Supremacy Battle Between Presidency, N’Assembly Stalls Legislation on PIB

There are indications that the passage of the PIB may be nowhere is sight as information gathered from ThisDay suggests that the delay in the passage of the Bill is actually due to internal wrangling between the National Assembly and the Executive, a power play centered around which arm of government is responsible for the passage of the Bill. This is in addition to the unresolved issue of the inclusion or otherwise of the host community fund in the Bill. The report decried this debacle calling it a major embarrassment for Nigeria in view of the landmark passage of a similar Bill by Ghana’s parliament last week.

The paper went on to report that the Group Managing Director (GMD) of NNPC, Dr. Maikanti Baru has promised to continue with the reform initiatives started by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and further grow the fortunes of NNPC by focusing on a 12-point agenda, which includes security of oil installations, the new business models, joint venture cash calls, production and reserve growth, growth of the Nigerian Petroleum Development Company (NPDC), gas development, oil and gas infrastructure, and refinery upgrade and expansion.

 

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.

 

 

Six Reforms the Nigerian Government can Undertake Prior to the Passage of the PIB (Part I)

Introduction

Nigeria’s proposed wide ranging oil and gas industry reform bill, the Petroleum Industry Bill (“PIB”), has failed to secure the approval of the National Assembly since 2008. The bill which seeks to reform government institutions, change the fiscal framework,and institute domestic gas reforms amongst other objectives has stalled at the National Assembly due to a wide range of disputes over its terms and mechanisms. According to Austin Avuru, the Managing Director of Seplat, one of Nigeria’s leading indigenous oil and gas companies, the delay in passing the PIB has contributed considerably to reduced investments into the sector.

 

The fall in investments will have a long term negative impact on Nigeria’s oil and gas industry with a reduction in government revenues, loss of jobs and the damaging effects associated with a failure to replace reserves. In spite of these apparent consequences, the new government is yet to enunciate its proposals with respect to the PIB, its passage and proposed timelines. Indeed, the Senate Majority Leader, Ali Ndume has stated that the passage of the PIB is not currently a priority of this Senate.  In any case, we believe that the new government will seek to make changes to certain aspects of the bill including fiscal & institutional reforms.

Continue reading “Six Reforms the Nigerian Government can Undertake Prior to the Passage of the PIB (Part I)”

House of Reps Passes Petroleum Industry Bill

Channels Television reports that the House of Reps’ Ad-Hoc Committee report on the PIB has been considered and that the Bill has been passed by the lower house.

This comes after a flurry of Bills (46 in total) were passed by the Senate yesterday, June 3, after same were transmitted by the House of Reps.

The House of Reps’ passage of the PIB comes to little or no avail as the 7th Assembly wrapped up today. The Bill would have also required passage by the Senate.

Indeed, Senate president, David Mark, in his End-of-Assembly speech, admitted the lawmakers failure to pass the Bill.

The PIB has been before the House of Assembly since July 2012.

Splitting up PIB not in Nigeria’s Interest says PENGASSAN

Reacting to the Minister of Petroleum’s suggestion that the Petroleum Industry Bill be split up to ensure prompt passage, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has retorted that such suggestion would not be in the interest of the country. The association maintained that the provisions, as contained in the current Bill, are capable of transforming the industry and in particular, grow the upstream sector.

HOUSE OF REPRESENTATIVES AND SENATE HOLD FINAL PUBLIC HEARING ON PIB

The House of Representatives’ Ad-hoc Committee on the Petroleum Industry Bill (“PIB”) in a communiqué issued on Monday, July 8, 2013, has notified the general public of its final public hearing on the Bill.

Members of the public, especially industry stakeholders, professional / interest groups, host communities, state and local governments, have been invited to make representations to the Ad-hoc Committee on the PIB on Wednesday, 9th and Thursday, 10th July 2013 at the New Wing of the House of Representatives National Assembly Complex, Abuja. All memoranda on the Bill are required to be typed, hardcover bound and produced in twenty (20) copies.

The House of Representatives’ hearing is to be followed by a two-day public hearing by the Senate’s Joint Committee on the PIB.

The Senate’s public hearing, taking place on Tuesday, 16th and Wednesday, 17th July, 2013 at Conference Room 022, New Senate Wing National Assembly Complex, is to host the Minister of Petroleum Resources, the 36 State Governors as well as heads of government Ministries, Departments and Agencies on the first day, and on the second day, Managing Directors of International and National Oil Companies, the Nigerian Labour Congress, Petroleum Marketers, industry stake holders and members of the public.

Stakeholders and interested members of the public willing to make representations on the Bill to the Senate’s Joint Committee are required to submit their memoranda in fifty (50) hard copies and one (1) soft copy to the Committee’s Secretariat in Room SB 10 (Red Carpet), (White House), the Senate National Assembly Complex, Abuja on or before Thursday 11th July, 2013.

REPORT ON THE FEDERAL HOUSE OF ASSEMBLY’S PETROLEUM INDUSTRY BILL SOUTH-WEST PUBLIC HEARING

The House of Representative’s Committee on the Petroleum Industry Bill (“PIB”) headed by the Chief Whip of the House, Hon. Ishaaka Bawa, held its South-West public hearing on Monday, 22 and Tuesday, 23 April, 2013 at Lagos Airport Hotel.

In attendance were various stakeholders in the petroleum extractive industry, petroleum industry consultants and experts as well as representatives from various government departments.

Although the Committee received a handful of remarks on the first day of hearing (particularly from the Lagos State Government), most representations were left till the hearing’s second day.

A representative from Shell expressed concern that PIB’s fiscal framework did not encourage new investments and if passed as drafted, the country stood the chance of experiencing a decline in deep water explorations.

Also contributing, Engr. Dada Thomas of Frontier Oil Ltd. and Mrs. Catherine Uju Ifejika of Britannia-U Nigeria Ltd. spoke on the Bill being unfavourable to Marginal Field Operators and dis-incentivising gas production. They advocated for better incentives for indigenous operators, a less stringent fiscal framework and an attractive pricing regime for operators involved in gas operations.

Speaking primarily on the Petroleum Host Community Fund, Environmental Rights Action’s Executive Director, Mr. Godwin Ojo, called for a redefinition of Petroleum Host Communities. He suggested the need to expand the category of communities classified as Host Communities. He suggested that Host Communities include all States affected by every aspect of petroleum operations and not just the Niger-Delta states.

Rounding up presentations, the Petroleum Technology Association of Nigeria (PETAN)’s PIB committee chairperson reiterated the general sentiments the Bill had received since its draft was released in July 2012.

Amongst other things, he expressed the need for the Bill to take more local content initiative, restrict the powers of the President as regards discretionary award of licences and leases, merge the regulatory agencies, allow greater transparency in NOC divestment and provide more tax incentives.