– As Senate passes PIB into law after over N235Billion dollars loss in 17 years
– Bill provides for creation of two firms from NNPC
A joint committee of the Nigeria’s petroleum industry unions, NUPENG and PENGASSAN Petroleum Industry Bill Committee, has opined that the newly passed Petroleum Industry Governance Bill (PIGB) will not usher in the required industry reform, kick-started 17 years ago, considering the other parts of the initial PIB that’s currently pending in the legislative houses.
The union’s committee chaired by Comrade Chika Onuegbu, expressed its concerns in a statement following the confirmation of the passage of the Bill by the Senate President Senator Bukola Saraki and its Joint Committee on the PIGB led by Senator Tayo Alasoadura.
The union’s committee noted that the PIGB only deals with one aspect of the PIB, that is the governance and institutional framework of the Nigerian petroleum industry.
Onuegbu pointed out that his committee expects the legislature to follow up immediately with the passage of the other aspect of the Petroleum Industry Bill (PIB) including; The Petroleum Fiscal Framework Bill; The Petroleum Industry Downstream Administration Bill; The Petroleum Industry Revenue Management Framework Bill and the Petroleum Host Community Bill.
NUPENG and PENGASSAN Petroleum Industry Bill Committee, Comrade Chika Onuegbu
“Also, when you consider that Nigeria has lost over N235Billion dollars due to its inability to pass the Petroleum Industry Bill into law since the reform in the Nigerian Petroleum industry was kick-started 17 years ago.”
“We therefore look forward to the concurrent passage of the Petroleum Industry Governance Bill (PIGB) into law by the Federal House of Representatives and also eventual accent by the President of Nigeria.” he pointed out.
Besides, he also emphasised that it is important that any legislation to address the challenges in the Nigerian oil and gas industry must make provisions on how to effectively address the Petroleum Host Community issues.
He lamented that the pending aspects have been major issues threatening the country’s oil output.
“You will recall for instance that Nigeria’s 2016 budget was based on Crude oil export of 2.2mln bpd with MTEF projections of 2.347mln and 2.469mln bpd for 2017 and 2018 respectively. Unfortunately, due to the Militancy in the Niger Delta, Nigeria’s crude oil export in 2016 only averaged some 1.5mln bpd creating a deficit of some 700,000 bpd in export, thereby worsening her economic crises and pushing the country deeper into recession, exchange rate crises, and stagflation.” Onuegbu explained.
It was also noted that the fiscal regimes aspect of the PIB is not included in the PIGB.
“It is this aspect that will guides the final decision of the International investors on how much to invest as it has direct impact on the profitability or other wise of the investments in the Nigerian oil and gas sector vis-a-vis other Petroleum host countries.
But the Senate President Bukola Saraki had earlier said that the Bill is not only for Nigerians but for our investors.
“We are proud of what has been done”, Bukola boasted.
The passage of the PIGB whilst commendable will not deliver the full benefits of the intended reforms except if the other aspects of the PIB are also legislated.
However the union commended the 8th Senate for the renewed efforts while looking forward to the passage of the other aspect of the PIB and the concurrent passage by the House of Representatives and accent by the President of Nigeria.
As passed, the bill will cater for a more inclusive development extending from crude oil to other product lines and by-products and open up more engagements and ventures among international oil companies (IOCs) and the government in investments and also showcase modifications in the Joint Venture Partnerships (JVPs)/cash call obligations.
If the bill eventually gets Presidential approval, the Act will unbundle the Nigeria National Petroleum Corporation (NNPC) into two companies: Nigeria Petroleum Assets Management Company and the National Petroleum Company which will be created and supervised by the Ministry Of Petroleum Incorporated.
The bill states thus: “the Minister shall, within six months after the Effective Date, take such steps as are necessary under the Companies and Allied Matters Act to incorporate two entities – the first may be called the Nigeria Petroleum Assets Management Company, or such other name as may be available and the other may be called the National Petroleum Company, or such other name as may be available, as companies limited by shares, which shall be vested with certain assets and liabilities of the Nigerian National Petroleum Corporation (“NNPC”).
“Upon incorporation and the transfer of assets pursuant to this Act: the Nigeria Petroleum Assets Management Company (hereinafter called the “Management Company” in this Act) shall be responsible for the management of assets currently held by the Nigeria National Petroleum Corporation (NNPC) under the Production Sharing Contracts and Back-in Right Provisions under the Petroleum Act 1969 as amended; The National Petroleum Company shall be responsible for the management of all other assets held by NNPC except the Production Sharing Contract and Back-in Right assets currently held by the NNPC; At the time of its incorporation, the initial shares of the National Petroleum Assets Management Company shall be held in the ratio of 20% by the Bureau for Public Enterprises, 40% by the Ministry of Finance Incorporated and 40% by the Ministry of Petroleum Incorporated on behalf of the Government.”
However, reports have it that the PIGB was the first tranche of the PIB while other tranches that would soon be presented before the senate comprises of Upstream Petroleum Licence and Lease Administration, Downstream Oil and Gas Administration and Petroleum Fiscals.