*Industry players express doubt over fiscal regime *Say Bill may not attract investment *Labour, others say it’s welcome development
Chuks Isiwu, Oscarline Onwuemenyi, Michael James & Mkpoikana Udoma
15 June 2017, Sweetrude, Lagos, Abuja & Port Harcourt – Mixed reactions have continued to trail the recent passage of the Petroleum Industry Governance Bill, PIGB, by the Senate. The PIGB is a part of the Petroleum Industry Industry Bill, PIB, which had created much debate and tension across the industry, oil producing communities and the nation at large.
Some stakeholders polled by SweetcrudeReports applauded the development, which is coming 17 years after the bill arrived the National Assembly. Some still expressed caution about the development, and others doubts about the possible success of the bill as passaged by the Senate. Some other respondents would rather wait for a concurrent passage of the bill by the House of Representatives before making any observations.
Specifically, the PIGB was passed by the Senate on May 25 after its Committee of the Whole, had considered and endorsed the report of the Joint Committee on Petroleum Upstream, Petroleum Downstream and Gas presented by the committee chairman, Senator Tayo Alasoadura.
Explaining the bill, Senator Alasoadura, who is also chairman of the Senate Joint Committee on PIGB, said: “Our report proposes a slim, focused yet robust framework for effective institutional governance of the Nigeria Petroleum industry. We supported and enhanced the creation of an independent one-stop-shop regulatory agency which will absorb the present Department of Petroleum Resources (DPR), Petroleum Product Pricing Regulatory Agency (PPPRA) and the Petroleum Equalization Fund (PEF) into one agency.
“We have streamlined and sharpened the role of the Minister. We have also enhanced the extensive reform of NNPC into two limited liability companies- the National Petroleum Company and Nigeria Petroleum Assets Management Company to ensure efficient and effective commercial performance.
“In carrying out our assignment we have ensured that the major lapses associated with prior institutional frameworks have been remedied.”
According to the Senate, the main objectives of the Bill include: the creation of efficient and effective governing institutions with clear and separate roles for the petroleum industry; establishment of a framework for the creation (out of existing government-owned entities) of commercially oriented and profit driven entities that will ensure value-add and internationalisation of the petroleum industry; the promotion of transparency and accountability in the petroleum industry; and the creation of a conducive business environment for operators in the petroleum industry.
It is evident from a review of the Bill that the draftsman seeks to ensure that the petroleum industry is run in an efficient and transparent manner for the benefit of the country and we can only hope that this is ultimately achieved.
In his remarks after the passage of the bill, the Senate President, Dr. Bukola Saraki commended the commitment of his colleagues in passing the bill after 17 years.
“I congratulate the 8th Senate with the passage of this landmark bill which has not been passed for many years”, he said, adding that “this Bill is not only for Nigerians but for our investors. We are proud of what has been done.”
Obviously, the intent of the proponents of the Bill is to ensure that there is a high level of transparency in the Nigerian Petroleum Industry whilst at the same time ensuring that the industry is commercially driven and attractive to potential investors.
Bill addresses only 10% of industry expectations
But, some of the stakeholders polled by SweetcrudeReports, comprising mainly industry players, said the bill addresses only 10 percent of industry expectations. Some fear that going by the content of the new PIGB, other aspects of the Petroleum Industry Bill, PIB, that would be coming up later for consideration and passage at the National Assembly might not meet up in the challenge of addressing all the major issues confronting the sector.
One of the respondents, a top upstream industry player, who craved anonymity, said: “Short of calling the bill ordinary, I can also tell you that it doesn’t inspire confidence. And that being the case, it might not appeal to investors”.
He added: “To a large extent, there is really nothing new in the PIGB apart from the name. We have talked about most of those issues (some of its provisions) all along. We knew, for instance, that the powers of the Minister would be whittled down. We knew the bill will try to streamline the roles of the NNPC and the DPR under new designations”.
“For the PIB to attract confidence and investment, that Bill must go beyond the surface. It must do something extra-ordinary. We now await the passage of the other parts of the Bill, especially the one dealing with the fiscal regime. The fiscal terms must be well thought out, they must be clear and unambiguous”.
Concurring that the PIGB addresses only 10 per cent of industry expectations, Head Energy Research of Ecobank, Mr Dolapo Oni, called for a harmony of regulation in the PIGB.
Oni spoke of “regulatory irregularities” in the oil and gas sector, which the PIGB failed to address as he noted that there are clashes of regulation between the Department of Petroleum Resources – the oil industry watchdog – and the National Petroleum Investment Management Services, NAPIMS – the Nigerian National Petroleum Corporation, NNPC, subsidiary.
“There is still need to harmonise regulations in the PIGB because (under the PIGB), operators (will) still have to contend with NAPIMS and DPR. For instance, if an operator wants to bring in a rig and DPR gives clearance but NAPIMS refuses to give a go ahead, the operator is stuck. This kind of issue was not addressed in the bill,” he said.
Labour says Bill is welcome development
Meanwhile, major unions in the oil and gas sector have described the passage of the PIGB as a welcome development, noting that it will increase the inflow of foreign investment. The unions, including the Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, and the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, stressed that the nation’s oil and gas industry was long overdue for reforms, which the bill aims to achieve.
General Secretary of NUPENG, Mr. Joseph Ogbebor, told SweetcrudeReports that the passage of the bill was long overdue. Ogbebor said that it was a welcome development for the oil and gas sector as the union had been campaigning for the passage of the bill for over 15 years. He said that the bill, if finally passed into law by the president would attract more foreign investors and boost accountability and transparency.
On the unbundling of Nigeria National Petroleum Corporation (NNPC), the NUPENG scribe said that the union would resist any attempt to sack workers without adequate settlement. He advised the Federal Government to be cautious on industrial relation issues and ensure that all labour matters were properly addressed.
On his own part, acting General-Secretary of PENGASSAN, Mr. Lumumba Okugbawa, also noted that the development was a step forward to addressing the issues in the oil and gas sector. Okugbawa said that the bill was part of the entire PIB, adding that it was necessary to pass it to create a law to regulate activities in the industry.
Furthermore, the leadership of Independent Petroleum Marketers Association of Nigeria, IPMAN, commended the 8th Senate for speedy passage of PIGB. National President, IPMAN, Mr. Sanusi Fari, stated that, “It is very commendable for the Senate to have passed the PIGB in less than two years of inauguration. This bill has spent over 10 years with the past Assemblies but with no success. It shows that Senate President, Senator Bukola Saraki, Chairman, Joint Committee on PIGB, Senator Tayo Alasoadura, and other Senators should be commended for a job well done.”
Fari also urged the House of Representatives to do the needful by harmonising the PIGB for onward transmission to the Acting President, Prof. Yemi Osinbajo to append his signature.
Also speaking, the National Deputy President, IPMAN, Dr. Kola Adewoyin, stated that passing the PIGB is very important in attracting foreign direct investment into the oil and gas sector. “The Senate must commence in earnest, the process of passing the other parts of the old PIB which was split into four. Recall that the old PIB was split into The PIGB, The Petroleum Fiscal Framework Bill (PFFB); The Petroleum Industry Downstream Administration Bill (PIDAB); The Petroleum Industry Revenue Management Framework Bill (PIRMFB), and the Petroleum Host Community Bill PHCB). The National Assembly will do the nation great favour if these bills could be given speedy consideration.”
Adewoyin also urged the Presidency to ensure full compliance with the PIGB when it finally becomes law. “Enforcing compliance by the Presidency is also very important and the government must ensure all stakeholders comply with the bill when it becomes law. There is also the need for the National Assembly and the Presidency to always engage IPMAN when formulating policies that affects the oil and gas sector, considering our role in the industry.
“As at today, we control over 90 per cent of the downstream sector which is very critical in maintaining and sustaining healthy business environment for both local and foreign investors. We have become a major stakeholder and we will continue to invest more in the industry to further complement the ‘Change Agenda’ of President Muhammadu Buhari,” he stated.
Also reacting, the Council Chairman, Society of Petroleum Engineers, SPE Nigeria, Mr. Saka Matemilola, said the passage of the PIGB is a step in the right direction. He stated: “The industry is also eagerly awaiting the passage of the fiscal policy bill. That is what will ultimately quell the lingering uncertainty that has negatively affected the decision on new investments by most of the major IOCs (International Oil Companies).”
He argued, however, that the PIGB is by no means a magic wand that will solve the many problems facing the petroleum industry, adding that it would be unrealistic to expect the bill as passed, to satisfy all stakeholders.
Nevertheless, he stated, “starting with passage of the governance bill was a good decision and hopefully, the momentum will be sustained to ensure the other bills are similarly passed quite soon. Beyond passage of the PIGB, it is important that the proposed restructuring is carried out in the true spirit of the bill, ensuring that personal interests are not allowed to determine or derail the implementation. This is the only way that the country can derive the desired benefits.”
For Chairman, Petroleum Technology Association of Nigeria, PETAN, Mr. Bank-Anthony Okoroafor, PIGB is an Act to provide for the governance and institutional framework for the petroleum industry and for other related matters. His words: “The bill shows that for once there is light on the other side of the tunnel.
“We need the governance bill to set up the framework for the following as stated in the governance bill document – Create efficient and effective governing institutions with clear and separate roles, establish a framework for the creation of commercially-oriented and profit driven entities, promote transparency and accountability and finally foster a conducive business environment.”
Also commenting on the bill, former Chairman of PETAN, Engr. Emeka Ene, said, “Passing the PIB is very welcome news for the industry primarily because, it aligns policy and regulations and updates the legislation to reflect the realities of the oil business in the 21st century.
“The impact of the PIB will depend on what exactly was passed. The fiscal aspects will drive new projects, particularly in deepwater. The structural aspects will improve efficiency.”
Niger Delta groups condemn Bill, say Senate insensitive
However, it has not only been praises and commendations for the passage of the PIB. Several groups, notably from the Niger Delta region, have condemned aspects of the bill, as well as the non-inclusion of others.
For instance, the Ijaw Youths Council, IYC, said it “rejected in totality” the PIGB, describing it as insensitive. The group noted that passing such version of the Petroleum Industry Bill, PIB, which failed to provide special funds for oil-producing communities would not guarantee peace in the Niger Delta region.
The IYC, in a statement signed by its spokesperson, Mr. Henry Iyalla, said the PIGB is a calculated move aimed at making laws for the smooth governance of exploitation and exploration of the Niger Delta region against the interest of the people.
Iyalla said passing such version of the PIB portrayed members of the Senate as insensitive lawmakers, even as he insisted that the only PIB that would ensure peace in the region and calm frayed nerves must include the Petroleum Host Communities Fund Act.
The Ijaw group said only the Petroleum Host Community Act would give the Niger Delta people a stake in the industry and provide avenues to alleviate the suffering of the people in the region adding that without such funds any governance structure put in place in the region would fail.
According to the group, the passage of the complete Petroleum Industry Bill (PIB) is the only guarantee for a smooth and conducive operational environment in the Niger Delta, as the people of the region cannot guarantee conducive operational base without the protection of their interest.
Another group, the Ndokwa National Youth Movement, NNYM, condemned the removal of the host community development funds from the Petroleum Industry Governance Bill, PIGB, passed by the Senate, describing it as anti-Niger Delta and a slap on the face of oil-bearing communities in the region.
NNYM, in a statement by its National Secretary, Presley Idi, lamented the silence on the enforcement of the Local Content Act in the bill, saying its passage “has further confirmed our belief that Nigeria hates anything that concerns the Niger Delta”.
Representatives of the Ijaw nation also described the Senate’s passage of PIGB, as a display of government disregard for oil host communities. Ijaw nation which made the observation through the Izon-Ebe Oil and Gas Producing Communities Association, IOGPCA, in Warri, Delta State, said, the PIGB as passed by the Senate is a direct opposite of the original Petroleum Industry Bill, PIB.
The Ijaw body stated: “In the original PIB, 2% was set aside for host communities. Surprisingly, it was removed from the PIGB. On composition of governing board, no reference was made to host communities, but that it will be composed by the President. Clear concession would have been accorded host communities.”
Referring the 8th Senate to Ijaw National Congress’s recommendations to the 6th and 7th senates during past public hearings in the days of the PIB, the Ijaws called on the current Senate to immediately commence re-amendment of the PIGB to reflect host communities interests.
On his part, national president of the Foundation for Human Rights And Anti-Corruption Crusade, FHRACC, Mr. Alaowei Cleric, described the passage of the PIGB as a rude shock to indigenes of the oil-rich Niger Delta region. He said, “The passage of the long awaited Petroleum Industry Bill into law by the Senate was a rude shock to us. After carefully reading the Act as passed by the upper legislative chamber, we found out that the Niger Delta region, or rather the oil producing communities, have no place in the Act.”
According to Cleric in a recent interview, “The Senate has indeed made good its vexatious and incisive plan to remove the host communities’ funds, otherwise known as the 10 percent equity shares for the oil bearing communities from the bill. What else do the oil communities have to celebrate the Act when their interest is not protected? The Act as passed, to us, is not different from the existing obnoxious, draconian and inimical laws that governed the petroleum industry.”
He added that new Petroleum Industry Governance Act is still enacted to colonize the Niger Delta people for the Federal Government to continue plunder the region. “The ecologically bastardised and degraded communities in the region have no hope of assuaging their sufferings in the Act. Why must we celebrate a law that designed to keep us in perpetual attrition in midst of vast oil wealth?
“Will the new Act curb the coastal erosions that have been ravaging Okerenkoko, Ogidigben, Sokebulou, Ogulagha, Agge, Ezetu, Bilabiri, Ekeni, Furupa, Akassa, Brass, Nembe City, Bonny and other numerous coastal communities in the Niger Delta region? The answer is definitely no. The 10 percent host communities’ fund was the main trust of the bill. Now that the upper legislative chamber has ungraciously removed it, then the purpose of the bill is defeated.
“The bill as proposed by late President Yar’Adua in 2008 was primarily to address the apathy of oil governance in the Niger Delta region. That was the reason why 10 percent equity shares were voted for the oil communities. We are not concerned about the merger of agencies under the NNPC as such cannot address the problems of the environmental degradation and despoliation as well as the economic deprivation and marginalisation of the oil producing communities.
“What the Senate has done is to stoke the flame of discord between the region and the Federal Government. We will not accept the Act as passed by the upper chamber. We are calling on the House of Representatives to reject the Senate version since its own version has incorporated the much talked host communities funds. No host communities funds, no Petroleum Industry Act,” the group added.