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The Federal Government has revealed that it would soon present two cluster bills on the petroleum industry to the National Assembly.
While the first executive bill would deal with the future regulatory framework for the upstream petroleum sector, midstream and downstream gas sector and the midstream and downstream petroleum sector, the second bill will address fiscal issues around the industry.
Already, the Senate has initiated the Petroleum Industry Governance Bill (PIGB), which underwent a three-day public hearing from December 7 to 9, 2016. The proposal sponsored by Tayo Alasoadura, Chairman, Senate Committee on Petroleum Upstream addresses the governance and institutional framework of the petroleum industry.
Ibe Kachikwu, minister of state for Petroleum, told the Joint Committee on PIGB that its first version of the christened: Petroleum Industry Reform Bill (PIRB) “addresses similar issues relating to the institutional framework for the industry that the PIGB is seeking to address”.
The bills, he disclosed, would soon be presented to the National Assembly.
“To ensure the sustainability of the policies, we have developed an executive bill and are in the process of developing fiscal bill that captures the critical policy positions, and these bills will be submitted to the National Assembly very soon.
“The first executive bill, titled: ‘Petroleum Industry Reform Bill’ (PIRB), addresses similar issues relating to the institutional framework for the industry that the PIGB is seeking to address; however, it goes further to present the executive’s view of the future regulatory framework for the upstream petroleum sector, midstream and downstream gas sector, and the midstream and downstream petroleum sector (the latter covering the processing, bulk transportation, bulk storage, of crude oil and petroleum products, and the distribution and retail trading of crude oil and petroleum products).
“The second bill will address purely fiscal issues around the industry segmentation that we have addressed in the sector policies and in the PIRB”, he told the committee while making his presentation at a public hearing at the weekend.
Kachikwu also supported the establishment of a single regulator, which the upper legislative chamber also proposed in the bill.
Recall that the Nigerian National Petroleum Corporation (NNPC), had in its presentation, backed the unbundling of the Corporation into three entities namely: the Nigeria Petroleum Regulatory Commission (NPRC), Nigeria Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC).
The bill proposes that the NPRC will act as the regulatory entity for the entire petroleum industry (upstream, midstream and downstream), while the NPAMC will serve as counterpart and administrator of production sharing agreements and NPC as a vertically integrated oil and gas company operating as a fully commercial entity across the value chain.
“We are aligned on the concept of a single regulator for the petroleum industry. What Nigeria needs going forward is a regulator that covers the field, as opposed to dissipated regulatory power amongst agencies. The regulator should cover upstream, midstream and downstream oil, gas and products regulation, as well as technical, economic and HSE regulation”, the minister noted in his presentation.
According to Section 8 of the PIGB, the NPRC will issue regulations in respect of a number of specified matters in order to give proper effect to the Act.
But Kachikwu believes “There needs to be careful calibration of the relationship between the role of the Minister as the institution charged with overall supervision of the industry vis a vis that of the super regulator as the institution responsible for regulation. The calibration must ensure checks and balances on regulatory power through tools such as administrative law; however, it seems essential that the power to issue regulations should at all times reside with the Minister.
“This ensures that power to issue delegated legislation is placed in the hands of the appropriate member of the executive with responsibility both to the President and also to the National assembly in terms of oversight. The counter check on this is that the technical issues are handled by the regulator, for consideration of the Minister, who upon approval of the recommendation, will issue the appropriate regulation.
“There are several matters in the bill that are not regulatory in nature which will require regulations. It will be an aberration if these matters, which are squarely within the purview of the Minister, to be delegated to the Commission. Minister should issue regulations upon the advice of the Commission”.
He also suggested that from the outset, the Commission should be constituted with the following departments: Upstream Regulation, Midstream and Downstream Oil Regulation, Midstream and Downstream Gas Regulation,
Health Safety and Environment.
