The first piece of the four component parts of the Petroleum Industrial Bill (PIB), the Petroleum Industry Governance Bill (PIGB) which has been passed by the National Assembly is awaiting the accent of President Muhammadu Buhari. Hopefully, he would accent to the bill before it is too late.
So that the petroleum industry would be saved from the current near stagnation of activities in the sector. The non-passage of the 18-year old PIB has stalled activities by the oil and gas companies because they cannot decipher what direction the new policy would take and they believe it would not be okay to operate in blindness.
Senator Tayo Alasoadura, chairman of the Committee on upstream in the Senate, said the PIB was broken down into component parts to foster expeditious consideration and passage. Public hearing has just been concluded on the other three pieces and it is hoped that further works would be done on these aspect before they are passed into law.
The other aspects of the bill that are currently under consideration apart from the PIGB are the Fiscal Regime Bill, the Upstream and Midstream Administration Bill and the Petroleum Revenue Bill and Host Community Bill.
Godwin Izomor, group managing director of MG Vowgas, said that it was very important that the bill was accented to by the President so that the industry can move forward. He said whatever anomaly that is noticed should be improved upon with time .
The PIGB which replaces Nigeria’s main legislation in the Oil and Gas Industry seeks to promote transparency and accountability, establish framework for the creation of commercially viable petroleum entities, create the governing institutions with clear and separate roles and foster a conducive business environment for petroleum industry operations.
The passage of the Bill could be described also as a milestone achieved as envisaged in the ‘7 Big Wins’ initiative by the Minister of State for Petroleum Resources.
Some of the fundamental changes introduced to the PIGB are these:
•Establishment of the Nigerian Petroleum Liabilities Company
Reduction in the amount of government share that should be divested to the public from 30percent to 10percent before the provisions on appointment of the Board members of National Petroleum Company will cease to have effect.
•Inclusion of Section 55(a) which makes the Minister of Petroleum the non-executive chairman of the Board of the Nigeria Petroleum Assets Management, etc.
•Deletion of the Fourth schedule which originally listed the assets to be transferred to the Nigeria Petroleum Assets Management Company as the Listing of assets in the schedule is no longer necessary as assets distribution has been taken care of it in the Bill
•The inclusion of Petroleum Equalisation Fund (PEF)
•Enhanced penalty for violation of the orders of the Minister in the case of emergency under Rights of Pre-emption.
•Increase in the number of the members of the Governing Boards/Directors of Institutions created by the PIGB.
•Increase in the experience required for managing director of the National Petroleum Company.
•Change in the initial shareholding of the Commercial entities.
•Reduction in the amount of Government share that should be divested to the public from 30percent to 10percent before the provisions on appointment of the Board members of National Petroleum Company will cease to have effect.
•It makes the Minister of Petroleum a non-executive chairman of the Board of the Nigeria Petroleum Assets Management.
•Deletion of the Fourth schedule which originally listed the assets to be transferred to the Nigeria Petroleum Assets Management Company as the Listing of assets in the schedule is no longer necessary because assets distribution has been taken care of it in the Bill.
•Vesting full responsibility of environmental matters in the Petroleum industry on the Nigeria Petroleum Regulatory Commission
•Requirement of senate approval in the appointment and dismissal of the Board members of the Nigeria Petroleum Regulatory Commission.
According to ACIOE Associates, a consultancy company, the bill reduced the power of the minister significantly. Under the Petroleum Act, Cap P10, Laws of the Federation of Nigeria (LFN) 2004, the federal minister has an absolute discretion to grant, amend, revoke and extend oil prospecting licenses and oil mining leases to applicants that satisfy statutorily prescribed conditions. But the PIGB in its current form seeks to curb this discretion of the Minister by subjecting the exercise of the powers to grant, amend, renew, extend or revoke petroleum exploration and production licenses and leases to the recommendation of the Commission. This presupposes that there would be a new method for application for amendment, renewal, extension and revocation of a license or lease which will involve application through the Commission rather than directly to the Minister. The PIGB is, however, silent on the procedure for application for amendment, renewal, extension and revocation of licenses and leases.
“The power of the Minister to exercise a right of pre-emption on all petroleum and petroleum products marketed or otherwise dealt with under any licence or lease granted under the Act in the event of a state of national emergency or war is retained in the PIGB. Furthermore, The PIGB also clarifies the role of the Minister of Petroleum Resources, which will be streamlined towards policy supervision,” ACIOE Associates said.
As regards the regulation of the industry, the Nigeria Petroleum Regulatory Commission (NPRC) will be the most powerful entity created under the PIGB with a role to take up the assets, resources, funds properties, liabilities, interests, and obligations of the Department of Petroleum Resources (DPR), the Petroleum Inspectorate and the Petroleum Products Pricing Regulatory Agency (PPPRA). It also regulates the petroleum industry.
It is also to keep records of awards and a register of oil blocks, monitor them, conduct a regular audit of activities, conduct bid rounds for oil blocks and administer un-allotted crude oil acreages.
Furthermore, the Commission has the prerogative to release the information provided by a petroleum operator to the public, if the governing board decides that such action is in the public interest.
The Bill allows the Commission to make new rules subject to public hearing. Any rule made without public hearing shall not last more than six months. In cases of conflict, the commission may seek technical advice or direct anyone affected by its order to seek judgment from the Federal High Court.
The bill has created three commercial entities for the promotion of accountability and self-sustainability. These are Ministry of Petroleum Incorporates (MOPI), National Petroleum Company (NPC) and National Petroleum Asset Management Company (NPAMC).
Ministry of Petroleum Incorporated (“MOPI”) has the role to hold, on behalf of the Government, shares in the successor commercial entities incorporated pursuant to the provisions of the PIGB.
The NPC has the role of managing all the assets held by NNPC except the Production Sharing Contracts and back-in Rights assets which shall be assumed by the NPAMC.
The PIGB provides that the initial shares of the NPAMC at incorporation shall be held by the Federal Ministry of Finance Incorporated (“MOFI”) and the Bureau for Public Enterprises (“BPE”) in a ratio of 99percent to 1percent, respectively. It further provides that within 3 months of incorporation, the Minister shall make an order that the assets, rights, obligations, employees, and liabilities of the NNPC shall be transferred to the NPAMC.
By the time the bill is fully implemented, the industry operation would no longer be shrouded in secrecy as it is today.
OLUSOLA BELLO
