences or lessees and host communities, and create a framework to support the development of host communities and foster sustainable prosperity within host communities. It also provides for direct social and economic benefits from petroleum operations to host communities. Section 235 also provides for the incorporation of the Host Communities Development Trust. Once this PIB is passed and assented to by President Muhammadu Buhari, the present upheavals rearing their ugly heads within the host communities in the oil-producing area and elsewhere will fizzle out and die a natural death.
The PIB also seeks the establishment of the Downstream Petroleum Regulatory Agency (DPRA) aimed to regulate the downstream sector of the petroleum industry. Its functions include regulating the technical aspects of the downstream sector; regulating the commercial aspects of the industry as may be designated by the minister; the issuance of downstream licenses to industry operators; and the facilitation of an enabling environment for investments in the downstream petroleum sector.
The bill also seeks for the commercialisation of the Nigerian National Petroleum Corporation (NNPC) to become Nigerian National Petroleum Company Limited; the bill proposes that the NNPC Ltd will be incorporated under the Companies and Allied Matters Act by the minister of petroleum as the ownership of all shares in NNPC Ltd shall be vested in the government at incorporation and held by the Ministry of Finance incorporated on behalf of the government.
Section 53(5) says shares held by the government in NNPC Ltd are not transferable, including by way of sale, assignment, and mortgage or pledge unless approved by the government. Subsection 7 says, “NNPC Ltd and its subsidiaries shall conduct their affairs on a commercial basis without recourse to government funds. Section 55(4), however, says the cost of winding down the assets, interests, and liabilities of NNPC shall be borne by the government.
Last year, the 9th National Assembly achieved a landmark when President Muhammadu Buhari signed the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill into law. The provisions of the Act stipulate that the law shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, the share of the revenue to the Nigerian government shall be adjusted under the PSC.
Finally, Petroleum Industry Bill will create efficient and effective governing institutions, with clear and separate roles and will establish a framework for the creation of a commercially oriented and profit-driven national petroleum company in addition to promoting exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people and the efficient, effective and sustainable development of the petroleum industry.
Gaya wrote in from House of Representatives, Abuja.