The row between Minister of State for Petroleum Dr. Ibe Kachikwu and Nigerian National Petroleum Corporation (NNPC) Group Managing Director Dr. Maikanti Baru has refocused attention on the Petroleum Industry Bill (PIB), which analysts believe has the capacity to entrench transparency in the sector, writes EMEKA UGWUANYI.
Rev. David Ugolor, the Executive Director of the Africa Network for Environment and Economic Justice (ANEEJ), believes the row between Minister of State for Petroleum Dr. Ibe Kachikwu and Nigerian National Petroleum Corporation (NNPC) Group Managing Director Dr. Maikanti Baru would not have happened if the National Assembly and President Muhammadu Buhari had concluded the passage and assent of the Petroleum Industry Governance Bill.
Ugolor said the conclusion of the enactment of the law would forestall that kind of row and also ensure transparency in the oil sector.
He said: “We believe that the inconsistencies being thrown up by the startling revelations from the Minister of State for Petroleum Resources include some of the issues which the Petroleum Industry Governance Bill seeks to address and redress.”
A former Minister of Petroleum Resources, Prof. Tam David-West, is, however, not excited about the PIB.
David-West said: “Some people also said that the Petroleum Industry Bill (PIB) would have prevented that kind of situation if it had been passed. That is not correct. The PIB is not the solution to the problem in the Nigerian oil industry. In fact, if passed the way it is, it can destroy the industry. I have read it. It is not a serious bill. It has only 40 words. If they don’t look at it carefully before passing it, it can destroy the industry.”
President of the Nigerian Association of Petroleum Explorationists (NAPE), Mr. Abiodun Adesanya, said: “This issue brings to the fore the issue of passage of the Petroleum Industry Bill (PIB). PIB has solution to this problem and it becomes surprising why the House Representatives is sitting on the Bill while the Senate is giving it speedy treatment.
“Let us not allow political issues to destroy the good deeds achieved in the sector. The President should call Kachikwu and Baru, resolve the issue amicable and ensure such issues are treated and resolved internally and kept away from public consumption in future.”
For the Lead Director, Centre for Social Justice (CSJ), Mr. Eze Onyekpere, the issue calls for need to speedily and totally pass the Petroleum Industry Bill (PIB) into law. He said the managers of Nigeria’s oil and gas resources should be more concerned with maximizing value from the resources for the benefits of Nigerians especially as oil and gas are being threatened by shift to use of renewable energies.
Onyekpere said he is yet to see any company law that doesn’t present its activities to the board before implementation, adding that the issue is test case for the reforms for the sector.
“The situation presents a water-tight case for the enactment of the Petroleum Industry Bill (PIB) because the world is not waiting for Nigeria. The nation is currently facing the challenges posed by the increasing production and choice for renewable energy worldwide.
“The world is moving away from use of fossil fuels and we should be concerned as a nation what to do with the hydrocarbon resources we have before it becomes totally useless. The world is leaving Nigeria behind.
“The allegations against the Nigerian National Petroleum Corporation (NNPC) are critical because they border on lack of transparency and lack of due process and should be taken seriously irrespective of who is involved.
“I want to look at the company law that says a company doesn’t report its activities to the board. It is nonsensical to classify firms that lift crude oil as off-takers. Also at what point did the NNPC present the report to the Federal Executive Council (FEC), and who presented the report to FEC when the Minister of Petroleum was not aware? Is it the President the presented it to FEC or was it the Vice President when the President was away?
“What is happening is an aberration and a watertight case for reforms for the oil and gas sector that is the mainstay of the country.”
Members of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) alleged that over N235 billion had been lost in the last 17 years that the bill’s passage had been delayed.
NUPENG Chairman Hyginus Onuegbu expressed worry that the aspect of the bill passed by the Senate only deals with the governance and institutional framework of the country’s petroleum industry. The other aspects of the PIB, which was unbundled into five different components, ostensibly for easy passage, include: Petroleum Fiscal Framework Bill; Petroleum Industry Downstream Administration Bill; Petroleum Industry Revenue Management Framework Bill and Petroleum Host Community Bill.
He said: “We look forward to the passage of the other aspects such as the: The Petroleum Fiscal Framework Bill; The Petroleum Industry Downstream Administration Bill; The Petroleum Industry Revenue Management Framework Bill and the Petroleum Host Community Bill.
“The bill, as passed, will not deliver the full benefits of the intended reforms, except a legislation is made in the other parts. It is worrisome that no mention was made of the petroleum host community fund, particularly as it is the major challenge in the Niger Delta area.”
The Managing Partner, J.O Adidi and Co., Mr. John Adidi, expressed his disappointment over the passage of the PIGB, which is an aspect of the Petroleum Industry Bill (PIB) by the Eighth Senate. He described the PIGB as a component of the original Petroleum Industry Bill (PIB).
“It’s not the most critical aspect of the PIB as far as the IOCs and indigenous operators are concerned”, Adidi said.
The Eighth Senate, under the leadership of Senate President Bukola Saraki and the Joint Committee on the Petroleum Industry Governance Bill (PIGB), chaired by Senator Tayo Alasoadura, passed the PIGB 2016, after PIB’s 17 year’s hiatus.
Adidi and other industry experts argue that the National Assembly put the wrong foot forward by first passing the PIGB without first considering other critical aspects of the bill, particularly the Petroleum Host Community Bill and the Petroleum Fiscal Framework Bill.
He said: “Now you have passed the PIGB and the other bills are nowhere to be found, what will the PIGB do on its own without being complemented by the Petroleum Fiscal Framework Bill, the Petroleum Industry Downstream Administration Bill, the Petroleum Industry Revenue Management and the Host Community Bill?”
According to him, splitting the PIB into six components and passing an aspect that has nothing to do with fiscal and host community concerns will hurt current efforts at driving significant investments in the industry.
“We are just dancing in circles. The most important bills have not even gone anywhere in the House. The first reading in the House is just for mention. The international investors are watching and they would want to see what has been passed”, Adidi said.
The Chairman, Enfrasco Energy and Infrastructure Services, Mr. Chukwuma Okolo, said the unbundling of the PIB into components and their passages in instalments would hurt investment.
He accused the National Assembly of avoiding the real subject matter (fiscal matters and peace and stability in the Niger Delta) and settling for the least important issue (governance and institutional framework).
The Managing Director/Chief Executive Officer, Gacmork (Nigeria) Limited, Alex Neyin, advised the Senate to pass a bill that would be conclusive, insisting that it was wrong for the Red Chamber to have passed the governance bill and ignored the component that is expected to add value to the lives of the host communities.
He said: “If you pass the bill without the host community part of it, then it could be classified as scam because you cannot be telling the people that you are going to compensate them and you will now turn around and talk of how much money to make out of them without thinking of what to put back to improve their lives.”
Mrs. Ibilola Amao of Lonadek Consulting and Local Content Advisory Services also stressed the need for the communities to be more involved in the exploration and exploitation of resources in their areas. She said there must be equity and fairness.
Mrs. Amao, who commended the PIB, however, said there must be adequate provision that the owners of the resources are engaged more effectively. This, she said, will make them more participatory stakeholders.
Her words: “We would like to see that the communities are more involved. The primary intent of the PIB was to commit the communities to maximising the return on investment for harnessing their natural resources so that it would create jobs and wealth for members of the communities.”
Mrs. Amao also accused governors in the Niger Delta for not addressing the welfare and wellbeing of people in their domains.
According to her, the state governors see the assets as avenue to enrich themselves and not to address the local community issues rather.
She said: “The state governments should be engaging with the oil companies and the people in the communities to make sure that work goes on, and not seeking for their own personal interests. We need to go back to equity and fair play if we want to move forward as a country.”
She emphasised that no investor (local or foreign), would want to put his money in a volatile atmosphere.
The PIGB, which split the Nigeria National Petroleum Corporation (NNPC) into three different entities, was also faulted by Okolo. He expressed doubt over government’s readiness to run the NNPC in a way that it would compete with its peers such as Petro Brass, PETRONAS or Saudi Aramco.
The PIGB as passed by the Senate created three entities from the NNPC, including: Nigeria Petroleum Regulatory Commission (NPRC), National Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC).
The NPRC will serve as a regulatory entity for the entire petroleum industry (upstream, midstream and downstream), the NPAMC will serve as the counterpart and administrator of production sharing agreements and such other risk-based agreements as the government may decide to conclude.
On the other hand, the NPC will serve as an integrated oil and gas company operating as a fully commercial entity across the value chain.
Its activities include: joint venture operations, operation of the Nigeria Petroleum Development Company (NPDC), frontier exploration and other upstream/service activities, refineries, and petrochemicals, among others.
Okolo said: “I don’t think we are yet politically mature to run a true international oil company that is owned by the government. You don’t make somebody competent by passing a law, without competent hands. The skills set necessary to drive the oil and gas industry does not exist within Nigeria, it does not exist in the NNPC.
“If the government wants to run an organisation with competent hands, then it should select people purely on the basis of competence and merit. There must be consideration to quota system, ethnicity or even nationality.
Neyin recommended that the NNPC workers and other government employees be reoriented, adding that their attitudes have never made the system profitable.
The Deputy Chairman, House Committee on Federal Character, Petroleum Resources (Upstream), Sergius Ose Ogun, informed that the bill had gone through the second reading in both chambers.
Ose Ogun said that an ad hoc committee was set up to look into it. According to him, both the host community and the fiscal framework bills were all in the component bill that went through the second reading in the Senate and in the House.
He added that they are being considered all together. “The committee set up had met and hopefully before the end of the year, the bill will be passed into law,” the lawmaker assured.
The Head of Energy Desk, Ecobank, Mr. Dolapo Oni, said as much as the passage of the PIGB was welcome, the knotty part of the PIB that has kept the bill on the table has not been tackled.
It remains to be seen if the National Assembly will hearken the calls for the conclusion of work on the PIB.
