Petroleum Industry Bill: Is this proposed law already ambushed? · Lawyers examine conspiracy theory KAYODE KETEFE The petroleum Industry Bill 2008 now pending before the National Assembly since 2008 years is a product of a report submitted by the Oil and Gas Reform Implementation Committee (OGIC) set up by the Federal Government under former President Olusegun Obasanjo. The committee was saddled with the responsibility to carry out a comprehensive reform of the oil industry with a view to bring Nigerian system under the international best practices and to replace the opaqueness haunting our oil industry with transparency. The Bill which has 495 sections laid out in whopping ten parts comprising 189 pages, have been lauded by experts as the first authentic step to improve the nation's oil and gas sector since Oil and gas production in Nigeria commenced in 1958 sequel to first discovery two years earlier in Oloibiri, (now in Bayelsa State.) It is described as a most comprehensive piece of legislation creating a legal and regulatory framework for redeeming the nation's ailing oil-industry. It has created a one stop legislative shop encompassing all the previous legislations on the petroleum industry by combining all 16 different Nigerian petroleum laws in a single document which has transparency as its thematic focus. Some of the main laws that have been incorporated into this Bill are the Petroleum Act 1969 (as amended) and the Petroleum Profits Tax Act 1959 (as amended), and the Nigerian National Petroleum Corporation Act of 1977(as amended). The PIB establishes the legal and regulatory framework, institutions and regulatory authorities as well as stipulating guidelines for operations in the upstream, midstream and downstream sectors of the Nigerian petroleum industry. It makes provisions on interrelated issues like Institutions in oil industry, Fundamental Objectives, , Upstream Petroleum Joint Ventures, Downstream Licensing, Downstream Products, Indigenous Oil Companies and Nigerian Content, Health, Safety and Environment, Fiscal Provisions, Repeals and Transitional Provisions and Interpretation.. In specific terms the Bill provides for a number of innovations. Under different sections, it proposes the creation/reformation of seven institutions. These are National Petroleum Directorate (s. 12); Nigerian Petroleum Inspectorate (s.37); Petroleum Products Regulatory Authority; National Petroleum Assets Management Agency (s. 113); Nigerian Petroleum Research Centre (s.148); National Frontier Exploration Service (s.174); Petroleum Technology Development Fund (s. 223) and Petroleum Equalisation Fund (s.199). While a number of these institutions are existing under the present statutes, a number of them are new formations. Section 136 of the Bill creates the Nigeria National Petroleum Company Limited as a successor to the existing NNPC. The NNPCL which will also inherit the latter's assets and liabilities, is scheduled to be owned 100 per cent at inception by the Federal Government, who may divest within two years and sell shares to members of the public. Under section 286, an attempt is made to ensure greater environmental awareness and protection as states and Local Governments are required to pay 1% and 0.5% of their annual derivation allocation into what is called "Remediation Fund" which shall be applied by an inspectorate created for the purpose to restore the environment in cases of damages caused to the environment as a result of sabotage. The bill reaches into all the facets of the petroleum industry and it liberates the sector from all the government constraints and impediments which hitherto rock the industry, rendering it unattractive to both local and international investors. It gives incentives to both small and big players in the industry through transparent and fair rules of participation. The concept of good corporate governance is also evident in the provisions of bill, which also features strong fiscal framework beneficial to the country. In a nutshell, it moves Nigeria clearly towards the international best practices in the extractive sector. Furthermore, the bill has far reaching provisions on the issues of Nigerian content. For example it provides that no project can be approved without a comprehensive "Nigerian Content Plan" which must include includes obligations on the part of the investor to purchase local goods and services, increase employment as well to focus on training, education research and development. It also requires the foreign investors to follow guidelines in order to assist local companies. Adherence to the provisions of the bill will surely boost the purchase of local goods and services leading to higher employment opportunities for Nigerians. Series of landmark provisions are also addressed in the bill to correct the anomalies of the current petroleum regime. For example it is a notorious fact that the Deep Sea Water Blocks contract that Nigeria entered into in 1993 with foreign investors is one of the worst contracts any oil-exporting nation can enter into as it seems to foster unilateral advantages only on the foreign partners with Nigeria having very little or no gains under the production sharing formula in the agreement. The royalties accruable to the country are Zero per cent! The foreign partners take I00 per cent of the products. Even the taxes system under the said "bad deal" contract does not provide much benefit for the country as the tax regime included generous tax credits to these foreign investors which wiped out a great percentage of the collectible tax by the Federal Government. Now under the bill, there are a number of provisions on ventures like Deep Water operations that are much more beneficial to the countries and comparable to what other oil-exporting nations do collect under such contracts. In totality, the Bill would both eradicate the practice of discretionary award of licenses and contracts in the upstream sub-sector of the industry, as well as ensuring that only genuine investors with appropriate technical and financial capacity get the oil licenses. In spite of all the advantages described above, it is very surprising and worrisome that the National Assembly since 2008 has not given it the urgent attention it deserves by passing it into a law. As a matter of fact there is a school of thought that believes that some cabalistic vested interests are the brains behind the non-passage of the bill through underground machinations. There is a belief that a regime of openness and transparency the Bill would usher in would erase some accruable gains under the present shady regime. After all, the presidency itself, during the fuel-subsidy removal crisis admitted that there are some cabals profiting under the present system. This admission itself has made many learned minds and opinion moulders to criticise the government. There is also the belief that the passage of the Freedom of Information Bill into Law last year must have sent jitters down the spines of vested interests as the Act, when combined with the PIB after it becomes an Act, would be a terrible weapon of ensuring transparency; all the operations in the oil industry would be laid open! Currently, there is ongoing probe of the oil sector by the Senate which came on the heels of a similar one by the House of Representatives. The Nigerian oil treasury is so shrouded in secrecy and opaqueness that it has even being alleged that the Federal Ministry of Finance, which is the statutory treasurer of the government, no longer knows the exact amount being realised from oil. Only few days ago, Regional Executive Vice President, Sub-Sahara Africa, Shell Upstream, Mr. Ian Craig, who spoke at the opening of the 2012 edition of the Nigerian Oil and Gas, in Abuja, said Nigeria loses approximately 150,000 barrel per day to theft - an amount translating to a whopping N2.9 billion daily! The pertinent question here is that "Is the prolonged delay in the passage of the this all-important PIB bill attributable to underground manipulation of the vested interests or is it just a case of unpatriotic nonchalance on the part of the lawmakers? A Lagos-based lawyer and human rights activist, Mr. Bamidele Aturu, alluded to the existence of this suspicion of sabotage of the bill when he said "The Petroleum Industry Bill pending before the National Assembly has been greeted with all sorts of controversies. There have been allegations and counter allegations by vested interests on the real motives for the Bill and whether or not some persons have been commissioned to kill the Bill." The Company Secretary/ Legal Adviser of the Nigerian National Petroleum itself, Professor Yinke Omorogbe, who is very knowledgeable in the politics surrounding PIB, has attributed the delay to internal, rather than external factors. According to Omorogbe the delay "was caused by a few people, who were not comfortable with the intended reform in the oil and gas industry" and not surreptitious manipulation by International Oil Companies. Expressing his views on the problem of cabal interest in the oil industry during the recent crisis subsidy crisis, the Chairman of the Lagos branch of the Nigerian Bar Association, Mr. Taiwo Taiwo, put the whole blame on the government, he said the existence of the cabal itself is an indictment of our leaders. Taiwo said "The references to an unnamed and seemingly faceless cabal in the petroleum industry that is responsible for our economic woes appears a pathetic attempt to pass the buck. If such a cabal is known to exist, then surely our security forces and prosecutorial agencies must be very lax in their duties for having failed woefully in bringing the cabal to justice for perceived crimes against the generality of the people" Speaking with this writer on the negative effects of the prolonged delay of the PIB, a number of lawyers expressed disappointment with the present state of affairs while calling on the National Assembly to expedite action on the revolutionary bill. A Senior Advocate of Nigeria, Mr. Joseph Nwobike, said "I think the non-passage of the PIB by the National Assembly till now is not good given what that is costing the nation, particularly in the light of problematic nature of our oil industry. We are not getting enough on our own resources compared to what other oil-exporting nations are getting. We must find a solution to this. "At present all manners of corruption are plaguing industry at various levels of management of the sector which involve both government officials and businessmen. This does not portend good omen for the economy. Having said that, I think the government now appears to be focused in its determination to ensure that the bill is passed." In his own view, a Senior lecturer of the Department of Commercial, University of Lagos, Dr Abiola Sanni, who made a call for the speedy passage of the bill, said "The prolonged delay in the passage of the bill is affecting us, the reforms being envisaged which will improve the petroleum sector. "The only people benefiting from the non-passage are those profiting under the existing system and they are the people playing different roles and making illegal gains. They know that if the bill is passed, the will be little or no room for the shady practices, but the more the bill is delayed the more their own profits will be prolonged. But the more there is delay, the more the country is losing. Also speaking in support of the theory of sabotage by the vested interests in delaying the passage of the bill, a lawyer with specialisation in commercial law, Mr. Yahaya Oladeji, said "The National Assembly members are the representatives of the masses, but you cannot help thinking they have let the people down by not focusing on a bill with the patriotic contents and intents like the PIB. The Sixth National Assembly failed to pass it, the Seventh National Assembly has not shown enthusiasm towards its passage, thus all sorts of improprieties, illegality and corruption that has bedeviled the oil industry continues to haunt our economy" Two other lawyers, Messrs Malachy Ugwummadu and Yomi Alagbada also bemoaned the non-passage of the Bill. Ugwumadu said "The reason why the Bill has not been passed is because it will go to the root of our misbehaviour as a nation. As at today, there is no legal framework that can regulate the excesses of the bucaneers that we have in the industry. "There is imposition and consolidation of impunity in exploration and exploitation of our natural resources and the revenue that should accrue to the state is being lost." |
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