Giving Life to PIB
After over 13 years of failed attempts, the Ninth National Assembly has finally passed the long awaited Petroleum Industry Bill, report Deji Elumoye and Udora Orizu Report
Nigeria, for about one and half decades, has been on a journey with the Petroleum Industry Bill (PIB), with a lot of anticipation and promises, which failed overtime in previous National Assemblies. However, two years into the Ninth Assembly, the two chambers at plenary on July 1, passed the Bill for third reading after duly adopting all the 318 clauses as recommended by the Committee on PIB after some amendments. With this latest development, it seems the Ninth Assembly is set to make history, if the PIB is eventually assented to by President Muhammadu Buhari.
Previous Attempts at Pass the Bill Into Law
The bill was first sent to the National Assembly in December 2008 by the then President Umaru Yar’Adua. A presidential committee set up in 2007 to look into the oil and gas sector came up with the idea of this bill, which aims to increase transparency at the NNPC and to increase Nigeria’s share of oil revenue.
The Bill then was never passed into law due to objections from the International Oil Companies (IOCs) and Nigerian National Petroleum Corporation (NNPC) over the content in its drafts. In 2015, the then Minister of State for Petroleum Resources, Dr. Ibe Kachikwu said, the PIB was to be amended to speed up its passage. Consequently, the Bill was broken into different parts, to address various aspects of the oil industry.
In 2016, the Senate showed signs of readiness to begin deliberations on the Bill, set to be moved for a second reading by the Chairman of Senate Committee on Petroleum (Upstream), Senator Omotayo Alasoadura.
Ahead of the debate on the Bill, Senators from the Niger Delta area, who had moved for the suspension of the bill some months back, because they believed that the non-inclusion of the community demands in the first phase might aggravate the tension in the oil producing areas, concluded plans to meet to brainstorm on the resuscitation of the bill and ensure that the work on its passage moves fast.
The plan to ensure that it was passed before the end of the legislative sitting, for 2016, never became a reality. Again in 2018, a version of the bill, the Petroleum Industry Governance Bill (PIGB), was passed by the 8th National Assembly, but President Muhammadu Buhari refused to assent to it.
Unveiling the New PIB, 2020
Despite failed attempts by the previous assemblies, the passage of the Petroleum Industry Bill is one of the priorities listed out by the Ninth National Assembly in its legislative agenda. Members of the Senate and the House of Representatives, resuming work after their inauguration on June 11, 2019, pledged to break the ‘’jinx’’ around the Petroleum Industry Bill (PIB) and bring about reforms in the oil sector.
President of the Senate, Dr Ahmed Lawan and his counterpart in the House of Representatives, Hon. Femi Gbajabiamila, had at different fora assured that the 9th National Assembly would ensure that the Bill was passed.
President Muhammadu Buhari, on September 29, 2020, transmitted the new PIB to the legislators. The Bill passed through first and second reading without varying views from the lawmakers, and consequently an ad-hoc committee was set up by the House for the public hearings, while the Senate committees on petroleum upstream, downstream and gas, will handle that of Senate.
The new PIB titled: “A Bill for an act to provide legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host community and for related matters’’, amongst others, seeks to scrap the Petroleum Equalisation Fund (PEF) and Petroleum Products Pricing Regulatory Agency (PPPRA) and replace them with a new agency to be known as Nigerian Midstream and Downstream Regulatory Authority (NMDRA), which shall be responsible for the technical and commercial regulation of midstream and upstream petroleum operations in the industry.
The Bill proposes the establishment of Nigerian Upstream Regulatory Commission to be responsible for the technical and commercial regulation of upstream petroleum operations. It further seeks the commercialisation of the Nigerian National Petroleum Corporation (NNPC) to become Nigerian National Petroleum Company to be incorporated under the Companies and Allied Matters Act by the Minister of petroleum.
Stakeholderss Stand
Both chambers of the National Assembly held a two-day public hearing on the Bill to enable stakeholders make their inputs before its final passage. While the Senate held theirs on January 25 to 26th, the House on its part conducted theirs on January 27 to 28th.
At the hearing organised by the Senate Joint Committee on Petroleum Upstream, Downstream and Gas, some major oil producing companies and other stakeholders in the industry still raised concerns over some provisions of the new Bill.
The Chairman of the Oil Producing Trade Section (OPTS), Mike Sangster, who made his presentations on behalf of Total, Chevron, Exxon Mobil and Shell companies expressed dissatisfaction with some provisions of the bill. Major concern raised were deepwater developments, which he said hadcontributed significantly in maintaining Nigeria’s oil production levels by offsetting the decline in the Joint Venture production.
The group complained that the PIB shows that the Deepwater provisions do not provide a favourable environment for future investments and for the launching of new projects. The group said the bill didnot address the key challenges facing gas development in Nigeria, such as inadequate midstream infrastructure, regulated gas pricing, huge and long outstanding debts, etc., thereby potentially jeopardising the realisation of government’s aspirations for the domestic gas sector.
Also, HOSTCOM National President, Mr. Benjamin Style Tams, in his presentation, said it would be absurd and economically illogical to deprive “HostCom” the right to equity shareholding in both the establishment of the NNPC Limited, the commission, the authority and the boards.
At the hearing in the House of Representatives, stakeholders including oil producers, oil producing states, organised labour and various interests groups opposed some provisions in the law, which they argued were not favorable for competition, investments and other activities in the petroleum industry.
In his submission, President of the Nigerian Labour Congress, (NLC) Comrade Ayuba Wabba countered some provisions of the PIB and proposed amendment to involve the labour and enhance productivity in the oil sector.
The public hearing however took a different turn on day two, as members of the host communities engaged in physical altercation before commencement.
The fight broke out when the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) was called to the podium to make presentation by the Chairman of the Ad-hoc Committee on PIB, Hon. Mohammed Monguno, but there was disagreement amongst them leading to exchange of blows until security operatives intervened.
To this end, federal lawmakers and other participants scampered to safety, and reconvened after the dust settled. One of the men involved in the fight, who identified himself, as High Chief Benjamin Tamaranebi, and President of HOSTCOM, speaking to journalists later, said the fight was all about the demand for 10 per cent equity shares by the host communities.
The government had in the PIB proposed 2.5 per cent as royalty for the host communities. But Tamaranebi said it was not enough for the people and therefore demanded upward increase of 10 percent. Monguno announced soon after they reconvened that henceforth members of the communities would only adopt their memoranda and exit the podium, assuring that the panel would visit various communities in the coastal region to properly engage them.
Position of State Governments
Similarly, in their various presentations, some oil producing states such as Delta, Rivers, Bayelsa, Akwa Ibom pushed for inclusion into the boards of the various regulatory commissions.
Rejecting the PIB Again
After the altercation on the final day of the hearing at the House, coalition of Civil Society Organisations (CSOs) and oil-producing communities in the Niger Delta rejected the Petroleum Industry Bill, 2020.
Spokesperson of the CSOs and host communities in the Niger Delta, Botti Isaac accused the House of Representatives Ad hoc Committee on PIB of ignoring the interest of host communities.
He also accused the National Assembly of not allowing a fair and adequate opportunity for vulnerable stakeholders in the region to have a say in the legislative processes towards passing the PIB, as both chambers denied their members access to the public hearing hall.
Isaac opined that the manner the House handled the host communities and civil society contributions in the hearings was deliberately aimed at ensuring critical voices are not heard.
According to him, the current PIB would not protect the host communities as it leaves them at the mercies of the oil companies. He asked the National Assembly to give ample time for host communities to make presentations, adding that the National Assembly could achieve this by working with the state houses of assembly to hold public hearings and reduce the burden of poor community members travelling to Abuja for hearings only to be denied participation.
What the FG Wants
Meanwhile, making its presentation at the hearing, the Chairman, Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) Elias Mbam told the lawmakers that the bill might cut the flow of revenue to the federal government.
He said, “The Commission supports fully the aims and objectives of this Bill. However, there are some areas we are concerned strongly. The Bill did not make reasonable provision on inflow of revenue to the federation. If we have NNPC Limited that is talking about dividends, which may come once a year, how do we guarantee a continuous infow of revenue monthly into the Federation Account?
“Secondly, we are aware that the revenue from Hydrocarbons is a revenue item of the Federation Account but where taxes are deducted from Hydrocarbon revenue, it is the same thing as encroaching on the Federation Account. So we expect that the Bill should not be to the disadvantage of monthly revenue to the Federation Account.
“On the host community funds, the Commission is totally in support of the establishment of community funds. Our concern is the source of the fund. There is subsisting law, which has provided 13% to address issues that are related to community funding. We feel that source of fund should be from that 13%.”
Corroborating Mbam’s position, the Minister of State for Finance, Budget and National Planning, Clement Agba cautioned against losing tomorrow’s future for today’s gains.
He said, ‘’From the Minister of Finance, Budget and National Planning, we are currently engaging our colleagues from the Petroleum sector to harmonize the government views on certain areas, where we see some rooms for improvement. So, as one government when we are through, Honourable Chair, we will be giving you our memorandum.
“We are moving in the right direction with the PIB but it is important that as much as we want to protect today’s revenue, we should look at sustainability. We should look at how revenue streams will continue to flow over the years and these are areas that from the Ministry of Finance, that we are looking at because we don’t want to get all the money today and lose tomorrow’s money”.
Stakeholders Who Support the Bill
Despite the rejection by host communities and other players in the industry, some stakeholders in the oil and gas sector of the Nigerian economy at the hearing took turns to highlight the significant good inherent in the proposed Petroleum Industry Bill.
The stakeholders, amongst whom were the Minister of State for Petroleum Resources, Chief Timipre Silva, the Group Managing Director, GMD, of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari and the Chairman of the Federal Inland Revenue Service, FIRS, Mohammed Nami said, bill when promulgated into law would promote economic growth and bring about the needed vigour and transparency that would in turn engender productivity in the petroleum industry.
National Assembly Still Optimistic on Bill Passage
Lawan and Gbajabiamila in their separate remarks at the public hearings held in both chambers, assured Nigerians that the passage and assent to the PIB would take place before the end of May, 2021.
While declaring the public hearing open at the Senate, Lawan warned against further delay in the passage of the PIB as it will result in more colossal losses to the Nigerian economy.
Gbajabiamila, on his part, said despite the positions of any vested interest, the House of Representatives would ensure that it protects the interest of Nigeria and Nigerians in the Bill. He said though it was a national consensus that there should be a comprehensive reform of the oil and gas industry.
Committee’s Unwavering Faith
Monguno, speaking after the fight that broke out among representatives of the Host communities, asked them to shun any act of violence and promised that the panel would visit and engage them one after another to assess their submissions as contained in their memoranda.
Gbajabiamila, at the resumption of plenary, June 28 announced that the lawmakers would pass the bill in two weeks. He tasked the lawmakers to put all hands on deck to ensure key legislations are passed within two weeks before they embark on their summer break mid July.
Chairman House of Representatives Committee on Host Communities, Hon. Dumnamene Dekor, during a briefing with journalists said the lawmakers were considering all the petitions before it would send to by the various oil communities in the Niger Delta before the passage of the Bill.
The lawmaker who appealed for the patience and understanding of Nigerians, particularly the people of the Niger Delta region, assuring them that the Bill would bring positive returns to all the stakeholders.
Finally, Senate Passes PIB Amid Chaos
The Senate amid chaos, last week, finally passed the Bill. The Bill was passed after the lawmakers considered the report of the Joint Committees on Petroleum (Upstream and Downstream) and Gas Resources at the plenary.
The passage of the Bill was also sequel to a closed door meeting with Sylva and Kyari. The duo appeared before the Senate to provide the lawmakers with technical details of the legislation as well as provide clarification where needed.
In the approved bill, the Senate approved a funding mechanism of 30 per cent of NNPC’s profit from oil and gas for frontier basins. This fund is for oil exploration in frontier states.
However, the passage of the bill was preceded by disagreement and division among the lawmakers. The lawmakers had started the clause-by-clause consideration of the bill when some lawmakers began to raise concerns in Clause 240. The bill had proposed 2.5 per cent Equity Share Holding for Host Communities while the committee recommended five per cent.
When the lawmakers got to Clause 240, Katsina senator, Babba Kaita, proposed that the amount for the fund be reduced from five per cent as proposed by the committee to three per cent.
Lawan put the question to a voice vote and despite resounding nays, it was passed. This generated noise in the chamber as some South-south senators faulted the ruling.
Senator James Manager then called for another vote opposing the initial vote, again Lawan ruled in favour of Mr Kaita’s amendment. Akwa Ibom Senator, Albert Bassey, was next to oppose the three percent fund. He explained that the reason of the recommended five per cent fund for host communities is so it can be used to remedy unfortunate incidents that may affect the assets.
His comment was greeted by more chaos. And in the midst of the noise, Rivers lawmaker, George Sekibo, raised a Point of Order, requiring that Lawan put the question to vote a second time. And if his opinion is again challenged, he shall call each senators name to vote. This time, the Senate Leader, Abdullahi Yahaya appealed to Sekibo to withdraw the order.
“This Senate has come a long way. We have never treated ourselves this way. We are embarking on a very dangerous journey. We have had and cherished unity. This is a path to Armageddon. I appeal to my brother and friend Senator Sekibo to withdraw the point of Order,” Yahaya said.
Sekibo withdrew his order but pleaded with his colleagues to increase the amount a little higher. But his appeal was ignored by the Senate President. Amid murmurings, the lawmakers continued the consideration and eventually passed the bill.
Some of the major amendments to the bill, according to the Chairman of the committee, Mohammed Sabo, who presented the report earlier, explained that the bill of five chapters, deals with creating efficient and effective governing institutions with clear and separate roles for the petroleum industry and promoting transparency and accountability in the administration of the petroleum resources of Nigeria, among others.
After the bill was passed, Lawan commended everyone involved in the legislative work describing the act as a milestone.
…The House Too
The House of Representatives, on its part, considered and adopted the report on the PIB for passage during its Committee of the Whole session at the plenary July 1. The adoption followed the consideration of all 318 clauses of the Bill, presented by Chairman of the Adhoc Committee on the PIB, Hon. Mohammed Tahir Monguno.
Section 240, subsection 2 of the Bill that prescribes 2.5 per cent equity for the host communities was amended to provide for 5 per cent, for their development and compensation.
Moving the motion earlier for the consideration of the report, Mongunu said by passing the bill into law, the House would have written its name in gold.
“We need to pass this bill so that our name will be written in gold. By passing this bill, the bill seeks to bring governance issue in the oil Industry in tandem with the international best practice. It will unbundle NNPC so that NNPC will be NNPC limited and metamorphose into a limited liability company.
“The bill seeks to create a commission in the oil and gas industry for the purpose of bringing governance in a transparent manner with a viewing to making Nigerian oil gas industry competitive and attract more investments. Against this background, the passage of this bill has eluded the previous assembly. We should pass this bill so that our names will be written in gold”, he said.
Speaking after the consideration of the report in the Commitee of the Whole, 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 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.
Addressing the Press after the passage, Mongunu offered more insights to the advantages inherent in the bill.
He said two bodies were created by the bill to adequately take care of the industry.
“The petroleum industry Bill has suffered over the years in previous assemblies. But this time around, the 9th House of Representatives decided to take the bull by the horn, and passed the Bill. We decided to pass it with the speed of light, because of the urgency it demands. Nigeria has lost a lot in terms of direct foreign investment in our oil and gas industry, as a result of obsolete laws affecting oil and gas industry. Abroad, their oil and gas law, is in tandem with international best practices.
“Under the bill, we created a commission and also an authority. The commission will be responsible for the regulatory aspect, while the authority Will be responsible for the day to day running.
“The NNPC as it is today will metamorphose into a cama company. It will be NNPC Limited, so that its operation will be commercial oriented, devoid of political interference and the much needed dividends will be brought 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 were also amended to 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.
“There is also five per cent that has been recommended for the host communities, because of the degradation occasioned by the exploration of oil. In oil producing areas, their environment has been degraded. They have lost their means of livelihood and as such, there is need for at least five per cent of the operating cost of oil companies to go to the host communities,” he explained amongst other advantages of the bill.
The two chambers of the National Assembly will have to convene a conference to harmonise their position on the percentage ratio to the host communities.Once a common position is arrived, which is currently put at three per cent at the Senate and five per cent at the House, the Bill will be cleaned up. Once the harmonisation is done, the Bill will now be transmitted to President Muhammadu Buhari for his assent.
Hopefully, the President will assent to the bill because most of the clauses in the bill had Executive input more so the bill was an executive bill sent to the Assembly in the wake of the Ninth Assembly.
