…NASS passes controversial Petroleum Industrial Bill
… Reps approve 5% operating cost for host communities against Senate’s 3%
… Says Bill to foster peace, prosperity in host communities, bring more money into the economy
AFTER over 20 years in the nation’s apex lawmaking body, the National Assembly, the controversial Petroleum Industry Bill, PIB was ‘technically’ passed by the Senate and House of Representatives yesterday. It would be recalled that the Bill that was introduced to the National Assembly in 2000 has suffered a delay in its passage by the federal lawmakers due to vested interests which cut across ethnic, religious, and political leaning. The only area of disagreement between the two chambers in the 319 clauses report submitted by their various ad hoc Committees on the Bill is that while the House approved five percent operating costs for host communities, the Senate pegged it at three percent. However, answering questions from journalists after the plenary session, the chairman, House of Representatives ad hoc Committee on PIB, Hon. Tahir Monguno said the House will jealously guard the five percent operating costs it recommended for host communities.
Breakdown of the Bill shows that it consists of five distinct and logically connected chapters which include Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Fiscal Framework and Miscellaneous Provisions comprising 319 clauses and eight chapters. The bill, when passed into law, will create efficient and effective governing institutions with clear and separate roles for the petroleum industry, establish a framework for the creation of a commercially oriented and profit-driven National Petroleum Company; promote transparency, good governance, and accountability in the administration of the petroleum resources of Nigeria, among others. It will also promote the exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people; efficient, effective, and sustainable development of the petroleum industry; and the liberalization of the midstream and downstream petroleum industry among other objectives.
Furthermore, the Petroleum Industry Bill will foster sustainable peace and prosperity within host communities, provide direct social and economic benefits from petroleum operations to host communities, and create a framework to support the development of host communities. Other benefits of the Bill is a globally competitive and progressive fiscal framework that places Nigeria as the desired investment destination in Africa, balancing rewards with risk and enhancing revenues to the federal government of Nigeria, a forward-looking, easy to implement fiscal framework with clarity, transparency, and effectiveness and enhancement of the revenue base of the federation while ensuring a better return on investments. Miscellaneous Provisions of the Bill show that it will strengthen the accountability and transparency of the present Nigeria National Petroleum Corporation which will metamorphose into NNPC Limited as a full-fledged Corporate Affairs and Allied Matter, CAMA, company under statutory/regulatory oversight with better returns to its shareholders, the Nigerian People. The joint committee’s recommendation recognizes the need for the country to urgently and aggressively 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 the speedy shift from fossil fuel to other alternative energy sources.
To this end, the committee recommends a funding mechanism of 30 percent of NNPC Limited’s profit oil and profit gas as in the production sharing, profit sharing, and risk service contracts to fund the exploration of frontier basins. The joint committee’s recommendation also shows that to ensure effective and efficient administration of the country’s oil and gas industry, the various obsolete laws currently in operation in the country have been updated and consolidated to meet global competitiveness and best practices. The joint committee also recommended effective and efficient administration of the Host Community Trust Fund which is to be anchored by the oil and gas companies operating in the host communities. The various recommended provisions when passed into law will ensure a peaceful operating environment that will have a positive direct impact on the cost of oil and gas production which has been the bane of the Nigerian oil and gas industry, After extensive engagements with various stakeholders and on-the-spot assessment visits to host communities across the country, the joint committee recommended strengthening measures and saddled the host communities with responsibilities with a view to reducing or completely eradicating interferences and tampering in the country’s oil and gas production assets.
Furthermore, to ensure adequate development of the host communities and reduction in the cost of production, the joint committee recommends five percent of the actual annual operating expenses of the preceding financial year in which was reduced to three percent of the upstream petroleum operations affecting the host communities for funding of the Host Communities Trust Fund. In his remarks, the Speaker of the House of Representatives, Hon. Femi Gbajabiamila described the passage of the Petroleum Industry Bill, PIB, as a landmark legislative decision that will write the name of the ninth Assembly on gold. He gave an assurance that having crossed the Rubicon over the PIB, in the coming weeks before the House proceeds on its long vacation, the all-important amendment to the Electoral Act too will be passed.
Apparently referring to some lawmakers who opposed the passage of the Bill, the Speaker said “at the end of the day, no matter what side of the divide members are on the PIB, Nigeria will be better for it as the legislation will bring the country in line with the international best practices in the oil and gas industry. Earlier in the background before presenting the Bill to the whole House for consideration, chairman of the Ad-hoc Committee on PIB, Hon. Mohammed Monguno had solicited for members’ total support in passing the Bill. He harped on the potentials of the new legislation to increase revenue in the oil sector through a more direct investment that will be attracted due to efficiency and transparency the law will add to operations in Nigeria’s oil sector. On his part, the spokesman of the House of Representatives, Hon. Benjamin Kalu said though the Bill was yet to be read a third time signaling its final passage, it has been ‘tactically’ passed as 90 percent of the legislative work to get the Bill passed had been successfully completed.
…NNPC to become a limited liability, open for investment by the general public
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