Stakeholders and players in the oil and gas sector of the Nigerian economy Wednesday took turns to highlight the significant good inherent in the proposed Petroleum Industry Bill, PIB currently undergoing legislative scrutiny in the national assembly.
This was as the Speaker of the House of Representatives, Femi Gbajabiamila assured that the bill would be passed into law in April this year. The stakeholders which included the Minister of State for Petroleum Resources, Chief Timipre Silva, the Group Managing Director, GMD, of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari and the Chairman of the Federal Inland Revenue Service, FIRS, Mohammed Nami said that bill when promulgated into law would promote economic growth and bring about the needed vigour and transparency that would in turn engender productivity in the petroleum industry.
The players spoke at the commencement of a two day public hearing organized by the Ad-hoc Commitee of the House on PIB chaired by Hon. Mohamed Monguno who is also the Chief Whip of the House. Termed “A Bill for an Act to Provide Legal, Governance, Regulatory and Fiscal Framework for the Nigerian Petroleum Industry, the Development of Host Communities and for Related Matters (HB. 1061)”, PIB is an executive bill that deputed to the national assembly 20 years ago. High profile variegated interests, according to reports, had however stifled its legislative progress and passage. But determined to ensure its passage to urgently relate the economy, President Muhammadu Buhari on September 20, 2020 retransmitted the bill to the national assembly for which the House was holding the public hearing. The Bill is designed to guarantee early revenues for government-Silva Speaking at the event, Minister Silva said the bill will enhance good governance and global competitiveness.
He said: “At the heart of this philosophy is the aim to establish good governance, competitiveness, global best practices and the ease of doing business within the Nigerian oil sector. The Bill is designed to guarantee early revenues for government, clarify roles and simplify administration of this sector, infuse transparency in regulation, ensure equity and fairness for all industry players and mandate the role space responsiveness of regulators. “Specifically the PIB seeks to achieve the following objectives: Promote economic growth to increase oil and gas production, stimulate economic growth through strong investments in mid stream gas infrastructure to increase gas based oil generation and industries, enable frontier exploration, establish an effective management system, infuse transparency and non confidentiality, transform NNPC into a viable commercially based and self sustaining national oil company, institute a strong regulatory framework with increased emphasis on mid stream development, create and effective mid stream and downstream licensing system, mandate improved environmental measures and assist host communities in petroleum operation areas to achieve their aspirations.
“Till date several engagements have been held in key domestic and international industries stakeholders including industry players and operators with a view to generate some level of consensus in the national assembly. While every care has been taken to accommodate different shades of opinion in the PIB, it cannot be complete without the input of the generality of the public which will ultimately enrich the document and put upon it the legitimacy and acceptance that is required to operate the law when passed.
“Participants at this hearing are assured that their voices would be heard and every effort would be made to integrate the best ideas and interventions into the final document. We appeal for understanding in instances where particular viewpoints have not been captured or reflect in the document as it is not possible to accommodate every opinion, as sometimes, this may be conflicting and contradictory to the design philosophy. “Passing the PIB after all the relevant processes have been completed is only a means to an end, not an end in itself. The end thereof being to operationize the law in a manner that best achieves the aims and objectives detailed earlier. “For this to happen, the participation and cooperation of every stakeholder is required and solicited. The law can have the desired multiplier effect on the economy, investments, infrastructure, employment, the environment and the well being of the citizens, only when we all work together to bring into existence the state of affairs within our expectation. “This is why it is imperative that our participation today should be productive and focused, devoid of rancour, acrimony and disruption. I am confident that everyone gathered here shares the same passion for the passage of the PIB and the resolution that Nigeria must get it right with the law this time around”. Oil will still remain relevant in next 30 years -NNPC boss In his remarks, the NNPC GMD, Kyari said offered a glimpse of hope that oil will still be relevant in the next 30 years. “The reality today, Mr Speaker is that oil and gas would be relevant in another 30 years. The use of oil would change and oil and gas would still be there. There would still be the demand of oil would in one hundred billion barrels per day. “Only countries where we have the most effective and efficient processes would suppress it. It is just like coal to generate power. The time we have to act is now. Yes, it very late, there is no doubt about it. No significant Investment in 20 years “We haven’t seen any significant investment in this industry since the year 2000 and the reason is very simple. The reason is that there is no physical stability in our country.
“Our target for 2023 was 23 million barrels per day but the reality that, this country has potentials of consuming 23 billion barrels per day and we have the market but unfortunately because of the physical nature and structure we have, we are not able to do it. Clear legislation and clear frame work in the upstream bad downstream is very critical in this industry”, Kyari said. Bill if passed into law would promote economic growth-FIRS boss Similarly, the Chairman of FIRS, Nami who aligned the Service to the objectives of the bill said it would promote economic growth. “The PIB is an important piece of legislation which if passed into law will change the administration, governance and physical landscape of the oil and gas industry in Nigeria. “Our country is more of a gas colony with untapped enormous reserves which the PIB as it is drafted will jumpstart the much needed NIgeria’s gas revolution. “The bill if passed into law would promote economic growth with a robust frame work for strong investment and infrastructure in the industry. Tax administration of oil and gas industry would also change in particular. “FIRS is in total support to develop the oil and gas industry inline with the international best practices”, he said. Bill to pass in April-Gbajabiamila Earlier in his remarks to declare the hearing open, the Speaker of the House, Gbajabiamila who noted the controversies in the bill that had stifled its passage said the House would pass it in April. He however said that the speed of the passage would not diminish the thoroughness the lawmakers were expected to give to the bill. The speaker also stated that the House would protect the interest of all Nigerians.
He said: “This public hearing allows all stakeholders to contribute to the PIB for an Act to Provide Legal, Governance, Regulatory and Fiscal Framework For the Nigerian Petroleum Industry, the Development of Host Communities, and for Related Matters. It is an opportunity for all of us to collaborate to improve this Bill, so when it becomes law, it will serve the best interests of all our nation’s people. “We are not oblivious to the fact of many contending interests in this sector.
These contentions do not need to result in conflict, especially when we know the objective of national prosperity benefits us all. Therefore, the process of engaging with stakeholders will continue beyond this public hearing to accommodate the diversity of interests and ensure all critical views form part of the deliberations that inform the final legislation. “Regardless of whatever other interests may exist, for this Ad-Hoc Committee and indeed the House of Representatives, Nigeria’s best interests is both our desired outcome and guiding principle. It falls to this Ad-Hoc Committee to engage in a necessary balancing act in the interests of our beloved nation. “Many believe and will proffer evidence to support the belief that the oil and gas industry has had its best years and is on an irreversible decline. For a country such as ours, as dependent on income from this industry as we are, this is a dire possibility made worse by the inefficiencies that bedevil our local industry and deprive us of the full benefits that ought to derive therefrom. Predictions of the fossil fuel industry’s demise have persisted for decades, so, understandably, some might dismiss these concerns out of hand. “Nonetheless, the truth remains that modernising and diversifying our economy away from overreliance on income from fossil fuels becomes a matter of greater urgency with each passing day. “The irony, of course, is that to do this, we must first make sure our oil and gas industry is more productive, more efficient and more profitable at a time of declining global profitability. This is a tall order. “We intend to pass this Bill by April. That is a commitment we have made. Some may call it a tall order, but we will do it and we will do it with every sense of responsibility without compromising the thoroughness of the work that will be done”.
Gbajabiamila also stated the need to diversify the economy, saying that passing the bill was obviously the first step. “The Petroleum Industry Bill is a necessary first step towards reorganising the sector to respond to the new global reality of decreasing demand and the diminished profitability of fossil fuels. Our assignment here is first to ensure Nigeria’s oil and gas industry operates optimally for the benefit of all Nigerians. Then we must see to it that the industry generates the resources we need to prepare Nigeria for a future when fossil fuels are worth even less than they are now. “Other countries have woken to the challenges of the new dynamics in the international market for crude oil and natural gas. Some have begun to adapt to these new realities, whilst others have already done so. We intend that when the Petroleum Industry Bill (PIB) becomes law, it will address our peculiar and localised concerns in ways that allow our oil and gas industry to compete more effectively globally. We will borrow from what has worked for others, but the solutions we implement must be uniquely suited to our needs. “Let me also reiterate, with this Bill we have the ability as a country to finally meet the obligations owed to the communities that host oil and gas exploration and transportation activities and pay a high environmental price as a consequence. There have been various prior attempts to meet this obligation. Let us remember those attempts and be motivated by the knowledge that we can now correct past mistakes and fulfil the responsibility we owe these communities once and for all. “Let me by way of emphasis say we are in a momentous occasion right now. This bill has been long coming like the chairman said, it has been upcoming in the last 20 years because of contending and vested interest, we have not been able to reach the desired outcome over the years. “A lot of work has gone into the preparation of this bill but it’s not strait-jacketed, the idea of public hearing is to have interests that may have not been accommodated prior to the introduction to the PIB to lend their voices and to understand perhaps the bigger environment where they are coming from. So my charge to everyone that will be participating is not to close our minds or our ears to the views and the positions that may be advanced by various interest groups.
“We are in a world, an economic world, so there must be interest groups, they will be interest groups and we cannot deny that. But what should guide the outcome of what we do here as we accommodate more views will be what will be in the best interest of the people. “It is important that we all, whether we participant or we do not participate, we are all fully engage because the outcome of this particular bill will determine a lot of things because it is the foundation upon which our economy, the foundation upon which the so much talked about diversification of the economy will be made, because for you to diversify your economy, you have to invest money, and for you to invest money, the resources you would use to invest and develop your economy, as it is in Nigeria for now, comes from the petroleum industry. “Whether you believe in the finite or infiniteness of the product, the point that needs to be made is that we need to derive as much profit for the time when the product is still available. We need to derive as much profit to be able to diversify into other areas”, the Speaker said. In his welcome address, the chairman of the adhoc Commitee,
Hon. Mohamed Monguno said that the PIB when passed will bring the needed reforms to the oil industry. “The Bill has been in the making for over 20 years, yet efforts towards passing it into law have failed. It was first introduced on the floor of the House in December 2008. The Bill has generated controversies and suffered criticism from major stakeholders such as International Oil Companies (IOCs), the Nigerian National Petroleum Corporation NNPC and the host communities. “The Petroleum Industry Bill when passed into law will bring about the much needed reform in the oil industry, entrench efficiency and transparency in both upstream and downstream sectors and bring operations at par with international standards”, he said. NLC President, NUPENG, PENGASSAN President speak In his own submission, President of the Nigerian Labour Congress, NLC, Comrade Ayuba Wabba suggested the creation of Nigeria Oil and Gas Commission as against two Commissions Offshore and Onshore Regulatory Commission for Upstream and Downstream stated in the bill. “Section 11. Governing Board of the Commission (1) There is established a Governing Board (the “Board of the Commission”) which shall be responsible for the policy and general administration of the Commission. (2) The Board of the Commission shall consist of the following members – (a) one non-executive chairman; (b) two non-executive commissioners (one of which shall represent Labour); (c) the chief executive of the Commission (the “Commission Chief Executive”); (d) two other executive commissioners who are responsible for Finance and Accounts and Exploration and Acreage Management; (e) one representative of the Authority not below the rank of a director; (f) one representative of the Ministry not below the rank of director; and (g) one representative of the Ministry of Finance not below the rank of a director (h) one representative of Labour of cognate qualification). (i) The Commission shall be known as Nigeria Oil and Gas Commission. “Critical stakeholders in the oil and gas industry must be represented in the board. This is against the backdrop of the numerous collective bargaining agreements (CBA) for oil industry remuneration and championed by the industrial Unions affiliates of Congress like NUPENG and PENGASSAN counterpart”, he said. But in its submission, National Union of Petroleum and National Gas, NUPENG and Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN pushed for an Oil and Gas Regulatory Commission. Presenting their joint position, the President of PENGASSAN, Festus Osifo argued that it would be counterproductive to duplicate Commissions. He also urged for independent regulator of NNPC asking the lawmakers to ensure that the PIB when passed must attract investments.
“The industry has awaited the passage of PlB, but the PIB must meet certain condition otherwise it will not be worth the while. “We must not pass PIB that will send investors away or put projects on hold like the Deep Offshore and inland Basin Amendment Act that was passed by this National Assembly in December 2019 by has reduced the drive for investment in deep water. We hereby advocate that the National Assembly should always do a study on how the laws they pass helps in redirecting the industry. “PENGASSAN and NUPENG should be represented in the Commission. There should be an independent regulator of the NNPC. We must create a PIB that’s balanced. “We have about 17 trillion dollars sitting all over the world, waiting for us to access. If we pass the PIB, I want to assure that most of these investments will come to Nigeria”, he said. Positions of State Governments Similarly, in their various presentations, some oil producing states such as Delta, Rivers, Bayelsa, Akwa Ibom pushed for inclusion into the boards of the various regulatory commissions. Rivers State recommended that “in view of the strategic position of Rivers State in the oil and gas production scale/contribution, the headquarters of the Commission and all oil producing companies should be cited in Rivers State in line with presidential directives”. For Delta State, Section 238 of the bill which read “Failure to incorporate Petroleum Host Communities Development Trust”, should be redrafted to read “Failure by any holder of a licence or lease governed by this act to comply with its obligation under this chapter may be grounds for revocation of the applicable license or lease.” The State represented by the Chief Economic Adviser to Governor Ifeanyi Okowa, Dr. Kingsley Emu also asked that section 238 of the PIB be redrafted to read: “Section 238 ‘ failure by any holder of a licence or lease governed by the act to incorporate the petroleum host communities development trust within the time frame in section 236 shall make the holder or license to be liable to a penalty of $250, 000 to be paid to the trust whenever the trust fund is incorporated. In addition, a further of $50,000 for every subsequent month the trust remains un- incorporated.
This penalty shall be in addition to the amount due to the trust fund under section 240.” The government also asked the lawmakers to create a new section 240 (5) to create 50 percent of the penalties for gas flared in the particular licence or lease area for which the petroleum Host Community development Trust is established just as it also asked for the creation of a new Section 240(6) to read “A take off grant equivalent of 20 percent of the licence fee paid on a new licence or sales price where the lease or licence is resold.”