Fingers have long remained crossed over the Petroleum Industry Bill (PIB) 2020, even as eyes have longed to see the end that would come out of the Bill. The anxiety to a large extent may be informed by the necessity to address basic foundational issues in the oil and gas sector, which hitherto have been subjected to a cycle of deficiencies, requiring concerted approaches for solutions. It would be recalled that the administration of President Umaru Yar’Adua had presented the PIB to the Sixth National Assembly in September 2008. The Bill was itself an offshoot of the President Olusegun Obasanjo’s Oil and Gas Reform Implementation Committee inaugurated in April 2000 to review and streamline all existing petroleum laws and establish an all-inclusive regulatory framework for the industry. The Bill under the Sixth Assembly, however, suffered set-back over disagreements on the allocation of oil profit among the international oil companies, host communities and the Federation, according to the Nigeria Extractive Industries Transparency Initiative. Moreover, in July 2012 a revised version of the PIB was forwarded to the Seventh Assembly, during the administration of President Goodluck Jonathan. Unfortunately, the same fate befell the Bill. It was passed by only the House of Representatives close to the end of their term. The slump in global crude oil prices, from as high as $115 per barrel in mid-2014 to $28 per barrel in January 2016, brought to bare, the necessity of the Bill. Therefore, to follow suit, during the first term of President Buhari, the Eighth NASS had split the bill into four parts which include: the Petroleum Industry Governance Bill, Petroleum Industry Administration Bill, Petroleum Industry Fiscal Bill and Petroleum Host Community Bill. It was asserted that this was done in a bid to hasten the passage of the Bill into law. However, while the PIGB was passed by the Senate and the House of Representatives in May 2017 and January 2018 respectively, the Bill had suffered set back as President Buhari withheld his assent to it since July 2018 when it was transmitted to him. In its rationale for withholding assent to the Bill, the Presidency had said that the provision of the PIGB permitting the Petroleum Regulatory Commission to retain as much as 10 per cent of the revenue generated is one of the reasons President Buhari withheld assent from the bill.
However, it was confirmed last weekend that President Muhammadu Buhari has tabled the much awaited Petroleum Industry Bill (PIB) 2020 to the National Assembly. One key proposition of the Bill is the scrapping of the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Products Pricing Regulatory Agency (PPPRA). In place of the NNPC, the creation of the Nigerian National Petroleum Company Limited, was proposed. According to the Bill, the NNPC Limited will be incorporated by the Minister of Petroleum, who together with his finance counterparts, will determine NNPC’s assets and liabilities that will be inherited by the new firm. Section 54 (1, 2 and 3 ) partly reads: “The Minister (of Petroleum) and the Minister of Finance shall determine the assets, interests and liabilities of NNPC to be transferred to NNPC Limited or its subsidiaries and upon the identification, the minister shall cause such assets, interests and liabilities to be transferred to NNPC Limited. Assets, interests and liabilities of NNPC not transferred to NNPC Limited or its subsidiary under subsection 1 of this section shall remain the assets, interests and liabilities of NNPC until they become extinguished or transferred to the government. NNPC shall cease to exist after its remaining assets, interests and liabilities other than its interests, assets, and liabilities transferred to NNPC Limited or its subsidiaries under subsection 1 of this section shall have been extinguished or transferred to the government.”
However, the preceding Section 53 of the Bill, stated that the Minister shall “within six months from the commencement of this Act, cause to be incorporated under the Companies and Allied Matters Act, a limited liability company, which shall be called Nigerian National Petroleum Company (NNPC Limited). The minister shall be at the incorporation of NNPC Limited, consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted which shall form the initial paid-up share capital of the NNPC Limited and the government shall subscribe and pay cash for the shares. Ownership of all shares in NNPC Limited shall be vested in the government at incorporation and held by the Ministry of Finance incorporated on behalf of the government.”
Another new reform the bill proposes is the establishment of an agency known as the “Nigerian Upstream Regulatory Commission” which will be responsible for the technical and commercial regulation of upstream petroleum operations. Section 4 of the Bill partly states that: “There is established the Nigerian Upstream Regulatory Commission (the commission) which shall be a body corporate with perpetual succession and a common seal. The commission shall have the power to acquire, hold and dispose of property, sue and be sued in its own time. The commission shall be responsible for the technical and commercial regulation of upstream petroleum operations.” As contained in Section 29, the Bill also proposed the creation of the Nigerian Midstream and Downstream Petroleum Regulatory Authority known as ‘The Authority’. The Section reads in part: “There is established the Nigerian Midstream and Downstream Petroleum Regulatory Authority (the Authority) which is a body corporate with perpetual succession and a common seal. The Authority shall be responsible for the technical and commercial regulation of midstream and downstream petroleum operations in the petroleum industry.”
It is noteworthy that policy matters are critical to the workings of any sector. This becomes more critical, particularly when this is coming from the Government to regulate operations within a particular field, industry or sector at large. Getting the policy build-up on the wrong anchor may constitute a premise of waving forces, capable of occasioning imbalance within a sector in question, and its attendant effects on the entire economy.
Putting this into bear, it is therefore essential that the National Assembly subject the PIB 2020 to critical scrutiny before passing it into law. The need to adhere to the democratic principle of checks and balances which places an oversight function on the Legislative arm, is very essential for the National Assembly. It is significant that both chambers of the Legislative body, consider subjecting the proposals of the Bill, as newly transmitted by the Presidency, to informed and intelligent analysis with wide consultations made to question their validity and virility before its passage. It is essential that the potency of the new provisions, particularly those proposing new institutions, be questioned to weigh if they truly carry the representation of formidable parameters different from the ones they are proposing to replace.
To begin the repositioning of faulty structures across sectors of the economy is very urgent. This necessity however, does not call for imprudence and rashness in decision making, without giving thought to exploring the best possible approach. Since such statutory policy making navigations, set the structural tune for sectoral operations, it is significant that the Senate and the House of Representatives, comprising the National Assembly, respectively subject the Bill to the highest intensity of scrutiny before passage. Rather than being a rubber stamp, both chambers should be resolute in working by the standard principles of informed oversight function as demanded under a democratic Presidential System of Government. Anything short of this, may be another failure that may render the Petroleum industry and better still, the oil and gas sector, in shambles in a number of decades. The attendant effects of this on the economy may be unimaginably gloomy.