The PIB public hearing at the House of Representatives will commence shortly. The public hearing will be streamed live on Zoom and will also be shown on NTA.
Public hearing commences at 10:30 am with a speech by the Speaker of the House of Representatives, who focused on the urgency of reforms and the need to diversify Nigeria’s economy. PIB should provide solutions uniquely suited to our needs. The House of Representatives intends to pass this bill by April.
HMSPR, Timipre Sylva thanks the members of the House of Representatives for their work on the Bill so far. “The effort to pass the PIB must be sustained and finalised. The world has changed significantly since the efforts for reform started.” The Minister emphasised the challenges of energy transition and the urgency of passing the PIB. “I am available to assist in any way that I can.”
NNPC GMD, Mele Kyari – “oil will still be relevant in another 30 years. The uses will change but oil and gas will still be relevant.” Only countries that can harness the resources in an efficient way will prosper. The time is now. We have not seen any significant investment in the oil and gas industry since 2000 as there has been no fiscal stability. Our current fiscal environment is uncompetitive. We have made significant improvements in the PIB and there is still room for improvement.
Chairman of OPTS – Mike Sangster:
only US$ 3bn out of US$ 70 bn invested in Africa was invested in Nigeria;
operating costs in the country is over 40% higher than competitor countries;
Deepwater developments – PIB does not provide a favourable environment for future investments;
PIB should grant full royalty relief for the first 5 years for deepwater;
Gas – PIB does not address the key issues facing gas development. Inadequate infrastructure, low gas pricing.
PIB must honour existing contractual obligations. Operators should be allowed to retain their existing license areas.
Segregation of upstream and midstream assets under the PIB should not apply to past investments;
PIB needs to include a robust dispute resolution process;
The dual tax system introduces a complexity;
The deductions should be based on WREN test;
Royalties should not be included in calculating the cost price ratio;
PIB does not broadly support the growth of indigenous oil companies.
Chairman FIRS, Muhammad Nami:
Tax administration will change significantly and will increase fiscal administration. FIRS is able to rise up to the challenge;
There will be a reduction in tax revenue in the short term, which will be compensated in the mid to long term by increased investments;
OPTS concerns on capital allowance has been raised with the executive committee and has been addressed;
Representative of Total, Victor Bandele:
The Bill increases administrative complexity
Total proposes a 5 year royalty relief and the removal of hydrocarbon tax for deep water;
cost price ratio should be deleted;
the deductibility provisions under hydrocarbon tax and the companies income tax act are misaligned;
Sole risk contracts should have the option to preserve the fiscal terms.
Nigerian Labour Congress:
No provisions for labour in the bill;
the provisions on the levy needs to be clarified.
Delta State, Chief Economic Adviser:
Incorporation of the host communities should be done within 3 months;
Failure to incorporate should be penalised;
Host community fund should be 5% of revenues;
20% of the license fee should be allocated to the trust fund;
Members of the board of trustees should be selected by a panel including the settlor and communities;
Chairman of the trustees should be appointed on a rotational basis;
Surveillance contracts should be given to the host communities;
Joint Presentation by NUPENG & PENGASSAN:
We must not pass a PIB like the Deep Offshore Inland Basin Amendment Act 2019, which was a disincentive for investment;
PIB must protect Nigerian workers and stamp out casualisation in the oil and gas industry;
We should have a single regulator in the oil and gas industry;
Labour unions should be represented in the Commission;
NNPC limited should include an independent director nominated by the regulator;
a portion of oil company training budget should be set aside for PTI;
Women in Energy Network President Mrs. Funmi Ogbue
Ensure gender neutrality in the PIB
PIB should ensure 35% of representatives of the organisations created in it are reserved for women;
Always Ibom State representative
Host communities and state governments should be involved in appointing the trustees for host communities development trust;
PIB should recognise the concurrent jurisdiction of the States on environmental matters;
oil producing states should have shareholding in NNPC Limited.
At the 6th session of the PIB Education Series, I will be joined by guest speakers – Dr Ekpen Omonbude, Managing Director, Eraskon Nigeria Limited and Dr Gboyega Oladele, Chief Financial Officer, Vertex Energy Limited. We will be speaking about the New PIB Fiscal Framework including the components of the fiscal system, dual royalty regime, dual tax system (Nigerian Hydrocarbon tax and Companies Income Tax), allowable deductions, Conversion, Cost Price Ratio Limit, ascertainment of total profits and consolidation for tax purposes amongst others. Please join us by clicking this link.
On Thursday, December 3 2020, I spoke with Mrs. Funmi Ogbue, CEO, Zigma Limited; Dr. Francis Adigwe, PIB Consultant to the Nigerian Senate; and Dr. Obinna Dike, Assistant Professor of Law, American University of Nigeria, on Host Community in the PIB. We discussed the background of host community, identification of host communities, sources of funding and allocation of host community funds, governance structure of the Host Community Development Trust, host community needs assessment and development plan. You may watch the video of the session below.
We had an amazing session talking with Ms. Ronke Onadeko, Principal Consultant, DRNL Consult Ltd, UK; Mr. Gbite Adeniji, Partner, Advisory Legal Consultants; Mrs. Ogechi Nkwoji, Head Economic Intelligence Research and Regulation, MOMAN; and Engr. Chichi Emenike, Head, Gas Ventures, Neconde Energy Limited on the Midstream & Downstream Regulation in the PIB.
Key points from the discussion include:
There should be no template or framework for the pricing of petroleum products, if we are truly operating a deregulated market. The prices should be determined by demand & supply in the market, input prices, and potential or required return on investments amongst others.
The PIB should not set the price of gas, as this will prove to be a disincentive for gas business in Nigeria. Gas prices should be determined in a “willing buyer – willing seller relationship”.
The PIB needs to address importation of petroleum products.