N’Assembly Plans Version of PIB

Amidst speculations that the government is splitting the Petroleum Industry Bill into manageable segments starting with a new Bill titled “Petroleum Industry Governance and Institutional Framework Bill 2015”, This Day Live reported that the Speaker of the House of Representatives Hon. Yakubu Dogara on Monday announced the National Assembly’s unwillingness to continue to maintain the status quo.

According to Dogara, the National Assembly is set to work on its own version of the bill to expedite the reforms needed in the oil and gas sector and will no longer stand on the sidelines while the Executive continue to delay in transmitting the Bill to the legislature for passage into law.

Dogara further stated that work on their own version has reached advanced stage and may soon be introduced in both chambers of the National Assembly.

Could he be alluding to the Institutional Framework Bill? We are not certain at the point. However, in our earlier report where we intimated that according to Reuters, a new Bill was in the works, the report had stated that the bill was “drafted by the Senate and overseen by the oil ministry”.

EXCLUSIVE-Stalled Nigerian oil law broken up, new draft splits state giant

It was recently reported by Reuters Africa that the government is breaking up the Petroleum Industry Bill and replacing it first with a law to overhaul the state sector. This new Bill, entitled “Petroleum Industry Governance and Institutional Framework Bill 2015” aims to create “commercially oriented and profit driven petroleum entities” and close loopholes that bred corruption.

Some of the changes reportedly made to the new Bill include amongst others, curtailment of Ministerial powers, the splitting of NNPC  into  two separate entities: the Nigeria Petroleum Assets Management Co (NPAM) and a National Oil Company (NOC). The NOC will be an “integrated oil and gas company operating as a fully commercial entity” and will run like a private company. It will keep its revenues, deduct costs directly and pay dividends to the government thus putting an end to the era of waiting for Federal allocation for funding and always failing to meet cash call obligations.

You will recall that in the recent past we had reported that the former Minister of Petroleum Resources, Diezani Alison-Madueke, suggested that the PIB be split up to ensure speedy passage into law. This sentiment is one that is shared by many industry stakeholders although there are others who believe that splitting the Bill is not in Nigeria’s best interest.

This is an interesting development and one we intend to watch closely to see how the pendulum swings. Should this Petroleum Industry Governance and Institutional Framework Bill 2015 be passed as reported, we do hope it addresses not just a few, but all the lacunae and institutional issues which the previous PIB was not able to effectively tackle. We are at least certain of one fact, it will be a welcomed  development for NNPC JV partners.

 

 

House of Reps announces zonal public hearings

The House of Representatives ad hoc committee on the Petroleum Industry Bill, announce  today, Sunday 21st April, that it is to hold its zonal public hearings in Port Harcourt, Enugu, Lagos, Kaduna, Ilorin & Gombe on Monday 22nd April & Tuesday 23rd April. The announcement may be found here. The Lagos public hearing is to be held at the Lagos Airport Hotel from 9 am to 4 pm each day. Given the importance of the PIB, the very short notice given by the committee is extremely disappointing is likely to affect the quality of the debates held at the sessions.

House of Representatives set to hold Public Hearings, other concerns

The Chairman of the House of Representatives Ad-Hoc Committee on the PIB, and Chief Whip of the House, Isiaka Bawa has announced the House’s intention to hold  zonal public hearings on the PIB across the cross section of the populace, TheGuardian has reported.

According to the report, the zonal public hearings to be held simultaneously on April 22 and 23, 2013 in Lagos, Port Harcourt, Enugu, Kaduna, llorin and Gombe would give an opportunity to state governments, state legislatures and professional/interest groups to participate in the passage of the PIB into law. This would culminate in a panel meeting during a three-day conference with the Senate in Abuja for harmonisation at the end of the scheduled hearing. The Abuja hearing, the date of which is yet to be announced would be the grand finale affording the final opportunity to the committee to collate the views of other stakeholders who might have been unwittingly left out of the zonal hearings.

Also in this report and a similar report, The Guardian highlights concerns expressed by the Institute of Chartered Accountants of Nigeria (ICAN) on certain aspects of the Bill. A major thread running through the institute’s  recommendation forwarded to the Senate President and members of the National Assembly, was the excessive powers conferred on the Minister. The fiscal terms of the Bill also raised ICAN’s concerns, which argued that the terms were not favourable as they heighten uncertainty and endanger returns on investments.

 

PIB SENATE COMMITTEES TO REPORT TO THE SENATE IN 6 WEEKS

It has been reported (here and here) that the Petroleum Industry Bill (PIB) on Thursday, March 6, 2013, scaled through the Second Reading on the floor of the Senate and has been passed on to the Senate Committees on Petroleum (Upstream and Downstream), Gas and Judiciary, Human Rights and Legal Matters.

Senators Emmanuel Paulker (Bayelsa Central), Chairman Committee on Petroleum(Upstream); Magnus Abe (Rivers South/East), Chairman Committee on Petroleum(Downstream); Nkechi Justina Nwaogu (Abia Central), Chairman Gas Committee; and Umaru Dahiru (Sokoto South), Chairman Committee on Judiciary, Human Rights and Legal Matters are charged with collating the views of the Senate on the Bill together with those of the public, which would be received through public hearings, and report same to the House within six (6) weeks.

The Senate President, David Mark commended the accord shown by his colleagues in getting the Bill passed to the Committee Stage and expressed his delight that the Bill had enjoyed robust debate as no fewer than 81 Senators had made contributions on the Bill over the past 3 days.

Mark summarized the general issues the Senate had with the Bill as:

  1. The provision for a Petroleum      Host Community Fund;
  2. The insufficiency with regards      frontier exploration; and
  3. The excessive powers of the Minister      of Petroleum.

He also made note as to the impracticability of certain portions of the Bill such as the Bill exempting the Nigerian National Petroleum Corporation (NNPC) assets to be privatized from provisions of the Public Procurement Act.

Although he pointed out that the Bill was a “worthy Bill”, he also mentioned that no Bill had come through the Senate and not been tinkered with. He assured the House that subsequent to the public hearings, “amendments, additions and subtractions” will be made to the legislation.

 

DAY 2: SECOND READING OF THE PIB

Wednesday, March 6, 2013 saw the second reading of the Petroleum Industry Bill (PIB) on the floor of the Senate enter into its second day. (Reported here and here).

Deliberations once again centered on the controversial 10 per cent allotted for the Petroleum Host Community Fund (PHCF).

Senate Committee Head on Rules and Business, Ita Enang (Akwa Ibom North East) in refuting the collective opposition by Northern Senators to further funding of oil producing regions through the PHCF, introduced another dimension to the debate by alleging that over 83 per cent of the indigenous acreage allotted in the Niger Delta were given to individuals from the North-East and North-West geo-political zones while the rest were distributed amongst individuals from the South-East and South-West which effectively returned most of the proceeds on investment in the Niger Delta to the North. He then called for the revocation and reallocation of oil blocks in line with the federal character principle. Adding his support to Enang’s view, Senator James Manager (Delta South), warned against withdrawing the Fund as it may breed the return of militants to the creeks, whilst Senator George Thompson Sekibo (Rivers) maintained that the money from the fund was not meant for the South-South region alone.

Senator Abdulahi Adamu (Nasarawa West) while accepting the spirit behind the reforms in the oil and gas sector asked that caution be exercised in the moves to privatise the National Oil Company as a lack of transparency and accountability could jeopardize the process.

Senator Olufemi Lanlehin (Oyo South) voiced concerns about Section 191 of the Bill which gave the President discretionary powers to grant licenses. He expressed worry that the Bill did not place any limitations on this discretionary power by the President.

An area that garnered support from Senators from both Northern and Southern divides was the need to provide adequate funding and support frontier exploration. Senator Manager was of the view that oil exploration in other states would contain the bickering over the PHCF incentives.

 

THE SECOND READING OF THE PIB COMMENCES

Reported by the Newspapers yesterday (here and here) is the commencement of the much anticipated second reading of the Petroleum Industry Bill (PIB) by the Senate on Tuesday, March 5, 2013 following a failed attempt to commence deliberations in December 2012.

Initiating the debate, Senate leader, Senator Victor Ndoma-Egba stated that the PIB was one of the most significant pieces of legislation to be considered by the Senate, whilst lauding the various benefits to be derived from the passage of the Bill which he stated included increased domestic gas supply for the power industry, a flexible and stable fiscal framework that is competitively attractive, the creation of a two-tier royalty and tax regime which captures the upside of crude oil and gas prices and the creation of a more commercially viable national oil company through the corporate restructuring of the Nigerian National Petroleum Corporation (NNPC) amongst others.

The crux of the Bill’s second reading centered around three contentious issues:

  1. The 10% remittance of profits from petroleum operators to host communities in form of the Petroleum Host Community Fund (PHCF);
  2. The inadequacy of the Petroleum Technical Bureau; and
  3. The excessive powers of the Minister.

Senators Abdukadir Jajere (Yobe South) and Ali Ndume (Borno South) led by Senator Ahmed Lawan (Yobe North) opposed the 10% remittance provision in the bill for the Host Community Fund. Senator Lawan stated that oil producing states had over the past decade received revenue adding up to 11 trillion Naira from the 13 per cent derivation fund; the Niger Delta Development Commission (NDDC); the Ministry of Niger Delta, the Amnesty Programme; and the Special Presidential Initiative Fund but had little or nothing to show for it as its leaders had mismanaged these funds thus failing to carry out significant development in the region.

It was further argued that the Petroleum Technical Bureau should be an independent organisation detached from the Ministry of Petroleum Resources which must concern itself with developing frontier acreages and should not be mixed with the abolishment of the Petroleum Equalistaion Fund.

Jajere further pointed out that the PIB provides the Minister of Petroleum Resources with excessive power, noting that if the bill is passed in its current form, the Minister would become too “powerful and uncontrollable”.

Senator Bukola Saraki (Kwara Central) in his own contribution called for caution as he believed the Senate was spending too much time arguing on the 10% PHCF derivation. He insisted that there was need to address issues of transparency in the Bill as its lack thereof has bedevilled the Nigerian petroleum industry.

Senators Isa Galaudu (Kebbi North) and Ibrahim Gobir (Sokoto East) on the other hand, opposed the bill in totality, saying it should not be passed at all.

Senators Ifeanyi Okowa (Delta North) and Benedict Eyade (Cross River North) urged their colleagues to rise above emotions and sentiments so that the bill could pass the second reading. Okowa said that it was important to realise that Bills emanating from the Executive may have its flaws but what is most crucial is the Executive’s good intentions.

The Senators’ differing stances we believe to a great extent provide a glimpse into what cross sections of Nigerians think on these issues and it would be interesting to see the outcome of the debate.

The 13th National Oil and Gas Strategic Conference & Exhibition

The 13th National Oil and Gas Strategic  Conference & Exhibition held between the 18th and 21st  of February 2013 at the International Conference Centre, Abuja featured the participation of several  key individuals and exhibiting companies in the Nigerian Oil and Gas sector.

The four day conference kicked off with a cultural  evening and a welcome dinner hosted by Chevron, Nigerian National Petroleum  Corporation and Shell.

The next day, Tuesday February 19, marked the first day of the conference as several sessions including topics on “Nigeria’s Oil &  Gas Strategy in the Next Five Years – A New Dawn to Boost Investment &  Production?” and “Gas,  Power & Renewables – What has Been Achieved & Where are we Heading?” were deliberated upon.

Discussions on the third day of the conference centred on “Focus on Independents: How Are Indigenous Companies Transforming the  Nigerian Oil & Gas Industry?” and “Focus on the Petroleum Industry Bill– Is This A New Dawn for Nigeria?” with the latter session being chaired by the Energy  Practice Partner of Odujinrin & Adefulu, Dr. Adeoye Adefulu. Speaking at the event,  Dr. Adefulu expressed his optimism on the Bill being passed into law and stated that the uncertainty surrounding the passage of the Bill did not favour  anyone (industry players, communities and the general public alike) as there has  been wide spread clamour for the Bill to become  operational.

The conference rounded up with a Nigerian Content  Seminar which highlighted the opportunities afforded by the Nigerian Content  Development Act as well as its challenges and  accomplishments.

New oil licences to await passage of PIB

Reports from Businessday indicate that the Federal Government intends to stall the award and renewal of Oil Licenses pending the passage of the Petroleum Industry Bill (PIB) submitted to the House of Assembly in July 2012.

The last licensing round was conducted in May 2007 by the administration of former President Olusegun Obasanjo. Plans were made to hold bid rounds in 2010 and 2011 but had to be shelved due to the non-passage of previous PIB drafts. The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, had fixed December 2012 and January 2013 as possible dates for the new bid rounds but the National Assembly’s inability to pass the current draft put a halt on the move.

Likewise, the government has since discontinued renewals of existing Oil Licenses. Shell, Chevron as well as other operators have since 2009 been unsuccessful at lobbying the government to renew their Licenses.

There are speculations that this delay is so as to have the new fiscal and regulatory terms apply to all licenses granted henceforth.

The fiscal provisions in PIB seek to increase governments take in oil revenue from 61 percent to 73 per cent, a scenario oil majors criticize and reckon will make investments unprofitable.