President Muhammadu Buhari has
rejected the historic Petroleum Industry Governance Bill (PIGB) as passed by
the national assembly.
The proposed law, which was
conceived to liberalise the governance structure of Nigeria’s oil industry, is
one of the four bills in which the omnibous Petroleum Industry Bill (PIB) was
broken into by the legislature after over a decade of motion without movement.
TheCable reports that Buhari has sent back the bill to the national assembly on three grounds.
One, Buhari said the bill, if
signed into law, would whittle down his power as minister of petroleum
resources.
Two, he said all the ministers he
consulted over PIGB refused to support his signing it into law.
Three, the president said he did
not see any “fiscal content” of the bill.
However, a separate
law, Petroleum Industry Fiscal Bill (PIFB), is currently being considered
by the lawmakers.
The other subsets being
considered are: Petroleum Industry Administration Bill (PIAB) and the Petroleum
Host Community Bill (PHCB).
Buhari’s refusal to sign PIGB
into law will be regarded as a big set-back for the reform of the oil industry
after years of campaigns and controversies.
The harmonised bill was passed by
both chambers of the national assembly on March 28, 2018.
The bill arrived Aso Rock on
Tuesday, July 3, 2018 — after a series of back and forth at the national
assembly.
Below are nine highlights of the
provisions of the PIGB as passed by the national assembly.
NNPC OUT, NPC IN
The provisions of the regulatory
bill state that NNPC will be restructured by splitting the assets and
liabilities of the company. This essentially means that much of what comprises
NNPC today, including the refineries, the Nigerian Petroleum Development
Company (NPDC) Ltd and the joint venture (JV) assets, will be
transferred to the proposed National Petroleum Company (NPC). The NPC will not
be subject to the provisions of the Fiscal Responsibility Act 2007 and the
Public Procurement Act 2007.
THE NEW ENTITIES
The bill proposes the
establishment of the Nigerian Petroleum Regulatory Commission (NPRC), the
Petroleum Equalization Fund (PEF) and the incorporation of three commercial
entities including the Nigeria Petroleum Assets Management Company (NPAMC),
National Petroleum Company (NPC) and the Nigeria Petroleum Liability Management
Company (NPLMC). The NPRC which will be formed by merging the Department of
Petroleum Resources (DPR) and the Petroleum Products Pricing Regulatory Agency
(PPPRA). It will be the regulatory entity for the whole industry. The NPAMC
will manage production sharing contracts and back-in rights provisions, while
NPC will be in charge of current NNPC joint ventures with international oil
companies (IOCs) upon incorporation.
FUNDING THE NEW ENTITIES
The bill states that the funding
of the NPRC shall be from the appropriation act through the national assembly.
A five percent levy on all fuel sold and distributed within the federation will
finance the PEF, subject to appropriation by the national assembly. The NPAMC
will be funded by the national assembly appropriation for the initial
capitalization and subsequent financing of the company while NPC will also be
funded by appropriation through the national assembly for the initial
capitalization.
THE PETROLEUM EQUALISATION
FUND (PEF)
PEF will ensure “economic balance
of petroleum prices across all regions”. Uniformity is meant to be
achieved through re-reimbursement of oil marketing companies for any loss that
they incur solely and exclusively as a result of the transportation of
petroleum products and for their provision of financing for infrastructural
development throughout the federation. The PEF will determine the amount of
reimbursement due to any oil marketing company for the purposes of equalizing
products prices.
NO MORE REGULATORY OVERLAP
Full responsibility for
environmental matters in the petroleum industry is now vested in the NPRC and
not the federal ministry of environment. The NPRC is toensure strict
implementation of environmental policies, laws, regulations and standards as it
pertains to oil and gas operations. The regulatory body will also promote the
healthy, safe and efficient conduct of all petroleum operations in an
environmentally friendly and sustainable manner. However, the bill adds a
clause that includes a voluntary collaboration of the commission with the
Ministry of Environment.
MINISTER’S POWERS REDUCED
The minister of petroleum has
been stripped of absolute power to incorporate other entities to assume
and manage some of the liabilities of the NNPC. Under the petroleum act and the
oil pipelines act, the regulatory functions of the minister of petroleum
resources will be transferred to the NPRC, which will be governed by a nine-man
board with a fixed tenure. The board’s composition includes one representative
each from the ministries of petroleum resources, finance, and environment. The
commission is vested with the power to make regulations, similar to the powers
of the minister of petroleum resources under the petroleum act but the PIGB
enables the minister to retain certain powers of discretion to “do all such
other things as are incidental and necessary” for the performance of his
ministerial functions.
EXPANDED REPRESENTATION
The number of executive directors
of the NPAMC increased from three to four. Similarly, the NPRC will have a
governing board made up of 11 commissioners. The number commissioners also
increased from nine to 11 in order to ensure proper coverage of the industry
regulatory functions while the number of non-executive commissioners increased
from 1 to 2 in order to strengthen the board. The bill requires that the
principles of federal character in making the appointments into the governing
board. Appointment and removal of the commissioners are subject to senate
approval.
INCREASED SHAREHOLDER
PARTICIPATION
PIGB requires federal government
to divest 10 percent of shareholding in the NPC in a transparent manner, within
five years from the date of incorporation. An additional 30 percent is to be
further divested within 10 years from the date of incorporation. This means
that citizens can own a stake in the national oil company subject to any terms
put forward for the privatisation exercise.
ALIGNMENT TO PUBLIC
PROCUREMENT ACT
The NPRC is subject to the public
procurement act and a corporate governance code will be defined for the
Nigerian Stock Exchange for the NNPC successor companies. The, NPC however,
will not be subject to the provisions of the Fiscal Responsibility Act 2007 and
the Public Procurement Act 2007.
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com