NNPC Commercialised As Senate Passes PIB

The Senate Thursday passed the Petroleum Industry Bill (PIB) after two decades of failed attempts.
The bill was passed after a clause-by-clause consideration of a report by the Joint Committee on Downstream Petroleum Sector, Petroleum Resources (Upstream), and Gas on the PIB.

The Red Chamber approved the commercialisation of Nigerian National Petroleum Corporation (NNPC) and the scrapping of the Petroleum Equalisation Fund (PEF) and Petroleum Products Pricing Regulatory Agency (PPPRA).

It also okayed 30 per cent of profits accruing from oil and gas operations by the NNPC Limited for the exploration of oil in the frontier basins and set aside three per cent of the operating expenditure of oil companies for the development of host communities.
The Chairman of the Joint Committee, Sabo Muhammed Nakudu, said the bill’s passage and eventual assent into law would strengthen accountability and transparency of NNPC limited as a full-fledged company.

He said the Joint Committee’s recommendation on Frontier Basins recognised the need for Nigeria to 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 to alternative energy sources.

PIB was first introduced in the Senate in 2008 and since then, it had suffered series of setbacks.

It came closer to passage in the 8th Assembly but suffered the same fate as its passage was jettisoned in the twilight of the life of the 8th Assembly.
Senate President Ahmad Lawan said the 9th Assembly had achieved one of its fundamental legislative agenda.
“The demons (of PIB) have been defeated in this Chamber. We have passed the bill,” he said.

Major highlights of PIB

The Petroleum Industry Bill consists of five distinct chapters, which include Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Fiscal Framework; and Miscellaneous Provisions comprising 319 clauses and 8 schedules.

The Red Chamber approved Clause 53 of the bill, which empowers the Minister of Petroleum Resources to incorporate the Nigeria National Petroleum Corporation as a limited liability company to be known as NNPC Limited, six months after the commencement of the Act.
Clause 53 mandates the minister of petroleum resources at the incorporation of NNPC Limited, to consult with the minister of finance to determine the number and nominal value of the shares to be allotted, which would form the initial paid-up share capital of NNPC Limited.

The Senate approved ownership of all shares in NNPC Limited to be vested in the government at incorporation and held by the ministry of finance incorporated on behalf of the government.

The Red Chamber approved the funding mechanism of thirty per cent of NNPC Limited’s oil and gas profit in the production sharing, profit sharing, and risk service contracts to fund the exploration of frontier basins.
Also, the Senate approved that 3 per cent of operating expenditure of oil companies (OPEX), estimated at $500 million annually be paid as contribution to the host community development fund.

The upper chamber also approved Clause 4 of the bill, which seeks the establishment of the Nigerian Upstream Regulatory Commission to provide technical regulatory functions that would enforce, administer and implement laws, regulations and policies relating to upstream petroleum operations.

It approved the establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, which shall be responsible for the technical and commercial regulation of midstream and downstream petroleum operations in the petroleum industry in Nigeria.

The recommendation of the Joint Committee was amended in Clause 52(7d) to ensure that all monies received from gas flaring be channeled for the purpose of environmental remediation and relief of the host communities as against the development of infrastructure in midstream gas operations.

Uproar over 3 per cent equity for host communities
Before the bill was passed, senators were divided on the right per cent of oil profits to be accrued to the Host Communities Trust.

The Presidency had, in the executive bill forwarded to both chambers of the National Assembly last year, proposed 2.5 per cent operational cost-share for the host communities.

Though the proposal was opposed during the public hearings in February by leaders of the oil-producing communities, the Senate joint committee that worked on the bill recommended 5%.

This, the committee said, was to ensure adequate development of the host communities and reduction in the cost of production.

However, the Red Chamber became tensed when the Senate passed an amendment to Section 240 of the bill on the sources of funding for the Fund, slashing the percentage to 3 per cent.
The development did not go down well with the senators from the Niger Delta, who quickly rose against the amendment.

Senator James Manager (PDP, Delta), proposed an amendment to retain the provision of five per cent in the report.
“This particular thing that is before us is something that is very bitter for us to swallow, a very bitter pill for us to swallow,” Manager said.  His appeal was rejected.

After the Senate President ruled on the 3 per cent, Senator George Sekibo (PDP, Rivers) called for a division to challenge the ruling of Lawan.

At this point, Senate Leader, Yahaya Abdullahi, appealed to Sekibo to withdraw his motion, saying the Senate would be heading to the state of Armageddon if it allowed that division to happen.

Lawan said though calling for division is the right of every lawmaker, he pleaded with Sekibo to allow the Senate progress with the bill. Sekibo, apparently overwhelmed, agreed but appealed that the percentage should be increased.

Reps consider, okay report on PIB
The House of Representatives also on Thursday considered and adopted the report on the Petroleum Industry Bill (PIB).

This followed the earlier submission of the report on PIB by the ad hoc committee Chairman, Mohammed Tahir Monguno at Wednesday’s plenary.
The Green Chamber considered the report clause-by-clause in a session presided over by Deputy Speaker Ahmed Idris Wase.

The bill was however not listed for Third Reading.
Speaking after the adoption of the clauses, Speaker Femi Gbajabiamila commended his colleagues, saying, “Even with this feat of landmark legislation, we are going on a high note. And I believe in the coming weeks, the electoral act amendment will sail through.”

Addressing the press shortly after the adoption of the PIB, Chairman of the committee, Rep Monguno said host communities have been expanded to include communities where oil pipelines pass through, as they also suffer from environmental degradations.

When asked if the bill has been passed for third reading, Monguno said, “Even if there are no discrepancies, third reading has not been done. There are processes of lawmaking, please. Let us not be mischievous; let us not put the cart before the horse. There are processes of lawmaking that are very clear. Third reading has not been done.”

PIB jinx broken – Presidency
The Senior Special Assistant to the President on National Assembly Matters (Senate), Senator Babajide Omoworare, hailed the Senate for passing the much-delayed Petroleum Industry Bill, PIB.

Omoworare said in a statement that passing the bill after several efforts by the previous assemblies was a testament that the executive and the legislature could really work together without compromising party position and individual perspective, in the most positive manner with a view to actualising the common goal and communal good for Nigerians.

Experts react to Petroleum Industry Bill passage
Following the passage of the Petroleum Industry Bill, experts and organisations have reacted to the development.
The Director General of the Lagos Chamber of commerce and Industry, LCCI, Muda Yusuf, said Nigeria with the largest oil and gas reserves in Africa has huge untapped potential to achieve its economic development goals including gas-to-power ambitions, but the investments were not coming in the absence of fiscal policies that will stimulate investment.

Nigeria despite having the largest reserves in Africa, only received 4 per cent ($3 billion) of $75 billion invested in the continent between 2015 and 2019.

According to Yusuf, this underscored the need to create a competitive environment to attract investment to the oil and gas sector.

A petroleum industry analyst, Suraj Oyewale said the passage of the bill would make it easier to run the economics of new investments or revise the viability of existing investments in the oil and gas industry.

“It will also give clarity on the regulatory and political process of investing and operating in the Nigerian oil and gas sector,” Oyewale said.
The analyst said the PIB would make a difference if thoroughly and sincerely implemented.

He said: “The final version of the bill that was passed today is not yet public so we do not know the content, but if it addresses the stakeholders’ concerns raised about the version made public in October 2020, it should make significant positive difference if sincerely implemented.”

He said the delay in the passage of the bill had put a lot of investment decisions in the industry on hold as investors sought to have greater clarity on the direction of the industry, especially with respect to the new fiscal rules.

But with the bill, he said new projects in the oil and gas industry would spring up across the country.

“This means jobs for Nigerians through direct employment by the oil companies or through their contractors. It will also bring more international capital into the Nigerian economy,” he said.

Similarly, Macbeth Francis, another expert agreeing with Oyewale said the PIB would address the problems in Nigeria’s oil and gas industry.
Francis believed Nigeria’s economy would witness an exponential growth soon.

Value, public interest guided new bill, says Malami
The Attorney General of the Federation and Minister of Justice has said the newly signed PIB will enhance value in terms of creating amiable environment for investment and protecting the public interest for the maximum benefit of the country.

The minister said necessary steps had been taken to ensure the pending bills were transmitted to the president for assent.

According to a statement by the media aide to the minister, Dr Umar Gwandu, Malami said this during a meeting with the British High Commissioner to Nigeria, Catriona Laing on Thursday in Abuja.

He said the minister and the diplomat and her delegation also discussed bilateral issues relating to asset recovery, anti-corruption crusade, amendment of the electoral act, the audit bill, PIB, Twitter ban and counter terrorism approaches.

Malami said the electoral act amendment was to enhance the democratic system through addressing delays in judicial determination of pre-election matters, as well as ensuring justice and fairness in the conduct of election processes including party primaries.

According to the statement, he said to strengthen the fight against corruption, the government came up with the proceeds of crime bill and audit bill, among others.

In her remarks, Ms Laing thanked the minister for the “clarification” of the issues maintaining that the steps taken in the fight against corruption and electoral reforms were “really encouraging.”

By Abdullateef Salau, Balarabe Alkassim, Itodo D. Sule, John C. Azu, Zakariyya Adaramola (Abuja) Sunday M. Ogwu & Christiana T. Alabi (Lagos)