For stakeholders in the Nigerian oil and gas industry, members of the National Assembly, this time, must not rest until they have passed the new Petroleum Industry Bill (PIB), which has just been approved by the Federal Executive Council (FEC), into law. Reason: Nigeria has lost billion dollars investment because of non-passage of the bill. CHARLES OKONJI reports.
As the Federal Executive Council (FEC), last week, approved the new Petroleum Industry Bill (PIB), which will be presented to the National Assembly any moment from now, stakeholders in the industry have put the National Assembly to task, saying that all that Nigerians needed was speedy passage of the bill into law.
These industry stakeholders commended President Goodluck Jonathan and all members of the FEC for approving the new PIB, which was put together by Senator Udoma Udo Udoma-led Special Taskforce on PIB.
They stated that by this development, Jonathan had lived up to his promise in his January broadcast, which made organised Labour and Civil Society (CSO) to call off their the strikes and protests over fuel subsidy removal.
The Executive Director of Africa Network for Environment and Economic Justice (ANEEJ), which has been consistent since the life of the sixth National Assembly on the call for the passage of the PIB, Mr. David Ugolor, said the bill would ensure that the nation’s oil and gas industry would become more competitive, promote rapid development of this sector.
He said: “There is an assurance that the new bill proposes revolutionary changes which include the unbundling of the Nigerian National Petroleum Corporation (NNPC) into several companies. Of particular interest to us is the fact that the the interest of the host communities is being addressed with the Bill.”
Ugolor urged the National Assembly to swing into action immediately it received the PIB and avoid situations that would bring unnecessary multiplication, which characterised the previous effort with the sixth National Assembly.
He said: “We want the National Assembly to draw up a timetable for its speedy passage. The timetable should provide for Public Hearing and other avenues for Civil Society to make inputs into the Bill. We are, particularly interested in ensuring that the new law makes the industry transparent and accountable to the people of Nigeria.”
ANEEJ Deputy Director, Mr. Leo Atakpu, equally called on the members of the National Assembly to learn lessons from the unseen “banana peels” in the National Assembly, which had been pulling down parliamentarians with corrupt tendencies as evident in the power probe, Capital Market probe and the latest being the fuel subsidy probe among others.
Atakpu said: “The National Assembly must be on its guard to ensure that the private oil companies and multi-national institutions operating in the sector do not move in with their money to derail the noble intensions of government and Nigerians on the PIB.
“We want to see a Petroleum Industry Law that addresses all major issues buffeting the industry. A Law that would reverse the resource-curse phenomenon that has become the lots of Nigerian oil-bearing communities.
“We want a Law that would stand the test of time in line with international best instruments that will end corruption and the culture of impunity in the industry. We want to see a Petroleum Law that would end the mindless thieving and appropriation of the nation’s commonwealth by a few powerful individuals,” he emphasised.
He called on the international community to assist Nigeria to get it right with its oil industry this time around so as to stem the rising poverty rate which has assumed a frightening dimension.
Another industry stakeholders, while also calling on the National Assembly to give the new bill an accelerated hearing and passage, said: “I think that what Nigeria needs is a private sector-driven economy which will eventually bring about, competitiveness, create jobs and general infrastructural development and building of more refinery so that we can add value to crude oil and export refine product and have enough for domestic consumption.
“Private investors must not be foreigners only; we have rich Nigerians also who can invest their money in the country and create jobs for our people than taking our money to South Africa, Ghana, Dubai and other countries. So if they like, let them come and invest in disguise, what we should care is competency and efficiency.
“I am happy that NNPC will be unbundled; we will get it right with time. Many may not agree with my submission, but this is the first time in this country I am actually seeing a government with vision and passion to move this country to the next level, if not for the insecurity which looks like an offshoot of neglect of pass government mixed with sabotage that is dragging our progress backward, but as a nation, we shall surmount this trial time and come out it.
“What I am saying is that no Nigerian public corporation has performed well because it is nobody’s business. Since after the civil war, employment into Nigerian civil service was politicised and tribalised which brought about incompetence, inefficiency, failures and massive corruption.
“But the past Nigerian leaders only remove and appoint new Director Generals from time to time using our collective source of strength as a nation, to play politics and settling political friends and family members to the detriment of Nigeria.
“For a national like ours were corruption is massive, if we want to tell ourselves the truth, privatization remains our only option, nobody steals from himself. It is also another way of fighting corruption and blocking the leakages,” he explained.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had stressed that the new PIB, which is an aggregate of about 16 laws in the oil and gas industry, would go a long way in making the Nigerian petroleum industry the preferred destination of oil and gas investors.
Alison-Madueke, while highlighting the new bill, disclosed that the Nigerian National Petroleum Corporation (NNPC) would be unbundled into vibrant successor companies, which would include the National Oil Company, National Gas Company and National Asset Management Corporation, among others, noting that they would all be private sector driven.
According to her, new agencies such as the National Frontiers Exploration Services, Host Community Fund and Regulatory Inspectorate for the downstream sector would emerge as unique departments that would be reporting directly to the Minister of Petroleum.
Alison-Madueke said: “The new bill looks at new areas that are quite critical and first of all they are the inspectorate, the regulatory agencies for the oil and gas sector to ensure that they are independent and that they can actually do the regulation.
“We also looked of course at the unbundling of the NNPC, which has been very critical; created out of the old NNPC a National Oil Company, which will be independent. It will be a registered company, which will have shareholding and it will be ceded acreages and will also, as we face and implement the PIB, take over current infrastructure in the oil and gas sector like refineries, depots and certain downstream entities as well as production sharing contracts.
“We created an Asset Management Corporation as a holding company, which will operate an asset management company that will be a competitive private sector driven company, and it will hold what is today the joint company hydro carbon assets of the nation.
“We expect of course that as time goes on, that company will operate essentially along the line of private sector to give the federation the right returns on investments in the hydro carbon sector. We looked at a couple of new agencies as well; the National Frontiers Exploration Services unit that will reside in the new Petroleum Policy Bureau, which will be a technical arm of the minister’s secretariat,” she stressed.
The Minister of Petroleum further stated that some existing parastatals, such as the Petroleum Training Institute (PTI), Petroleum Trust Development Fund (PTDF), Petroleum Equalisation Fund (PEF) and National Content Development Management Board (NCDMB) would continue to exist until they were no longer necessary.
An industry source disclosed that the new PIB was a demonstration of the Federal Government’s resolve to embark on full fledged deregulation of the downstream petroleum sector.
The bill, it was gathered, would scrap the Petroleum Products Pricing Regulatory Agency (PPPRA) and its sister agency, PEF, which some analysts agreed were irrelevant in a deregulated downstream economy. Also, there was no room for the National Petroleum Research Centre (NPRC), as was originally proposed by the respective committees in the 2004 and 2009 draft PIBs.
Information gathered revealed that the new PIB proposed only eight governing institutions for the petroleum industry, as opposed to the 10 proposed in 2009 or six proposed in the 2004 bills. The regulatory institutions proposed under the new dispensation, in addition to the office of the Petroleum Minister, are National Petroleum Directorate (NPD), Nigerian Petroleum Inspectorate (NPI), National Frontier Exploration Service (NFES), Petroleum Technology Development Fund (PTDF), Petroleum Host Community Fund (PHCF), Incorporation of the National Oil Company (INOC) and Incorporation of the Nigeria Petroleum Assets Management Company (INPAMC).
Under the new proposal, the NPI would be responsible for all regulatory functions, hitherto performed by various agencies.
The bill stated: “The Inspectorate shall be successor to the assets and liabilities of the Petroleum Inspectorate of the Nigerian National Petroleum Corporation, Department of Petroleum Resources of the Ministry of Petroleum Resources and the Petroleum Products Pricing Regulatory Agency.”
In line with the above, the Inspectorate would, among others, enforce the provisions of any enactments or regulations applicable to upstream petroleum operations and downstream petroleum operations made prior to the commencement of this Act;
The President and Minister of Petroleum Resources, it was revealed, would “enforce the provisions of any regulations referring to or formerly administered by the Department of Petroleum Resources of the Ministry of Petroleum Resources or the former Petroleum Inspectorate of the Nigerian National Petroleum Corporation;
“Modify, extend, renew, suspend and revoke any licence issued by it pursuant to the provisions of this part; make recommendations to the minister for the issuance, amendment or revocation of any regulations relevant to the provisions or requirements of this Act;
“Monitor and enforce the application of tariff and pricing framework by licensees in the midstream petroleum operations in accordance with the provisions of this Act; iInstitute legal proceedings against any licensee, lessee or permit holder for failure to comply with licence, lease or permit conditions or other requirements of the Act;
“Ensure adherence to environmental standards approved in collaboration with Federal Ministry of Environment or any other relevant agency, by all persons and companies involved in petroleum operations
“Establish, monitor and regulate health and safety measures relating to all aspects of petroleum operations within the onshore and offshore territory of Nigeria, including the Exclusive Economic Zone,” it stated.
An analyst pointed out that it was uncertain what will become of the staff of the PPPRA and PEF, as this was not indicated in the new draft PIB, thus pointing to future job cuts, in which hundreds may lose their jobs.
There was no mention of the transfer of employees, as with the case of the NNPC to the National Oil Company (NOC) and the Nigeria Petroleum Assets Management Company in which “the transfer of employees of the NNPC to (these companies) shall be in accordance with provisions of this Act (Savings and Transitional Provisions Relating to Employees).”
Among the industry governing institutions, the only new body that was not previously proposed in other bills, a source said, was the Petroleum Host Community Fund, through which government seeks to get oil communities more involved in oil and gas revenues.
Although the PHC Fund, which would be derived from 10 per cent contributions from companies’ net profit, the bill stated, would be a deviation from the original concept in which 10 per cent equity was proposed for host communities in all oil and gas assets.
Under the proposal, “the PHC Fund shall be utilised for the development of the economic and social infrastructure of the communities within the petroleum producing communities.”
Each upstream petroleum company, according to the new bill, would “remit on a monthly basis 10 per cent of the net profit (net profit defined as the adjusted profit minus the Nigerian Hydrocarbon Tax and minus the corporate income tax) as follows:
“For profit derived from petroleum operations in onshore areas and in the offshore shallow water areas, all of such remittance directly into the PHC Fund; for profit derived from petroleum operations in deepwater areas, all of the remittance directly in equal shares to each state government of the eight littoral states of the Federal Republic of Nigeria.
“At the end of the fiscal year, each upstream petroleum company shall reconcile its remittance pursuant to subsection (1) of this section with its actual filed tax return to the service and settle any such difference.
“The contributions made by each upstream petroleum company pursuant subsection (1) of this section, will constitute an immediate credit to its total fiscal rent obligations as defined in this Act,” it added.
Communities, the new PIB noted, would risk losing their share to the fund if they indulged in acts of vandalism or civil unrests, as “where an act of vandalism, sabotage or other civil unrest occurs that causes damage to the upstream facilities allocated to a community, such community shall forfeit its entitlement to the portion of the PHC Fund determined by the Inspectorate to be sufficient for repair and remediation of the damage.”
However, one of the stakeholders, while also reacting to the new bill, said: “Something is ominous about this bill, when looking at some events that has been happening in the oil and gas industries for a while.
“First of all, NNPC pumps quite large amount of money into developing gas exploration in the nation with no one asking about what amount accrued and how it has been disbursed. Secondly, there is a project to be embarked on by NNPC to supply the generating power plants with gas for continuous operation.
“Thirdly, removal of fuel subsidy from the market-imported refined products is to pave way for discriminatory high price that will ensue once the leash is released. Lastly, this Ministry of Petroleum Resources just announced the plan of building six new refineries that will gulp whopping amount of 4.5 billion of dollars. More, there will be some other spade of developments going on as of now in preparation for the unbundling the NNPC that might be privatised.
“There is nothing wrong in commercialisation and privatisation of industries but the question is why would you take so much pain to invest lot of money to rebuild and turn around of an industry but later auctioned at a very cheap price?
“After burrowing money and dipping into the reserve account to execute a project that will eventually be sold to themselves, it is the masses that will later bear the brunt. It is so pathetic that we should be doing this to ourselves. It is ridiculous that we do things to harm our fellow citizens at the late hour and then auctioned it out at a loss.
“If the government wants to open the market let it ease itself out of the system without incurring any unnecessary debt that will plague the masses later on. MTN and all other Telecom came in with their structure built from ground. Why not ask any other investor interested in developing any sector to come at ease and operate with minimal constrain as we have in the case of telecom?
“This idea of making a turn around of an industry and then later sold it at a cheap price has been going since the inception of their insincere privatisation and commercialisation programme.
“I hope the concern Nigerians will voice out and ensure that we do not just have to do a thing for the sake of doing it but must be done properly and rightly. We want no more debt accrued from investing for the looters and skimming of this nation by these unscrupulous politicians and their dubious business men counterpart,” he added.
Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has, however, charged its workers to brace up in the performance of their duties to enable them confront challenges that will accompany reforms in the oil and gas industry.
PENGASSAN President, Mr. Babatunde Ogun, said: “Going forward, the terrain for doing our jobs will not be an easy one for the Nigerian nation and for the oil and gas industry.
“It will be tight because of the ongoing reforms in the oil and gas industry. Such reforms such as the PIB, unbundling of the NNPC, and the Nigerian Oil and Gas Content Development (NOGICD) Act, among others, would impact on the industrial relations in the industry,” he stated.
The union president stated that the staff appraisal system would be reviewed and base on performance level of individual rather that collective to achieve optimum productivity and the growth of the association.
He noted that the staff should be able to checkmate excesses of the branches and elected officers with their training and expertise to develop the union, saying that “staff is individually responsible for their actions and inactions in the union.”