There is no doubt that the PIGB will help strengthen the institutional and governance structure of the petroleum industry with the promotion of transparency and accountability. But there are still pertinent questions that need to be addressed: Will the PGIB, as passed by the Senate, help to address fundamental questions that will lead to the creation and expansion of national wealth or is it another elite tinkering with formula for sharing extractive resources? Has it taken care of all the problems that inhibit growth in the sector? Will it be acceptable to the other tiers of government i.e. states and local governments that also have stakes in the sector? Have all the governance issues in the oil and gas sector been addressed?....While dismantling the NNPC may excite many Nigerians, given what the company has represented over the years, experience has also shown that the entrenched government reflex of creating new agencies to deal with systemic challenges has only led to the relocation of the various seats of abuse, rather than its elimination.While we must commend the Senate for the passage of the PGIB, even as we hope that the House of Representatives will speed up their own process so that there can be a harmonious version to assent, it is important that the lawmakers see this as the beginning of their work. As they work on the enabling legislation, they must engage the oil and gas sector with a good sense of history, the highest level of patriotism and in accordance with the interest of the Nigerian people
Passage of Petroleum Governance Industry Bill – Thisday
It is a significant step in the right direction
In a small but significant step geared towards repositioning the oil and gas sector in the country, the Senate last Thursday completed the passage of the governance component of the Petroleum Industry Bill. With a new structure that takes the oil industry assets and control from the Nigerian National Petroleum Corporation (NNPC), the passed bill, if and when it eventually becomes law, will achieve the strategic objective of freeing the oil industry from the stranglehold of a perennially corrupt machinery of government.
However, against the background that the Seventh Assembly of the House of Representatives also passed a variant of the PIB that lapsed because there was no concurrence by the Senate, it may be too early to crow about the passed bill. Besides, the Petroleum Industry Governance Bill (PGIB) is just one of the five bills proposed by the National Assembly after 17 years of tinkering with several drafts, which means that there is still a long way to go before there are laws governing every aspect of the oil and gas industry in Nigeria.
The PGIB passed by the Senate scrapped the NNPC, the Department of Petroleum Resources (DPR), the Petroleum Products Pricing and Regulatory Agency (PPPRA) as well as several government agencies in the oil sector while creating new entities to oversee activities in the sector. These new entities are the National Petroleum Company (NPC), the National Petroleum Assets Management Commission (NPAMC) and the National Petroleum Regulatory Commission (NPRC). Under the new governance structure, the NPC would operate as a profit-driven commercial entity while the NPAMC would be a single petroleum regulatory commission, with a clear mandate to oversee the sector.
The passed bill also saddles the commission with the responsibility for health and safety regulations in the industry and would collaborate with the Ministry of Environment on environmental issues. The commission is expected to be funded through the retention of 10 per cent of the revenue it generates though the expenditure is subject to appropriation by the National Assembly. Meanwhile, the NPRC will replace and take over the functions of the PPPRA and DPR when the PIGB finally becomes law.
There is no doubt that the PIGB will help strengthen the institutional and governance structure of the petroleum industry with the promotion of transparency and accountability. But there are still pertinent questions that need to be addressed: Will the PGIB, as passed by the Senate, help to address fundamental questions that will lead to the creation and expansion of national wealth or is it another elite tinkering with formula for sharing extractive resources? Has it taken care of all the problems that inhibit growth in the sector? Will it be acceptable to the other tiers of government i.e. states and local governments that also have stakes in the sector? Have all the governance issues in the oil and gas sector been addressed?
Again, there are other issues.
While dismantling the NNPC may excite many Nigerians, given what the company has represented over the years, experience has also shown that the entrenched government reflex of creating new agencies to deal with systemic challenges has only led to the relocation of the various seats of abuse, rather than its elimination.
While we must commend the Senate for the passage of the PGIB, even as we hope that the House of Representatives will speed up their own process so that there can be a harmonious version to assent, it is important that the lawmakers see this as the beginning of their work. As they work on the enabling legislation, they must engage the oil and gas sector with a good sense of history, the highest level of patriotism and in accordance with the interest of the Nigerian people
--SUMMARY
PIB = Petroleum Industry Bill
PIB = PIGB: Petroleum Industry Governance Bill
+ PFFB: Petroleum Fiscal Framework Bill
+ PIDAB: Petroleum Industry Downstream Administration Bill
+ PIRMFB: Petroleum Industry Revenue Management Framework Bill
+ PHCB: Petroleum Host Community Bill.
PIGB: NNPC ====================> NPC: National Petroleum Company
and
====================> NPAMC: Nigeria Petroleum Assets Management Company
PPPRA + DPR + PEF etc. ======> NPRC: Nigeria Petroleum Regulatory Commission
"The PIGB, which is the first leg of the 17-year-old Petroleum Industry Bill (PIB), which has been broken into five separate bills by the 8th Senate, scraps the NNPC, the Department of Petroleum Resources (DPR), the Petroleum Products and Pricing Regulatory Agency (PPPRA) and several government agencies in the oil sector and now creates three new entities to oversee activities in the sector. The three new entities are the National Petroleum Company (NPC), the National Petroleum Assets Management Commission (NPAMC) and the Nigeria Petroleum Regulatory Commission (NPRC)......The NPRC would replace and take over the functions of PPPRA and DPR..."
----
"We supported and enhanced the creation of an independent one-stop-shop regulatory agency, which will absorb the present Department of Petroleum Resources, Petroleum Products Pricing Regulatory Agency and the Petroleum Equalisation Fund into one agency. "We have streamlined and sharpened the role of the Minister (of Petroleum Resources). We have also enhanced the extensive reform of NNPC into two limited liability companies – the National Petroleum Company and the Nigeria Petroleum Assets Management Company – to ensure efficient and effective commercial performance...."
-----
"He said the unions expected the passage of other aspects of the PIB, namely, the Petroleum Fiscal Framework Bill; Petroleum Industry Downstream Administration Bill; the Petroleum Industry Revenue Management Framework Bill; and the Petroleum Host Community Bill....."
My People:
Note: 1. The PIGB has NOT been enacted - just passed by the Senate so far - and hence is NOT law yet.
2. Until the other four bills are passed, the original PIB remains an amputee bill.
And there you have it.
Bolaji Aluko
----
-
THIS DAY
Senate Scraps NNPC, others in New Petroleum Industry Governance Bill
- It's promise fulfilled, says Saraki
- Crude oil price stabilises at $53 as OPEC extends output cut
Damilola Oyedele, Chineme Okafor, James Emejo, Onyebuchi Ezigbo in Abuja and Ejiofor Alike in Lagos
The ding-dong over a legal regime that would reform and make the petroleum industry more transparent and efficient began a homeward stretch Thursday as the Senate passed the Petroleum Industry Governance Bill (PIGB).
The bill, when concurred to by the House of Representatives and assented to by the president, would institute a new governance structure in the management of the nation's oil industry assets and its manager, the Nigerian National Petroleum Company (NNPC).
The Senate gave the bill its nod on a day crude oil prices dropped $1.24 a barrel to $52.72 before regaining ground at $53.76 as the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members decided to extend cuts in oil output by nine months to March 2018.
The PIGB, which is the first leg of the 17-year-old Petroleum Industry Bill (PIB), which has been broken into five separate bills by the 8th Senate, scraps the NNPC, the Department of Petroleum Resources (DPR), the Petroleum Products and Pricing Regulatory Agency (PPPRA) and several government agencies in the oil sector and now creates three new entities to oversee activities in the sector.
The three new entities are the National Petroleum Company (NPC), the National Petroleum Assets Management Commission (NPAMC) and the Nigeria Petroleum Regulatory Commission (NPRC).
Under the new governance structure, the NPC would be an integrated oil and gas company, operating as a fully commercial entity that will run like a private company, while the NPAMC would be a single petroleum regulatory commission, which would focus mainly on regulating the industry.
The bill also saddles the commission with the responsibility for health and safety regulations in the industry, and would collaborate with the Ministry of Environment on environmental issues.
The regulatory commission would be funded through a retention of 10 per cent of the revenue it generates for the government of the federation. The expenditure is however subject to appropriation by the National Assembly.
The NPRC would replace and take over the functions of PPPRA and DPR.
The rite of final passage began when the bill was read the third time and the Committee of the Whole considered the Report of the Committee on Petroleum Upstream, Petroleum Downstream and Gas presented by Senator Donald Alasoadura. It then went through the clause-by-clause ritual with minor amendments before it was passed.
"We made a commitment and it's being fulfilled," an elated Senate President Bukola Saraki said, adding: "This bill is not only for Nigerians but for our investors. We are proud of what has been done."
Saraki's excitement is understandable given the fact that the PIB had been with the National Assembly since 2000 but had suffered passage delays because of objections and concerns raised by International Oil Companies (IOCs) who felt threatened by the fiscal regimes proposed by the bill.
The 8th Senate, therefore, decided to split the bill into five, isolating the contentious fiscal issues in separate bills, for easier passage.
However, the PIGB still has another hurdle to overcome as the House of Representatives has a different version before it.
The House of Representatives said Thursday that it did not yet have a specific timeline for the passage of the bill. The deputy spokesman of the House of Representatives, Hon. Gaza Gbefwi, told reporters that the lower chamber was still carefully considering inputs made by local and international stakeholders during a seminar on the bill last year.
The passage got positive reviews from industry stakeholders Thursday describing it as a welcome development that would create a vibrant industry.
Speaking to THISDAY, the Chief Executive Officer of Seplat Petroleum Development Company (SPDC), Mr. Austin Avuru, said the passage of the bill would set the tone on how the oil and gas industry should operate."It is a welcome development. That is the governance bill and it sets the tone on how the industry should operate," said Avuru, whose company is listed on both the London and Nigerian Stock Exchanges. He expressed the hope that the lawmakers would also pass the second aspect of the bill that governs the fiscal regime before the end of this year.
Avuru urged the Senate and the House of Representatives to harmonise the different versions of the bill before them.
The Chief Executive Officer of the International Energy Services, Dr. Diran Fawibe, commended the upper chamber for passing the bill.
He said the passage by the Senate would put pressure on the House of Representatives to pass their own version for both chambers to harmonise the bill for the benefit of Nigeria."We have to commend the Senate for taking the right step in the right direction. That is what is expected of the upper chamber because the bill has been languishing in the National Assembly for over 10 years," he said.
The All Progressives Congress (APC) commended the Senate on the passage of the bill.
"We are very excited that the bill was passed today after about 12 years delay. We specially commend the Senate President, Dr. Bukola Saraki, for his focused leadership of the 8th Senate, which has produced several legislative actions that have positively affected the lives of Nigerians, promoted good governance and advanced on-going efforts by the APC-led administration to rebuild the country," the party said in a statement Thursday by its National Publicity Secretary, Malam Bolaji Abdullahi."The passage of the bill is an indication that our federal legislators are diligent and reform-minded, and are committed to fulfilling the promises our party made to Nigerians," he said, calling on the House of Representatives to follow the example of the Senate by also promptly passing the bill.
Crude Oil Price Stabilises at $53
Meanwhile, crude oil price Thursday dropped $1.24 a barrel to $52.72 before peaking at $53.76 as OPEC and non-OPEC member countries decided to extend cuts in oil output by nine months until March 2018.
While the global benchmark, Brent crude oil traded at $53.76, the US light crude traded at $51.16 per barrel.
Non-OPEC oil producers led by Russia agreed Thursday to join OPEC in extending production cuts for nine months until March 2018, Reuters quoted OPEC delegates as saying.The combined cap on oil output for the OPEC and non-members was agreed at around 1.8 million barrels per day.
The next OPEC and non-OPEC meeting is scheduled for November 30, 2017, delegates said.Reuters reported that the cuts are likely to be shared again by a dozen non-members led by top oil producer Russia, which reduced output in tandem with the oil cartel from January.
OPEC's cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets.
Crude oil's earlier price decline, which started in 2014, forced Russia and Saudi Arabia to tighten their belts and led to unrest in some producing countries including Venezuela and Nigeria.
The price rise this year has spurred growth in the U.S. shale industry, which is not participating in the output deal, thus slowing the market's rebalancing with global crude stocks still near record highs.
OPEC oil ministers were continuing their discussions in Vienna as at press time Thursday after three hours of talks.
Non-OPEC producers were scheduled to meet OPEC later in the day.In December, OPEC agreed its first production cuts in a decade and the first joint cuts with non-OPEC members, led by Russia in 15 years. The two sides decided to remove about 1.8 million barrels per day from the market in the first half of 2017, equal to 2 per cent of global production.
Despite the output cut, OPEC kept exports fairly stable in the first half of 2017 as its members sold oil from stocks.
The move kept global oil stockpiles near record highs, forcing OPEC first to suggest extending cuts by six months, but later proposing to prolong them by nine months and Russia offering an unusually long duration of 12 months.
"There have been suggestions (of deeper cuts), many member countries have indicated flexibility but … that won't be necessary," Saudi Energy Minister Khalid al-Falih said before the meeting.
Falih also said Saudi oil exports were set to decline steeply from June, thus helping to speed up market rebalancing.
OPEC sources have said meeting would highlight a need for long-term cooperation with non-OPEC producers.The group could also send a message to the market that it will seek to curtail its oil exports.
"Russia has an upcoming election and Saudis have the Aramco share listing next year so they will indeed do whatever it takes to support oil prices," said Gary Ross, head of global oil at PIRA Energy, a unit of S&P Global Platts.
OPEC has a self-imposed goal of bringing stocks down from a record high of 3 billion barrels to their five-year average of 2.7 billion.
"We have seen a substantial drawdown in inventories that will be accelerated," Falih said. "Then, the fourth quarter will get us to where we want."--------------------
PUNCH
UPDATED: Senate passes PIGB, unbundles NNPC
Leke Baiyewu, Abuja
The Senate, on Thursday, passed the Petroleum Industry Governance Bill, which seeks to unbundle the Nigeria National Petroleum Corporation and merged its subsidiaries into an entity.This was part of the recommendations in the report by the Joint Committee on Petroleum (Upstream, Downstream and Gas) on the PIGB, which was adopted by the Senate at the plenary on Wednesday.
While presenting the report, the Chairman, Senate Committee on Petroleum (Upstream), who is also Chairman of the Joint Committee on Petroleum, Senator Tayo Alasoadura, said some subsidiaries of the NNPC had also been merged into an entity to be known as the Nigeria Petroleum Regulatory Commission.
He 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, Petroleum Products Pricing Regulatory Agency and the Petroleum Equalisation Fund into one agency.
"We have streamlined and sharpened the role of the Minister (of Petroleum Resources). We have also enhanced the extensive reform of NNPC into two limited liability companies – the National Petroleum Company and the 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."
------------------------------
----- PUNCH
Senate passes petroleum governance bill 14 years after …APC, NUPENG, PENGASSAN hail passage
John Ameh, John Alechenu, Leke Baiyewu and 'Femi Asu
The Senate on Thursday passed the Petroleum Industry Governance Bill, which seeks to unbundle the Nigerian National Petroleum Corporation and merged its subsidiaries into a single entity.
The passage of the bill came 14 years after the original Petroleum Industry Bill was drafted and submitted to the National Assembly.
The PIGB, formerly known as the Petroleum Industry Bill, had suffered setbacks since 2003 when it was first sent to the National Assembly.
This was part of the recommendations in the report by the Joint Committee on Petroleum (Upstream, Downstream and Gas) on the PIGB, which was adopted by the Senate at the plenary on Wednesday.
While presenting the report, the Chairman of the committee, who is also the Chairman of the Joint Committee on Petroleum, Senator Tayo Alasoadura, said some subsidiaries of the NNPC had also been merged into an entity to be known as the Nigeria Petroleum Regulatory Commission.
President of the Senate, Bukola Saraki, who presided over the plenary, said the bill had been in the National Assembly "for many years and we have not been able to pass it."
He added that a commitment was made at the beginning of the eigth Senate that the bill would be passed.
Saraki said, "This is a bill that not only Nigeria, but our friends and investors in the petroleum sector have been waiting for us to put a framework that will ensure transparency and accountability, and create an enabling environment for the petroleum sector to stimulate growth in the sector.
"We hope that by what we have done today, we will continue to show the kind of commitment and leadership and contribution to develop this country. We are proud of what we have all done today. We gave the commitment and we have passed this bill. It had not been possible for many years but we have done it now.
"I hope that with this bill, the oil and gas industry will begin to see the new kind of investments that is necessary. We will plug the loopholes; we will be able to reduce the areas of corruption and inefficiency; our people will be able to benefit better in the petroleum sector and Nigerians will be better for it."
The proposed NPRC is expected to be a one-stop-shop in the petroleum industry. It will also be allowed to retain 10 per cent of the revenue it generates as the cost of collection.
The proposed entity will be saddled with the responsibility of promoting efficient, effective, safe and sustainable infrastructural development of the industry, while ensuring compliance with all applicable laws and regulations governing the sector.
The commission will also be in charge of implementation and maintenance of technical standards, codes and specifications in the industry in line with global best practices.
On December 7, 2016, at the public hearing held on the bill, the NNPC and workers in the oil industry had differed on the proposal to unbundle the corporation.
A proposal to amend the Nigerian National Petroleum Corporation Act, 2004, failed on the floor of the House of Representatives on Thursday as members rejected it.
The bill, which sought to "enhance financial and fiscal discipline in the conduct of transactions by the NNPC" was sponsored by a member from Imo State, Mr. Nnana Igbokwe.
Igbokwe sought to amend the extant law of the oil corporation to make a provision that the NNPC should submit its budgetary estimates for next year to the President four months to the expiration of the current financial year.
He said his intention was to bring the NNPC to act in line with a similar provision of the Fiscal Responsibility Act, 2007.
However, members opposed the proposed amendment on the grounds that it was in conflict with the FR Act, a more recent law that set the timeline on how estimates should be presented to the National Assembly.
Incidentally, it was the Speaker, Mr. Yakubu Dogara, who led the opposition.
Dogara observed that Igbokwe's proposal would mean a repetition of a provision already adequately captured by the FR Act.
He also pointed out that the NNPC was one of the 39 agencies listed under the FR Act, which were required to attach their budgets to the national budget for onward transmission to the National Assembly by the President.
Dogara noted that the amendment could only be worth the effort if the laws setting up all the other agencies were amended as well.
Igbokwe alluded to the absence of the PIGB when he said he proposed the amendment in the interim, while the passage of the PIGB was being awaited.
When asked to explain the delay in the passage of the PIGB, the Deputy Chairman, House Committee on Media and Public Affairs, Mr. Gaza Jonathan, said the House was still working on it.
He stated, "We pay due respect to best practices. What we are doing is to pass a bill that will stand the test of time. We have held a world class seminar on the PIGB, where the views of Nigerians and experts were collated.
"We are working on those views to ensure that we have a realistic PIGB in operation when it is passed."
Jonathan refused to give a specific date when the bill would be passed.
Meanwhile, the All Progressives Congress has commended the Senate for passing the Petroleum Industry Governance Bill, describing the development as historic.
The party said the bill had sought to introduce reforms that would ensure greater transparency and accountability in the Nigerian oil and gas industry.
The National Publicity Secretary, APC, Bolaji Abdullahi, said this in a statement in Abuja on Thursday.
He said, "The party notes that the bill had languished in the various chambers of the National Assembly for about 12 years, but it took the purposeful and dedicated APC-led Senate to pass the bill.
"We are very excited that the bill was passed today after about 12 years' delay. We specially commend the Senate President, Dr. Bukola Saraki, for his focused leadership of the 8th Senate, which has produced several legislative actions that have positively affected the lives of Nigerians, promoted good governance and advanced ongoing efforts by the APC-led administration to rebuild the country.
"The passage of the bill is an indication that our federal legislators are diligent and reform-minded, and are committed to fulfilling the promises our party made to Nigerians."
According to the statement, the party urged the Yakubu Dogara-led House of Representatives to follow the example set by the Senate by also promptly passing the PIGB.
The APC urged Nigerians to continue to support and cooperate with the President Muhammadu Buhari administration and the National Assembly as they continue to make laws and execute projects to improve the well-being of the citizens.
The Nigerian Union of Petroleum and Natural Gas Workers and the Petroleum and Natural Gas Senior Staff Association of Nigeria have commended the Senate for the passage of the PIGB.
The PIGB is one of the parts in which the long-delayed Petroleum Industry Bill was split into after it suffered setbacks in two consecutive legislative tenures.
The PIB seeks to overhaul the nation's oil and gas industry, which has been hobbled by corruption and mismanagement for decades.
The Chairman, NUPENG and PENGASSAN Petroleum Industry Bill Committee, Mr. Chika Onuegbu, said in a statement, "This is indeed a milestone achievement, especially when you consider that the PIGB is not an Executive Bill.
"Also, when you consider that Nigeria has lost over N235bn 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 PIGB into law by the House of Representatives and also eventual assent by the President of Nigeria."
He said the unions expected the passage of other aspects of the PIB, namely, the Petroleum Fiscal Framework Bill; Petroleum Industry Downstream Administration Bill; the Petroleum Industry Revenue Management Framework Bill; and the Petroleum Host Community Bill.
Onuegbu said, "The passage of the PIGB, while commendable, will not deliver the full benefits of the intended reforms except the other aspects of the PIB are also legislated."
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