NASS passes PIB, 13 years after

The National Assembly on Thursday passed into law the Petroleum Industry Bill (PIB) thirteen years after it was presented.

The PIB was presented as an Executive Bill to the sixth National Assembly by the late President Umaru Yar’Adua administration, to introduce major reforms in the oil and gas sector.

Amongst others, it sets to create efficient and effective governing institutions with clear and separate roles for the petroleum industry; establish a framework for the creation of a commercially oriented and profit-driven national petroleum company, and promote transparency, good governance, and accountability in the administration of the petroleum resources in the country.

The report of the 54-member Senate Joint Committee on Downstream Petroleum Sector, Petroleum Resources (Upstream) and Gas, chaired by Senator Sabo Mohammed Nakudu, was read on the floor of the Senate before the lawmakers dissolved into executive session. They were briefed on the technical details at the closed-door meeting by the Minister of State, Petroleum, Timipre Sylva, and the Group Managing Director of the Nigerian National Petroleum Commission (NNPC), Mele Kyari.

One of the recommendations of the joint committee, however, led to disagreement amongst lawmakers A report of the committee read by Senator Nakudu had recommended the establishment of host communities’ trust fund with five per cent of the actual annual operating expenditure of the upstream petroleum operators.

It read in part: “The various recommended provisions, when passed into law, will ensure a peaceful operating environment that will have a positive direct impact on the cost of oil and gas production which has been the bane of the Nigerian oil and gas industry.

“After extensive engagements with various stakeholders and on-the-spot assessment visits to host communities across the country, the joint committee recommended strengthening measures and saddled the host communities with responsibilities, with a view to reducing or completely eradicating interferences and tampering in the country’s oil and gas production assets.”

There was, however, drama during the clause-by-clause consideration of the report as Senator Lawan Kaita called the attention of his colleagues to the disclosure by Kyari that the best percentage for host communities is three per cent, as against the five per cent the committee recommended in the report. The Senate subsequently slashed the five per cent in the committee report to three per cent.

Attempts by senators from the South-South region: Abiye Sekibo, James Manager, representing Delta South and Rivers East respectively, were rebuffed.

A source source revealed that despite the insistence of the oil-producing states at the public hearing organised by the joint committee that the fund should be increased to 10 per cent, as contained in the original Executive Bill by the late President Yar’Adua administration, it took a strong lobby by certain lawmakers from the South-South for the leadership of the Senate to agree to move the fund to five per cent from the 2.5 per cent it was pegged by the President Muhammadu Buhari administration in his Executive Bill.

The source further revealed that the leadership of the Senate extracted a commitment from the South-South lawmakers not to kick against the provision for Frontier Basin in the final draft of its report. Checks revealed that Frontier Basin was never mentioned to stakeholders at the public hearing organised ahead of the passage of the Bill.

In the report of the committee, which was upheld by the entire Senate, 30 per cent of the profit of the NNPC Limited Company in oil and gas exploration will be dedicated to the funding of oil prospecting, outside the creeks. Investigations revealed that with the development, the oil giant to be renamed NNPC Limited now has enough financial latitude to commit its revenue to oil prospecting in certain areas of the country where prospecting for hydrocarbons has generated mixed reactions among oil industry operators, particularly the forum of indigenous oil explorers and multinational oil exploration companies in the country. A good example is the Lake Chad Basin and the Benue Trough. Another reform in the Bill was the transformation of the NNPC from a state-owned enterprise to a limited liability company.

According to the committee’s recommendation, “The Bill, when passed into law, will strengthen the accountability and transparency of NNPC Limited as a full-fledged Companies and Allied Matters Act (CAMA) company under statutory/regulatory oversight with better returns to its shareholders, the Nigerian people. It was adopted by the Senate. Speaking with newsmen shortly after passage of the Bill, Senator Nakudu said the three per cent should be enough for the host communities, as he noted that since the fund would come directly from investors, a higher percentage would be counterproductive as it could ultimately be a disincentive to investment in the sector.

President of the Senate, Ahmad Lawan, added that he was fulfilled with the passage, saying that the Ninth Assembly has achieved one of the targets it set for itself in its legislative agenda. At the House of Representatives, the lawmakers on Thursday adopted the recommendations of its special committee on PIB without debate.

According to the committee, Nigeria attracted less than five per cent of the over $100 billion capital investment inflow into Africa’s oil and gas industry over the past 10 years. The 74-member committee on PIB, after its visit to the Kaduna Refining and Petrochemical Company, Dangote Refinery, Lagos and Port Harcourt Refining Company, as well as on-the-spot assessment visits to host communities to ascertain the impacts of oil exploration across the oil-producing states, initiated necessary reviews and came up with final report prescribing amendments to a total of 752 provisions.

As stipulated in the report, in the bid to ensure adequate development of host communities and reduction in the cost of production, the committee recommended five per cent on operating expenditure for upstream and two per cent for midstream and downstream, due to its high operating cost and low return margins relative to the upstream operations.

The committee expressed optimism that the bill, when passed into law, will “unlock the long-awaited capital investment inflow to the country’s oil and gas industry since it contains enhanced incentives in the land, swamp, shallow and deep water terrains,” adding that provisions were made for better and attractive tax incentives to achieve the goal. Honourable Mongunu, who spoke during a press briefing, said: “The House in its wisdom has decided to pass five per cent unanimously without a single voice of descent.”

He explained that whatever resolution passed by the conference committee is sacrosanct and not subject to debate by the two chambers. He, however, noted that the bill has not been passed through the third reading until the conference committee concludes its assignment.

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