PIB: Govt may trim involvement in oil sector with key exemptions

Alison-Madueke 122 October 2013, Abuja – The exemption of key institutions from two major Acts of government meant to promote prudent management of Nigeria’s resources in the redrafted Petroleum Industry Bill, PIB, may suggest that the federal government is keen on cutting back its direct involvement in operations within the country’s petroleum industry.

The two Acts; the Public Procurement Act 2007 and Fiscal Responsibility Act 2007 will not be applied in the operations of key institutions to be established in the PIB. The Acts are currently before the National Assembly for consideration and passage into law.

Sections 124,149,160 of the PIB indicates that the proposed Nigerian Petroleum Asset Management Company, National Oil Company and National Gas Company Plc, which are to be established in the PIB and to take charge of certain responsibilities such as to acquire and manage investments of the government in the Nigerian upstream petroleum industry amongst others, will be exempted from such extant law like the Public Procurement Act 2007 and Fiscal Responsibility Act 2007.

While some civil society organisations have consistently sought for an explanation on the exemption of such key institutions from the scope of these Acts, a petroleum industry expert who spoke with THISDAY in Abuja on the exemptions suggested that such may be a deliberate attempt by government to trim its involvement in further development of the country’s petroleum sector.

The expert, who would not want to be named, explained that a key provision in the Public Procurement Act in particular which states that: “The provisions of this Act shall apply to all procurement of goods, works, and services carried out by: (a) the federal government of Nigeria and all procurement entities; (b) all entities outside the foregoing description which derive at least 35 per cent of the funds appropriated or proposed to be appropriated for any type of procurement described in this Act from the federation share of Consolidated Revenue Fund.” has foreclosed the possibility of subjecting such institutions to the Act.

He explained that in the event of government not providing up to 35 per cent of funds appropriated by the institutions in their operations, such institutions are then not liable to the procurement Act as well as the fiscal responsibility Act, adding that there is a readily available example with government’s involvement in the operations of the Nigerian Liquefied Natural Gas (NLNG).

“NLNG is not subjected to the procurement Act or the fiscal responsibility Act; while it does not provide up to 35 per cent of funding for the company, it has appointed board members in it and as such, whatever it wants to know, it does through its representatives.

“I think this may be an attempt by government to limit its involvement in the sector and rather allow more private sector participation. If it would not provide funding up to the required level to subject the institutions to the procurement Act, then there is no need asking them to open up their books,” the expert said.

Under the PIB, Section 160 states that the National Gas Company Plc shall not be subject to the provisions of the Fiscal Responsibility Act 2007 and the Public Procurement Act 2007 while Section 150(2) indicates that the National Oil Company shall be subject to the governance rules of the Securities and Exchange Commission (SEC) but exempted from the provisions of the Fiscal Responsibility Act 2007 and the Public Procurement Act 2007 in Section 149.

Similarly, Section 124 noted that the Nigerian Petroleum Asset Management Company when established shall not be subject to the provisions of the Fiscal Responsibility Act, 2007 and the Public Procurement Act, 2007.

– This Day

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