With different stakeholders, especially host communities of the oil-producing states singing discordant tunes and overtly opposed to the planned passage of the Petroleum Industry Bill (PIB), indications are that there are still some hurdles to cross ahead of the Presidential assent to the bill. The Nation examines the issues
Few days ago when members of the hallowed chambers of the National Assembly considered the various committees’ report on the Petroleum Industry Bill and subsequently sought presidential assent to the bill, they probably acted in good faith believing that the public interest has been served. How wrong they were.
Since it became public knowledge that the much hyped bill had scaled through the two legislative houses, sleep has literally eluded the lawmakers as there have been a welter of criticisms from almost quarters that have an entirely different view to the one being canvassed by the arm of government.
ABC of the new PIB
Unlike in the 8th Assembly, this bill is an Executive Bill. The bill was sent to the National Assembly in September 2020.
From available information, the bill has different parts including fiscal, administration, governance and institutions, and host communities components respectively.
Under governance, the bill seeks to establish Nigerian Upstream Regulatory Commission, which will be responsible for regulating the upstream sector. The commission’s functions are divided into technical and commercial functions.
The original bill proposed first line charge funding for the commission but the House deleted the provision. Besides, the commission will also have a special investigative unit to carry its regulations.
Also commenting on the new changes, Taiwo Oyedele, Africa Tax and Legal Services Leader, PwC Nigeria, in his treatise titled, ‘The Petroleum Industry Bill: Top 20 Changes You Should Know!’ noted that it seeks to provide legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry and development of host communities.
Specifically, he said, some of the key changes is the need to achieve key objective of ensuring good governance and accountability, creation of a commercially oriented national petroleum company, and fostering a conducive business environment for petroleum operations.
Timeline of the PIB
The journey of PIB began 20 years ago following the Oil and Gas Reforms Committee (OGRC) constituted by former President Olusegun Obasanjo’s administration. The report of the committee formed parts of the bill which was first introduced to the National Assembly by former President Umar Yar’Adua’s administration in 2008.
The bill languished in the 6th Assembly without making any headway. In 2012, it was re-introduced by former President Goodluck Jonathan’s administration. It was passed by the House, just a few days to the end of that administration, but the Senate failed to pass the bill.
In the 8th Assembly, lawmakers decided to introduce the PIB in parts. The bill was broken down into the Petroleum Industry Governance Bill (PIGB), Petroleum Industry Fiscal Bill, Host Communities Entitlement and Protection Bill and the Petroleum Industry Administration Bill.
Several lawmakers introduced different versions of the bills, but the PIGB sponsored by Tayo Alasoadura and Pally Iriase, was the version passed by both chambers and harmonised. The bill was transmitted to President Muhammadu Buhari but he rejected it.
Although the two chambers reconsidered and passed the bill again, it was still not assented to by Mr Buhari, until that House adjourned sine die.
More applause for PIB passage
The Nigeria Extractive Industries Transparency Initiative, NEITI, has hailed the lawmakers for passing the PIB, describing the move as bold, courageous and progressive.
The Executive Secretary of NEITI Dr. Orji Ogbonnaya Orji in a statement issued by the agency shortly after the PIB was passed commended the Senate and the House of Representatives for considering the Bill as priority resulting in its eventual passage.
PIB
According to Dr. Orji, “NEITI as an agency set up to enthrone transparency and accountability in the management of extractive industries in Nigeria has demonstrated genuine and legitimate interest in the PIB from the onset. NEITI’s interest is in view of the urgency and strategic importance of a new law to replace the existing archaic legislations that have aided huge revenue losses, impeded transparency, accountability and investment opportunities in the nation’s oil and gas industry.”
The trouble this time
Niger Delta host community agitators had favoured at least 10 per cent, but the NASS Joint Committee had proposed five per cent. It was during the clause-by-clause consideration that it was conspiratorially reduced to three per cent, and the Senate President, Ahmed Lawan, used the power of his office to railroad it in spite of valiant efforts by Senators George Sekibo (Rivers) and James Manager (Delta). This has sparked anger among the Niger Delta advocates who have described it as “an insult”.
To complicate matters further, a part of the Bill provides that any vandalisation of oil facilities will be addressed with funds from the three per cent set aside for host community development. The problem with this is that, with the Niger Delta full of myriads of autonomous “militant” and pirate elements, the anger generated by this callous disregard of the needs of the host communities and the struggle for their various interests to be “accommodated” within this paltry sum might simply worsen vandalisation.
The section on host communities has been the most contentious part of the bill. At the House of Representatives’ public hearing, different factions of the association of host communities engaged in a brawl to determine the right representative.
However, the House Committee on PIB recommended 5 per cent which was adopted by the House. The Senate proposed the same but Sani Kaita (APC, Katsina) moved an amendment for it to be reduced to 3 per cent. This amendment will have to be harmonised at the joint committee of the National Assembly.
However, some stakeholders from the regions want a 10 per cent equity share in the lease or licence to operators. During the public hearing by the Senate joint committee, the Minister of State for Petroleum Resources, Timipre Sylva, described the 2.5 per cent Opex as ‘fair’ during his presentation on the bill.
“The 2.5 per cent as proposed in the PIB is fair and of course, I speak as a member of a host community. But if you have to look at it properly, you will see that 10 per cent of profit is different from 10 per cent of operating expenditure.
“Before now, you had a provision of 10 per cent of profit and profit means that if I don’t declare it, you don’t have anything,” he stated.
Unlike Syla, Chief Edwin Clark, an Ijaw national leader, has described the newly passed PIB as “satanic, unjust and embarrassing.”
Reacting to the passed bill, Clark, who is also the leader of the Pan-Niger Delta Forum (PANDEF), in an open letter addressed to the Senate President Ahmad Lawan and Femi Gbajabiamila, speaker house of representatives, condemned the provision and allocation of 30% of profits for further frontier oil exploration in the north.
He said the PIB does not reflect the long clamour by the people of the region for equity, fairness and justice, noting that the bill has dashed the hopes of the people of the Niger Delta.
Clark said people of the Niger Delta, at all levels both at home and abroad, have expressed their great displeasure over the satanic and obnoxious allocation of a paltry percentage of operating expenditure to oil-producing communities by the national assembly.
“It is important to state clearly here to all well-meaning Nigerians that the demand of the oil-bearing communities of the Niger Delta Region was for a minimum of 10% equity participation,” he said.
“But you Mr. Senate President, the Right Honourable Speaker and some of your colleagues in the National Assembly have further shown your disdain to the Niger Delta people by redefining host communities to include pipeline-bearing pathway communities, in which case States, where pipelines pass through to aid them with the privilege of cheap supplies of Niger Delta petroleum products, could also be entitled to the ridiculous and unacceptable percentages that the legislators are willing to cede to oil-bearing communities.”
Oil companies’ grouse
Mike Sangster, the Chief Executive Officer of Total Nigeria, had presented the position of the oil companies under the cluster of Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce (LCCI) at the hearing. His position was adopted by other oil giants.
Perhaps as a way of compromise, the House committee heavily amended this part of the bill as against what the Executive proposed. Several sections were deleted by the lawmakers.
Others in the section were deleted by the committee, including the deep offshore tax regime. It would be recalled that Mr Sangster had in January said the bill in its current form will discourage investment in the deep offshore, including the Egina project.
The two chambers still have to harmonise the two versions, while the country waits to see the position of President Buhari on the bill.
