Undoubtedly, the need for working reformation of several sectors by legal framework in Nigeria is alarming. While the necessity is essential for virtually all sectors in the Country’s socio-
economic frameworks, the working framework for the oil and gas sector has been on the top of discourse most recently. This finds strong expression on the surrounding facts of the Petroleum Industry Bill (PIB) presently before the National Assembly for passage into law. It would be recalled that in September, President Muhammadu Buhari had tendered the much awaited PIB 2020 to the National Assembly. The new Bill apparently is embedded with some foundational reform parameters which keenly touches on the workings of the Petroleum Industry. One of such is the proposition of scrapping 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 perceived 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.”
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 settings 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, with the development of the transmission of the Bill to the National Assembly in September, Nigerians are anxious to see what would become of the Bill at this material time. While the Bill has scaled the second reading in the House of Representatives, certain reservations are very critical on points of rational development. 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.
On Wednesday, the Chairman, House of Representatives Ad-hoc Committee on Petroleum Industry Bill (PIB) Hon. Mohammed Monguno has said that the parliament is committed to overhauling the oil and gas sector to boost the Country’s economy. The Lawmaker said this would be achieved through the passage of the age-long PIB which scaled through the second reading in the House on Tuesday. The Bill comprises 5 chapters which included Governance and Institutions, Administration, Host Communities Development, Petroleum Industry Fiscal Framework, and Miscellaneous Provisions. Right of Pre-Emption; Principles of Negotiating Incorporated Joint Ventures; Domestic Base Price and Pricing Framework; Pricing Formula for Gas Price for the Gas Based; Industries; Capital Allowances; Production Allowances and Cost Price Ratio Limit; and Petroleum Fees, Rents and Royalty. The Bill seeks to provide for Legal, Governance, Regulatory and Fiscal framework for the Nigerian Petroleum Industry, the Development of Host Communities, and for related matters. The Bill when passed will improve the clarity of structures, roles, accountability, transparency, and overall efficiency and effectiveness of the institutions in the Oil Industry.
Speaking at the inaugural meeting of the Committee, Monguno urged Nigerians to make inputs to the Bill by submitting their memoranda. According to him, the House would pass the Bill by the end of the first quarter of 2021. He said: “Under our watch as a Committee, which I am privileged to Chair, it is a general consensus that the passage of this Bill is long overdue. We are taking the time to review what has been done by the previous Assemblies and what we need to do differently. Prior to the referrer of the Bill, the Leadership of the House, the Senate, and the relevant committees of the National Assembly, has been briefed by the Hon. Minister of Petroleum with his team, wherein most of the concerns and controversies contained in the previous drafts have been significantly addressed with this present draft. Going forward, the Committee will do its best by engaging various Stakeholders, civil societies, and the general public by subjecting the Bill to detailed and public scrutiny to ensure that Nigerians are carried along. We are confident that this piece of legislation will stand the test of time. In as much as we are eager to pass the Bill, we will not circumvent the legislative process, it is our hope and belief that the Bill will be passed by the end of the first quarter of the year 2021. The Committee has taken the liberty to create a Website which will serve as one of the platforms where stakeholders and interested members of the general public can download the text of the Bill and also upload comments/inputs/memoranda to same. The Website is particularly important because, it enables all Nigerians so long as you have internet access, irrespective of where they might be or leave, to participate in the legislative process. We are by this notice calling on the Stakeholders and interested members of the general public to visit our Website, for updates on the Committee‘s activities, to download the text of the Bill and also upload memoranda to same.”
The move by the lower chamber is a right step in the democratic light of governance. Such legislative matters bordering on pressing subjects, particularly on developmental policies demand in-depth considerations and assessment of all sides of the strength and weaknesses to come up with legal instruments that will not be counterproductive to development. The optimal productivity of a sector with emphasis on the Petroleum Industry of the oil and gas sector, demands economic policies enshrined in legal frameworks that reflect workable patterns in templates that will make the sector virile in full capacity for optimum productivity.
The Petroleum Bill as a proposal containing the template for the workings of the Petroleum Industry is a document that will, upon passage into law, determine the workings of the industry henceforth. Given the significance of the relativity of the proposed law to the industry in particular and the entire economy in general, it is essential that Nigerians and key stakeholders who will be affected by the Bill once passed into law, take frontline bold step to study and make necessary contributions to the making of the Law. The National Assembly has taken a commendable decision to throw the processes open with the call for inputs by the public. It is therefore paramount for Nigerians who would be at the receiving end of the legislation to study its provisions, highlight the commendable sections, while contesting all faulty aspects which may be counterproductive to development.
Such move is a reflection of the true spirit of the workings of democracy with the principles of participation, popular engagement and self determination by the people. While Nigeria has jettisoned military draconian rule engrossed with decrees, it is instructive that Nigerians exploit to the fullest, the benefits of democratic tenets which allow for popular inputs and determination. The National Assembly should equally give fair justifications, assessment and considerations to the inputs (memorandum) of the populace and stakeholders who will be affected by the legal frameworks. Such analytical approach should be done under the best brainstorming standards of thoughts and objectivity to come up with the most feasible, virile and working legal framework to set the Petroleum Industry on the right channels of productivity for the benefits of the economy. This is essential to salvage the Country from losses in the oil and gas sector which over the years have not accrued the expected and ideal results for the economy.