How PIB Will Repeal Many Petroleum Acts And Regulations —Hon. A.M. Gaya |The Republican News

House of Representatives member: Hon. Abdullahi Mahmud Gaya

By Hon Abdullahi Mahmud Gaya

Nigeria’s oil and gas industries is being governed by laws enacted more than 50 years ago which are extremely not conversant with current oil and gas reality.  Even though oil and gas industry contribute less than 10% to the country’s Gross Domestic Product, but it contributes about 90% of the foreign exchange earnings and 60% of total income. 

For 13 years,   Petroleum Industry Bill (PIB) has gone through three presidents and four legislative tenures without resulting in an overarching petroleum industry law. In 2018, the House of Representatives passed a harmonised version of the PIGB almost a year After the Senate passed the bill. However, the Petroleum Industry Bill was rejected by President Buhari for “Legal and Constitutional reasons.

Non passage of the Bill remained a major drag on the petroleum industry, significantly limiting the country’s potential to attract both local and foreign capital at a time when many other countries in Africa are scrambling to exploit their oil and gas resources. In spite  global market is changing rapidly, exacerbating old threats and creating new ones. The world’s largest consumers have become top producers and top importers have begun to export. Future trends for the oil industry do not look too good because a number of developed countries have set ambitious targets for reduced green house emissions.

Therefore, the passed bill arrived at right time considering future usefulness of petroleum resources in near decades had increased level of uncertainty on oil demand calls for great concern.  With great anticipation Petroleum Industry Bill would overhaul the sector to operate optimally in line with global standards.
For all these years the sector has many  Petroleum Acts and Regulations which overlapped each other in functions and responsibilities without comprehensive law for the administration of the oil and gas sector.  But when PIB assented by Mr President will repeal about 10 laws including the Associated Gas Reinjection Act; Hydrocarbon Oil Refineries Act; Motor Spirit Act; NNPC (Projects) Act; NNPC Act (when NNPC ceases to exist); PPPRA Act; Petroleum Equalisation Fund Act; PPTA; and Deep Offshore and Inland Basin PSC Act. It also amends the Pre-Shipment Inspection of Oil Exports Act while the provisions of certain laws are saved until termination or expiration of the relevant oil prospecting licenses and mining leases including the Petroleum Act, PPTA, Oil Pipelines Act, Deep Offshore and Inland Basin PSC Act
 Within 6 months from commencement of the new law NNPC Limited under Companies and Allied Matters Act (CAMA)  will change  NNPC operation to  commercially oriented, which would bring much-needed dividends to Nigerians. NNPC will metamorphose into a limited liability company.  Incorporation of a commercial and profit focused NNPC Limited under CAMA with ownership vested in the Ministry of Finance Incorporated (and Ministry of Petroleum Incorporated) on behalf of the Federation to take over assets, interests and liabilities of NNPC.

This structure is expected to pave the way for eventually sale of shares to Nigerians.
The initial shareholders are going to be the Ministry of Finance Incorporated and Ministry of Petroleum Incorporated. But subsequently, it will be open for the general public to invest. Then with regards to the fiscal regime, the laws will bring it in tandem with international best practices, to make the oil and gas industry in Nigeria much more competitive and attract the much-needed investments into the country.”
The passed bill will create the Nigerian Upstream Regulatory Commission responsible for the technical and commercial regulation of the upstream petroleum operations; and the Nigerian Midstream and Downstream Petroleum Regulatory Authority responsible for the technical and commercial regulation of the midstream and downstream operations in Nigeria. 

The PIB seeks to provide legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry and  It contains 5 Chapters, 319 Sections and, 8 Schedules. Petroleum Industry Bill (PIB) key objective is to ensure  good governance and accountability, creation of a commercially oriented national petroleum company, and fostering a conducive business environment for petroleum operations.
The NNPC as it is today will metamorphose into a Limited Liability Company. It will be NNPC Limited. So, its operation will be commercially oriented, devoid of political interference and the much-needed dividends will be brought to Nigerians. 
The quest for oil explorations in the North and other parts of the country have received a huge boost. Based on Section 9 of the PIB, at least 30% of the profit generated by the proposed Nigerian National Petroleum Company Limited will go to the exploration of oil in ‘frontier basins’. Although the proposed law doesn’t identify the frontier basins, a statement by the president in 2019 identified the frontier basins as Chad Basin, Gongola Basin, Anambra Basin, Sokoto Basin, Dahomey Basin, Bida Basin and Benue Trough.

30 per cent for Frontier Exploration Fund as specified in (section) 9(4) of this Act”. It will also have the power to “be a supplier of last resort for security reasons. All associated costs shall be for the account of the federation. The main objective of 30% frontier exploration activities is to promote the exploration of petroleum resources in Nigeria for the benefit of the Nigerian people and promote sustainable development of the industry, ensure safe, efficient transportation and distribution of infrastructure, and transparency and accountability in the administration of petroleum resources in Nigeria. The proposed law stipulates that the 30% profits from oil operations will be held in Escrow Account that processes completing of transaction. Money, securities, funds, and other assets can all be held in escrow. In a situation where it is not being used, it would be returned to the treasury.
the House of Representatives made efforts to return to the Senate to discuss the possibility of renegotiation to 5% but the Senate had already passed the report thereby foreclosing any review. Therefore, members of the conference committee of the House had to return and pass it. That is what House rules say. As we don’t want PIB to suffer the same fate that it had suffered in the past. Therefore, the House of Representatives adopted Conference Report on the Petroleum Industry Bill approving 3% as the financial provision for the Host Communities Fund to align with the position of the senate on the same matter.
The 3% should be paid annually as contribution to the host Community Development Fund Operating Expenditure of Oil Companies (OPEX). The bill provides that each settlor must set up a development trust fund and appoint a Board of Trustee which must apply to the Corporate Affairs Commission (CAC) to register the trust as a Host Communities Development Trust. Another good aspect for communities component in the bill provides that each settlor must set up a development trust fund and appoint a Board of Trustee which must apply to the Corporate Affairs Commission (CAC) to register the Trust as a Host Communities Development Trust.
Clause 236 of the bill gives the time frame for the registration of a trust fund for oil asset.

For existing leases and existing designated facilities, the period for setting up the fund is within 12 months of the bill coming into effect. Existing prospective licences must set up the Fund before application for the field development plan. And failure to comply with setting up of the trust fund in line with the Act, a holder risks revocation of the applicable licence.

According to the Bill, “wherein any year, an act of vandalism, sabotage or other civil unrest occurs that causes damage to petroleum and designated facilities or disrupts production activities within the host community, the community shall forfeit its entitlement to the extent of the costs of repairs of the damage that resulted from the activity with respect to the provisions of this Act within that financial year. Provided the interruption is not caused by technical or natural cause”.

If PIB assent by PMB will clear the concerns raised by investors and have greater clarity on the direction of the industry, especially with respect to the new fiscal rules and Nigeria’s oil and gas industry and Nigeria’s economy to witness an exponential growth soon. The bill also promotes the competitive and liberalised downstream sector of the petroleum industry as well as the development of fuel and chemical industries.
Under- Fiscal framework the objective is to establish a progressive fiscal framework that encourages investment in the Nigerian petroleum industry, provides clarity, enhances revenues for the government while ensuring a fair return for investors.

Hon. Gaya, writes in from the House of Representatives, Abuja

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PIB: Oil Host Communities Disapprove 5%, 3% Equity By Reps, Senate Against 10% Requested |The Republican News

•Senate approves 30% fund exploration of frontier basins

•NNPC to become limited liability company

•Passage of PIB: Jinx broken indeed —Presidency

•Oil, gas industry leaders react

By Emma Amaize, Udeme Akpan, Henry Umoru, Levinus Nwabughiogu & Obas Esiedesa

The passage into law of the controversial Petroleum Industry Bill, PIB, has not gone down well with the Niger Delta host communities, as the Senate gave host communities only three percent equity holding in Host Communities Trust Fund, as against the 10 percent people of the oil-producing areas demand.

The House of Representatives, on its part, yesterday, passed the age-long awaited PIB, granting host communities’ five per cent equity stake for host communities in the Host Communities Trust Fund, as against the agitation for 10 per cent by host communities.

Meanwhile, National President, Host Communities of Nigeria Producing Oil and Gas, HOST ON, Chief Benjamin Tamanarebi said it was insulting for the Senate and House of Representatives to cede only three and five per cent equity shareholding respectively to the oil and gas producing communities in the PIB, passed, yesterday.

Another controversial area passed was the fund exploration of frontier basins, which the Senate left at 30 percent, while stakeholders in the Niger Delta had demanded that it should be reduced to 10 percent.

Both the Senate and Reps agreed that the Nigerian National Petroleum Corporation, NNPC, should become a limited liability company.

This came as Presidency described the passage of the complete version of the PIB, which had defied passage in previous assemblies over the last 20 years by the Senate as a jinx that had indeed been broken.

Meanwhile, at the Senate, after a very heated argument, debate and plea on the percentage for the host communities, the lawmakers approved three percent of the actual annual operating expenses of the preceding financial year in the upstream petroleum operations affecting the host communities for funding of the Host Communities Trust Fund.

The original bill brought to the Senate by the Executive was 2.5 percent for funding of the Host Communities Trust Fund, but the Senate committee moved it to five percent, but the Senate at the end of the day approved only three percent.

The Senate report read, “This chapter highlights the effective and efficient administration of the Host Community Trust Fund which is to be anchored by the settlor, i.e. 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.”

Earlier, the senators had a closed-door meeting with the Minister of State, Petroleum, Timipre Sylva and Group Managing Director of the NNPC, Mele Kyari, who briefed them for over one hour on the technical and financial details of the Bill before the consideration of the report.

After the consideration of Report of the Joint Committee on Petroleum (Downstream) Petroleum (Upstream) and Gas Resources Petroleum Industry Bill, 2021 ( SB. 510) laid by the Chairman, Senator Sabo Mohammed (APC, Jigawa – West), the Senate approved funding mechanism of 30 percent of NNPC Limited’s profit in oil and profit gas in the production sharing, profit sharing, and risk service contracts to fund exploration of frontier basins.

With this development, 30 per cent of profits accruing from oil and gas operations by the NNPC, is now to be set aside for exploration of oil in the frontier basin.

It means that all exploration of frontier basins shall fall under the purview of the Upstream Regulatory Commission.

The Senate also passed that as part of moves to strengthen the accountability and transparency of NNPC Limited, it will now be a full-fledged CAMA company under statutory/regulatory oversight with better returns to its shareholders, the Nigerian people.

On Petroleum Industry Fiscal Framework, the Senate passed the Bill as part of moves to attract and unlock the long-awaited capital investment inflows to the country’s oil and gas industry since it contains enhanced incentives in the land, swamp, shallow and deep waters terrains. Provisions have also been made for better and attractive tax incentives to achieve this goal.

Before the passage of the PIB, Senator Ahmad Kaita( APC, Katsina North) stirred controversy, when he called for an amendment to the recommendation by the Senate Committee from five percent to three percent in line with the explanation of the GMD, NNPC during the closed-door session.

When the President of the Senate, Senator Ahmad Lawan, put the question for a voice vote and despite resounding nays, passed in favour of the ayes, however, generated noise in the chamber as some senators, majorly the South South senators were uneasy with the ruling.

At that point, Senator James Manager (PDP, Delta South) called for another vote opposing the initial vote as he proposed an amendment to retain the provision of five percent in the report but he was defeated.

Senator Goerge Sekibo (PDP, Rivers East) raised a Point of Order 73 of the Senate Standing Rules as amended, calling for a division of the Senate.

According to Sekibo, the order challenged the ruling of the chairman (Lawan) and requires that he put the question to vote a second time. If his opinion was again challenged, he shall call each Senator’s name to vote.

Lawan who was apparently afraid of the consequences of embarking on a division, swiftly resorted to pleading with Sekibo to withdraw his motion.

This time, the Senate Leader, Senator Yahaya Abdullahi (APC, Kebbi North) appealed to Sekibo to withdraw the order.

At this point, the President of the Senate who also pleaded with Sekibo to drop his division point of Order said, “We are representatives of the people before anything. I just want to remind us of what we know that we represent, we legislate and oversight.”

After listening to them, Senator Sekibo who withdrew the point of Order said, “Mr President, you know naturally we have known ourselves in this chamber from 2007, and I also know that it is the privilege of all parliamentarians all over the world to call for division when he feels the need.

“As the Senate President, if you appeal to me on something that is personal and I did not take it, you will not be delighted but no I will say something.

“For I’m asking for is not for me as a person but it is in the interest of the nation because when we pass a good law, we must also have a good environment to implement the law.

“If the environment is not conducive for implementation, we will all come back to redress it. My appeal to you that you increase the number a little bit. I have withdrawn while appealing to you.”

In his concluding remarks after the passage, Lawan who noted that the passage of the PIB was an indication that the “demon” behind its non-passage in the past had been finally defeated, said, “The 9th Senate and indeed the 9th National Assembly has achieved one of its fundamental items on the legislative agenda.”

Before the consideration of clause by clause of the report and passage, the Deputy President of the Senate, Senator Ovie Omo- Agege who spoke in his capacity as the Senator representing Delta Central had pleaded that the host communities fund should be above five percent as earlier recommended by the committee.

Reps pass 5% equity holding

At the House of Reps, the five per cent equity granted to the host communities was, however, an improvement on the 2.5 per cent earlier proposed for the communities in the bill.

The clauses and sections of the bill are 318 in all, and following consideration of the bill, it will be passed into law any time from now.

The piece of legislation from the Executive is about 20 years old in the National Assembly.

Previous attempts to pass the bill into law by the former Assemblies hit the brick wall due to variegated interests from high and mighty.

Section 240, subsection 2 of the bill that prescribes 2.5 percent equity for the host communities was amended to provide for 5 percent.

Moving the motion earlier for the consideration of the report, the Chairman of the Ad-hoc Committee on PIB, Mohammed Mongunu, said bypassing the bill into law, the House would have written its name in gold.

Speaking after the consideration of the report in the Committee of the Whole chaired by the Deputy Speaker, Ahmed Wase, the Speaker, Femi Gbajabiamila, hailed the House for achieving the feat.

“I want to commend the 24 wise men and the 360 members in producing this 318 sections law. In the coming week, the Electoral Amendment bill will follow suit.

”By the time we are done, irrespective of which side of the divide you are, this 9th House would have done us proud,” he said.

Host communities reject 3-5% equity shareholding

Tamanarebi, who spoke to Vanguard, said: “Imagine for over 63 years of neglect, deprivation and marginalization of the aborigines who have suffered untold hardship amid wealth, for the first time after many years of agitation, asking for only 10 per cent equity shareholding and the leadership of NASS is considering five per cent and three per cent viewing it that they have done us a favour.

“This is unacceptable and we reject the offer. It is our sole right as the aborigines, it is our land, it is our waterways, is Nigeria claiming it because we are from Nigeria state.

“Then why denying our rights to benefit, the right to have a clean environment, the right to have potable water to drink, good hospital, electricity, good roads but leaving us in abject poverty, in a desecrated environment without considering the UNFCCC/ CDM criteria.

“We will still study other areas in the Bill to address it in due course, for example, section 104 (2) on gas flaring where funds on penalty should be paid to the government, we reserve to study all sections, but is a fruitless exercise as usual,” he said.

Passage of PIB: Jinx indeed broken— Presidency

In a statement, yesterday, by the Senior Special Assistant to President Muhammadu Buhari on National Assembly Matters( Senate), Senator Babajide Omoworare, congratulated President Muhammadu Buhari, Senator Ahmed Lawan, Senate President and Speaker House Representatives Femi Gbajabiamila on the passage of the PIB by the National Assembly.

Omoworare said: “It should be noted that the efforts by the Executive and Legislature in Nigeria to put in place contemporary legislative and legal framework in the oil and gas sector has proved abortive since the year 2000; also, the non-amendment of the extant framework being the Petroleum Act of 1967, has affected the inflow of Foreign Direct Investment as well as growth in Local Content.

“Breaking this jinx and achieving this feat is a testament that the Executive and the Legislature can really work together and truly engage each other, without compromising party position and individual perspective, in the most positive manner with a view to actualizing the common goal and communal good for Nigerians.

“I would like to thank the entire Leadership and Members of the Senate and House of Representatives, as well as the Minister of State for Petroleum, Timipre Sylvia, and the Group Managing Director of NNPC, Mele Kolo Kyari for their focused and tenacious attitude to achieving this milestone.”

Oil, gas industry leaders react

Commenting on the passage of the PIB, Lead promoter, EnergyHub Nigeria, Dr Felix Amieyeofori, said: “This is a welcome development for the oil and gas industry, and the country at large as it will provide the long-expected business and investment environment for operators, and other stakeholders.

“This is coming at the time when oil and gas-dependent economies are grappling with the reality of the energy transition to cleaner renewable energy sources, targeted at tackling the global climate problems.

“While oil will still play a significant role in the global energy mix beyond 2050, the “Proverbial Net Zero Date,” Nigeria must ensure that we utilize the opportunities created by this Law to fully harness the total hydrocarbon value chain to generate the capital that will propel our transition into the renewable world.

“I would, therefore, advise that government and all the stakeholders to work toward ensuring the immediate implementation of the critical and pivotal clauses without the traditional politicking.

“The 2014 National Conference is still very fresh, as Nigerians are known for putting together very pragmatic policies and laws, but, we have always failed to walk the talk, and that has been the albatross of our development as a nation.”

Similarly, a Port Harcourt-based energy analyst, said: “The PIB is dead on arrival, apparently because it is belated.

“This administration could have passed the PIB much earlier, but it wasted time trying to break it down into segments, including the Petroleum Industry Governance Bill, PIGB, before returning to the original plan of passing it as a single document.

“Consequently, the oil and gas industry and the entire nation’s economy have suffered. Many investments and companies had over the years gone to other nations in Africa, especially Angola, Ghana, and even the emerging East African countries.”

NEITI applauds NASS courage in passing PIB

Nigeria Extractive Industries Transparency Initiative, NEITI, has hailed the National Assembly for passing the PIB, describing the move as bold, courageous and progressive.

Executive Secretary of NEITI, Dr Orji Ogbonnaya Orji in a statement said: “NEITI as an agency set up to enthrone transparency and accountability in the management of extractive industries in Nigeria has demonstrated genuine and legitimate interest in the PIB from the onset.

“NEITI’s interest is in view of the urgency and strategic importance of a new law to replace the existing archaic legislations that have aided huge revenue losses, impeded transparency, accountability and investment opportunities in the nation’s oil and gas industry.”

He recalled that as an anti-corruption agency in the sector, NEITI boldly alerted the nation through a special Policy Brief “The urgency of a new petroleum sector law” that the current stagnation of investment opportunities in the Petroleum Industry was as a result of the absence of a new law for the sector.

“This has led to huge revenue losses to the tune of over $200 billion. In that publication which was widely circulated, NEITI argued that the “revenue losses were as a result of investments withheld or diverted by investors to other (more predictable) jurisdictions.

“The hedging by investors stems from the expectation that the old rules would no longer apply, but not knowing when the new ones would materialise.”

He added that NEITI Reports on the sector had also disclosed that over $10.4 billion and N378.7 billion were lost through under-remittances, inefficiencies, theft or absence of a clear governance framework for the oil and gas industry.

Vanguard News Nigeria

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Senate Passes Petroleum Industry Bill, Allocates 3% Of Profits From Companies To Host Communities |RN

The Senate has finally passed the Petroleum Industry Bill (PIB) — but not without fierce arguments.

The bill has been in the works since the tenure of former President Olusegun Obasanjo who led Nigeria between 1999 and 2007 but successive sessions of the national assembly failed to pass it.

But the PIB passed third reading after Mohammed Sabo, chairman of the joint committee petroleum (upstream and downstream) and gas, presented a report and its clauses were put to voice vote.

While presenting the report on Thursday, Sabo said the legislation is aimed at “promoting transparency, good governance and accountability in the oil and gas sector.”

The chairman said the committee recommended that 30 percent of Nigeria National Petroleum Corporation (NNPC) profit from oil and gas should be used to fund exploration of frontier basins.

“The various obsolete laws currently in operation in the country have been updated and consolidated in this chapter to meet global competitiveness and best practices,” he said.

“A total of 355 amendments were recommended to this chapter while others were retained.”

During the clause-by-clause consideration of the bill in the “committee of the whole”, the percentage that should be allocated to the host communities caused a division among the senators.

At the public hearing on the bill, representatives of the host communities demanded that they be allocated 10 percent.

Although five percent was proposed, the joint committee recommended three percent after a meeting of the senators with Timipre Sylva, minister of state for petroleum resources, and Mele Kyari, NNPC group managing director.

After three percent was accepted as what is due to host communities, Thompson Sekibo, senator representing Rivers north-east, called for a “division” to challenge a ruling of Senate President Ahmad Lawan that allow that.

While some senators spoke in favour of the division, others kicked against.

Abdullahi Yahaya, senate leader, while describing it as a “bad precedent”, said his “heart bleeds” over Sekibo’s motion.

Yahaya pleaded with the Rivers lawmaker to withdraw his motion and Sekibo did.

Also speaking, James Manager, senator representing Delta south, said five percent was not too much for the host communities.

The bill, which has five parts, eight schedules and 319 clauses, was eventually passed. (Journalist101)

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