A total of N53,445,345.10 Nigeria’s oil and gas industry lost to the long delay of the passage of the passage of the Petroleum Industry Bill would be gained by Nigeria when President Muhammadu Buhari signed the bill into law,the Nigeria Extractive Industries Transparency Initiative (NEITI) has said.
The gains include over $200billion revenue dip and $10.4bn and N378.7bn lost through under-remittances, inefficiencies, theft or absence of a clear governance framework for the oil and gas industry,according to the agency.
The Executive Secretary of NEITI Dr, Orji Ogbonnaya Orji described the decision of the Senate and the House of Representatives to consider the Bill as priority resulting in its eventual passage as bold, courageous and progressive given the challenges the bill has passed through in its legislative journey for over fifteen years.
He said:“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”.
He recalled that as NEITI boldly alerted the nation through a special Policy Brief “The urgency of a new petroleum sector law” that the current stagnation of investment opportunities in the Petroleum Industry was as a result of the absence of a new law for the sector.
This,he said,has led to huge revenue losses to the tune of over $200billion. In that publication which was widely circulated, NEITI argued that the “revenue losses were as a result of investments withheld or diverted by investors to other (more predictable) jurisdictions.” The publication added that “The hedging by investors stems from the expectation that the old rules would no longer apply, but not knowing when the new ones would materialise.”
He added that NEITI Reports in the sector had also disclosed that over $10.4bn and N378.7bn were lost through under-remittances, inefficiencies, theft or absence of a clear governance framework for the oil and gas industry.
He expressed optimism that with the new governance law for the industry, these huge revenue losses to the nation as a result of process lapses and outright stealing will be strictly checked if not eliminated.
He said:“The implementation of the global Extractive Industries Transparency Initiative which Nigeria is a key signatory, have over the years been frustrated by the absence of a dynamic law that suits modern business modules and trends in the ever evolving oil and gas industry”.
He added that the PIB when assented to by the President will provide a dynamic governance framework required to re-position the Petroleum industry to fully embrace competition, openness, accountability, professionalism and better profit returns on investments to both companies and government.
According to him,NEITI and its multi-stakeholders are encouraged that the National Assembly in this particular instance threw politics aside and dealt with the PIB issue with the attention it deserves in over all public interest.
He also commended the media, the civil society, development partners, industry, stakeholders and experts who have followed the bill in the National Assembly for their valued contributions to what has been achieved so far.
He added:”While NEITI awaits early harmonisation and the details of the contents of the bill as passed and hoping for early Presidential consideration and assent, the transparency agency looks forward to working with its stakeholders in the industry to ensure effective implementation under the global EITI framework”.
Justifying the passage of the bill,former Director General of the Lagos Chamber of commerce and Industry, LCCI, Muda Yusuf, said hat
the passage of the bill marks positive steps toward achieving its stated goals.
He said the oil and gas industry is a major contributor to the Nigerian economy and government revenue and as such should be freed from political influence.
According to him, Nigeria, with the largest oil and gas reserves in Africa, has huge untapped potential to achieve its economic development goals including gas-to-power ambitions, but the investments are not coming in the absence of fiscal policies that will stimulate investment.
He said Nigeria despite having the largest reserves in Africa, Nigeria only received 4 per cent ($3 billion) of $75 billion invested in the continent between 2015-19.
He said the development underscores the need to create a competitive environment to attract investment to the oil and gas sector.
He said the fundamental shift in global energy markets driven by advances in unlocking unconventional petroleum resources and increasing traction for cleaner energy sources has resulted in a global oversupply of crude oil, putting pressure on prices.
He added that this has been further worsened by the COVID-19 pandemic, potentially putting at risk the viability of ongoing and future projects and driving fierce competition for scarce investments around the world.
Nigeria’s petroleum industry ,he disclosed,faces many country-specific challenges including Joint Venture Funding and Arrears, regulatory overlaps, insecurity and inadequate infrastructure for domestic gas development, which the Bill will resolve.
He said the Chamber is fully supportive of the Government’s efforts to drive industry reform through the Bill which among other things will reform the institutional and fiscal framework, develop Nigeria’s gas sector further, create a framework to support the development of host communities and foster sustainable prosperity, and further bring in new investments to grow the country’s production capacity
He added:”The Bill mandates that ministries, departments, and agencies to consult with the Commission prior to introducing overlapping legislation which will impact the oil and gas industry. It also allows for consultation with industry stakeholders before making regulations.The commercialisation of NNPC aims to improve business efficiency and effectiveness, especially in relation to Joint Venture activities”
Nnimmo Bassey,an environmentalistsaid the passage of the bill would have salutary effects on the oil and gas industry,but regretted that it came rather too late when there is ongoing global energy transition.
He blamed the major oil company for deliberately delaying the passage of the bill to feather their nest as well as water it down.
He punctured the 3percent provision for the host communities in the new law,saying it was inadequate and inconsiderate on the part of the law makers.
He also picked holes in the power given oil companies to determine who the host communities are and who should be entitled to certain resources,saying the development shows the country is yet to wean itself from the dominance of foreign oil companies .
The bill was passed after a clause-by-clause consideration of a report by the Joint Committee on Downstream Petroleum Sector; Petroleum Resources (Upstream); and Gas on the PIB.
The Chairman of the Joint Committee, Sabo Muhammed Nakudu, delivered a presentation on the Committee’s report moments before the upper chamber held a closed session to receive briefing by the Petroleum Minister, Timipre Sylva, and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari.
In his presentation, the lawmaker said that the Petroleum Industry Bill consists of five distinct chapters which include Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Fiscal Framework; and Miscellaneous Provisions comprising 319 clauses and 8 schedules.
According to him, the bill’s passage and eventual assent into law would strengthen accountability and transparency of NNPC limited as a full-fledged company under statutory/regulatory oversight with better returns to its shareholders – the Nigerian people.
He added that the Joint Committee’s recommendation on Frontier Basins recognized the need for Nigeria to explore and develop the country’s frontier basins to take advantage of the foreseeable threats to the funding of fossil fuel projects across the world due to speedy shift to alternative energy sources.
During a clause-by-clause consideration of the bill, the upper chamber approved the funding mechanism of thirty percent of NNPC limited’s oil and gas profit in the production sharing, profit sharing, and risk service contracts to fund exploration of frontier basins.
It also approved Clause 4 of the bill which seeks the establishment of the Nigerian Upstream Regulatory Commission to provide technical regulatory functions that would enforce, administer and implement laws, regulations and policies relating to upstream petroleum operations.
The Commission would, among others, ensure compliance with applicable national and international petroleum industry policies, standards and practices for upstream petroleum operations; and establish, monitor, regulate and enforce health, safety and environmental measures and standards relating to upstream petroleum operations.
In addition, the upper chamber while adopting the Committee’s recommendation to retain provisions in Clause 29 of the bill, approved the establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
Clause 29(3) empowers the Authority to be responsible for the technical and commercial regulation of midstream and downstream petroleum operations in the petroleum industry in Nigeria.
Its function include implementing Government policies for midstream and downstream petroleum operations as directed by the Minister; and to promote, establish and develop a positive environment for international and domestic investment in midstream and downstream petroleum operations.
Others are to ensure strict environmental
implementation of policies, laws and regulations for midstream and downstream petroleum operations; and to develop and enforce a framework on tariff and pricing for natural gas and petroleum products.
The recommendation of the Joint Committee was amended in Clause 52(7d) to ensure that all monies received from gas flaring be channeled for the purpose of environmental remediation and relief of the host communities as against the development of infrastructure in midstream gas operations.
The upper chamber, however, retained the recommendation of the Joint Committee in Clause 53 which empowers the Minister of Petroleum Resources to incorporate the Nigeria National Petroleum Corporation as a limited liability company to be known as NNPC Limited, six months after the commencement of the Act.
Accordingly, the adopted Clause 53 mandates the Minister of Petroleum Resources at the incorporation of NNPC Limited, to consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted, which would form the initial paid-up share capital of NNPC Limited.
Consequently, the Senate approved ownership of all shares in NNPC Limited to be vested in the Government at incorporation and held by the Ministry of Finance Incorporated on behalf of the Government.
The upper chamber, however, reviewed downward the Joint Committee’s recommendation that 5 percent be paid as contribution to the host community development fund.
Senators in the majority voted for 3 percent contribution to the host communities, following an amendment to Clause 240(2) by Senator Ahmad Babba Kaita (APC, Katsina North), which was seconded by Ibrahim Gobir (APC, Sokoto East).
The approval of 3 percent for host communities represents an upward review of 0.5 percent from the previous 2.5 percent contribution to the host community development fund.
Efforts by the Deputy Senate President, Ovie Omo-Agege (APC, Delta Central), Senators James Manager (PDP, Delta South), George Thompson Sekibo (PDP, Rivers East), and Albert Bassey Akpan (PDP, (PDP, Akwa-Ibom North East) to demand an upward review met a brick wall from lawmakers.
Sekibo, in a move to sustain his agitation for an increase in contributions to host communities, relied on Order 73 of the Senate Rule and called for a division.
The Senate Leader, Yahaya Abdullahi (APC, Kebbi North), however, prevailed on Sekibo to withdraw his call for division, and reminded him of the commitment of Senators of the Ninth Assembly in fostering unity while keeping in mind their obligation at all times to protect the national interest.
The Senate Leader’s plea was accompanied by a subtle reaction from the Senate President, Ahmad Lawan, who reminded Sekibo of the overwhelming support demonstrated by lawmakers who had earlier approved that host communities receive remediation and relief from monies accruing from gas flaring in the PIB.
Sekibo at this point withdrew his earlier call for division.
The Senate President, Ahmad Lawan, in his remarks after the eventual passage of the PIB, congratulated the Ninth Assembly and Joint Committee on Downstream Petroleum Sector; Petroleum Resources (Upstream); and Gas for the “tremendous and historical achievement of passing the long awaited Petroleum Industry Bill.”
According to him, the passage of the PIB was an indication that the “demon” behind its non-passage in the past had been finally defeated.
He added, “I must commend the leadership of the House of Representatives, too, for providing leadership to ensure that our Joint Committees in the Senate and the House work together to produce the report that we have just passed.
“Let me say that the Ninth Senate and, indeed, the Ninth National Assembly has achieved one of its fundamental items on the legislative agenda.
“We promised Nigerians that we will do our best to pass the PIB that has defied passage or defied assent. At least, the demons are being defeated in this chamber.”
Lawan appealed to President Muhammadu Buhari to give expeditious assent to the bill when it is eventually forwarded to him by the National Assembly.
