Senate Report on the PIB

The Senate Report on the PIB may be found here. A notable difference from the report of the House of Representatives is the insertion of a new section 317(8), which seeks to implement the backward integration policy, previously utilised in the sugar and cement industries, in the petroleum industry. Section 317(8) provides as follows:

(1) The Authority shall apply the Backward
Integration Policy in the downstream
petroleum sector to encourage investment in
local refining.
(2) Pursuant to subsection (1) of this section,
licence to import any product shortfalls may be
assigned only to companies with active local
refining licences and proven track records of
international crude oil and petroleum products
trading.
(3) Import volume to be allocated between
participants shall be based on criteria to be set
by the Authority taking into account the
respective refining output in the preceding
quarter, share of active wholesale customers
competitive pricing and prudent supply and
distribution track records.
(4) To safeguard the health of Nigerians,
imported petroleum products shall conform to
the Afri-5 specification (50 ppm sulphur) as per
the ECOWAS declaration of February, 2020 on
adoption of the Afri-Fuels Roadmap.

The effect of the provisions of section 317(8)(1-3) will be to stifle competition in the supply of petroleum products and will ultimately have an impact on the price of all petroleum products.

House of Reps passes the Petroleum Industry Bill

The Nigerian House of Representatives passed the Petroleum Industry Bill today. The Senate is also expected to pass the bill later today, after which the versions of the Bill will be reconciled before being sent to the President for assent. The reconciliation process is expected to be short as the House of Reps and Senate Committees worked together in the review of the Bill. The President is likely to give his assent fairly quickly to the Petroleum Industry Bill, given that the Bill was proposed by the Executive and its drafting committee worked very closely with the National Assembly. We will share the version of the Bill we have received shortly.

Live blogging the Public Hearing at the House of Representatives Day 1

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:

  1. only US$ 3bn out of US$ 70 bn invested in Africa was invested in Nigeria;
  2. operating costs in the country is over 40% higher than competitor countries;
  3. Deepwater developments – PIB does not provide a favourable environment for future investments;
  4. PIB should grant full royalty relief for the first 5 years for deepwater;
  5. Gas – PIB does not address the key issues facing gas development. Inadequate infrastructure, low gas pricing.
  6. PIB must honour existing contractual obligations. Operators should be allowed to retain their existing license areas.
  7. Segregation of upstream and midstream assets under the PIB should not apply to past investments;
  8. PIB needs to include a robust dispute resolution process;
  9. The dual tax system introduces a complexity;
  10. The deductions should be based on WREN test;
  11. Royalties should not be included in calculating the cost price ratio;
  12. PIB does not broadly support the growth of indigenous oil companies.

Chairman FIRS, Muhammad Nami:

  1. Tax administration will change significantly and will increase fiscal administration. FIRS is able to rise up to the challenge;
  2. 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;
  3. OPTS concerns on capital allowance has been raised with the executive committee and has been addressed;

Representative of Total, Victor Bandele:

  1. The Bill increases administrative complexity
  2. Total proposes a 5 year royalty relief and the removal of hydrocarbon tax for deep water;
  3. cost price ratio should be deleted;
  4. the deductibility provisions under hydrocarbon tax and the companies income tax act are misaligned;
  5. Sole risk contracts should have the option to preserve the fiscal terms.

Nigerian Labour Congress:

  1. No provisions for labour in the bill;
  2. the provisions on the levy needs to be clarified.

Delta State, Chief Economic Adviser:

  1. Incorporation of the host communities should be done within 3 months;
  2. Failure to incorporate should be penalised;
  3. Host community fund should be 5% of revenues;
  4. 20% of the license fee should be allocated to the trust fund;
  5. Members of the board of trustees should be selected by a panel including the settlor and communities;
  6. Chairman of the trustees should be appointed on a rotational basis;
  7. Surveillance contracts should be given to the host communities;

Joint Presentation by NUPENG & PENGASSAN:

  1. We must not pass a PIB like the Deep Offshore Inland Basin Amendment Act 2019, which was a disincentive for investment;
  2. PIB must protect Nigerian workers and stamp out casualisation in the oil and gas industry;
  3. We should have a single regulator in the oil and gas industry;
  4. Labour unions should be represented in the Commission;
  5. NNPC limited should include an independent director nominated by the regulator;
  6. a portion of oil company training budget should be set aside for PTI;

Women in Energy Network President Mrs. Funmi Ogbue

  1. Ensure gender neutrality in the PIB
  2. PIB should ensure 35% of representatives of the organisations created in it are reserved for women;

Always Ibom State representative

  1. Host communities and state governments should be involved in appointing the trustees for host communities development trust;
  2. PIB should recognise the concurrent jurisdiction of the States on environmental matters;
  3. oil producing states should have shareholding in NNPC Limited.

Federal University of Petroleum Resources:

  1. FUPRE should be recognised in the PIB;

Stakeholders and General Public Hearing on the Petroleum Industry Bill 2020 (2)

The House of Representatives Ad-hoc Committee on Petroleum Industry Bill welcomes all Stakeholders and the General Public to a Two-Day Public Hearing on the:

*PETROLEUM INDUSTRY BILL (PIB), 2020 (HB. 1061)*

Scheduled as follows:
Date: Wednesday, 27th – Thursday, 28th January, 2020.
Time: 10:00am Daily
Venue: Conference Room 028, House of Representatives, National Assembly Complex, Abuja

Join the Public Hearing
https://us02web.zoom.us/j/88941672444?pwd=RHVLZWZ1UHZjUzlBTzF1ZFd2b2R3UT09

Meeting ID: 889 4167 2444
Passcode: 223303

If you have any question, please send it to:
publichearingonpib2021@gmail.com