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PIB To Tackle Shortfalls In Nigerian Economy

Posted: Sep 9, 2016 at 6:50 am   /   by   /   comments (0)

By Charles Okonji

Some stakeholders in the oil and gas industry, in the face of dwindling economic fortunes, have identified Petroleum Industry Bill (PIB), which is believed to have the potential restructure the entire oil and gas industry if passed, as the panacea to the nation’s economic woes.

Former Group Managing Directors of the Nigerian National Petroleum Corporation (NNPC), during a meeting at the weekend, which was convened at the instance of Dr. Maikanti Kachalla Baru, the current Group Managing Director of NNPC, equally espoused the need for PIB to address the fundamental challenges in the industry.

NNPC, prior to last weekend meeting of the former GMDs, had stressed the fundamental objectives of PIB, which included addressing vesting of petroleum and natural gas, allocation of acreage, government participation,    environment and air quality emissions, community development and Nigerian content.

Benefits Of PIB

The corporation had pointed out that vesting of petroleum and natural gas would include property and sovereign ownership of petroleum within Nigeria, its territorial waters, the continental shelf, the exclusive economic zone and the extended continental.

NNPC also disclosed that under the PIB, any company qualified under terms and conditions prescribed from time to time by the relevant Institutions should be free to apply for the grant or award of a license, lease or contract for the exploration and production of petroleum.

NNPC stated: “The management and allocation of petroleum resources and their derivatives in Nigeria shall be conducted strictly in accordance with the principles of good governance, transparency and sustainable development of Nigeria. (2) Subject to subsection (1) of this section, the main criterion for the management of petroleum resources shall be the total benefits that will accrue to the sovereign state of Nigeria.

“The Minister shall grant licences and leases on the recommendation of the Directors General of the Institutions and in accordance with guidelines, impose special terms and conditions that are not inconsistent with the provisions of this Act on any licence or lease to which this Act applies, including terms and conditions as to: (a) participation by the Federal Government in the venture to which the licence or lease relates, on terms to be negotiated between the Minister and the applicant for the licence or lease; and (b) exploitation of any natural gas discovered. (2) Subsection (1) of this section shall not apply to any indigenous company operating in the upstream sector whose aggregate production is less than or equal to fifty thousand barrels per day of crude oil or natural gas equivalent.

“In achieving their functions and objectives under this Act, the Institutions and the National Oil Company shall be guided by principles of the Nigerian Extractive Industries Transparency Initiative Act of 2007.

“The Federal Government shall, to the extent practicable, honour international environmental obligations and shall promote energy efficiency, the provision of reliable energy, and a taxation policy that encourages fuel efficiency by producers and consumers. (2) In accordance with the provisions of subsection (1) of this section, the Federal Government shall introduce and enforce integrated health, safety and environmental quality management systems with specific quality, effluent and emission targets for oil and gas related pollutants, without regard for fuel type such as gas, liquid or solid, in order to ensure compliance with international standards.

“The Federal Government shall, in co-operation with the state and local governments and communities, encourage and ensure the peace and development of the petroleum producing areas of the Federation through the implementation of specific projects aimed at ameliorating the negative impacts of petroleum activities.

“The Federal Government shall at all times promote the involvement of indigenous companies and manpower and the use of locally produced goods and services in all areas of the petroleum industry in accordance with existing laws and policies.

“Where any contract for work or services is considered to be within the capabilities of Nigerian companies, in accordance with any law relating to Nigerian content, the tender list shall be restricted to Nigerian companies.

“All companies involved in any area of the upstream or downstream petroleum industry shall, as a condition of their licence, lease, contract or permit, as the case may be, comply with the terms and conditions of any law relating to the Nigerian content law in force at the time.

“Failure to comply with the terms of any local content law as determined by the Inspectorate shall be a ground for revocation of a licence, lease, contract or permit that may have been previously granted to the company that failed to comply with the said terms,” it stressed.

The erstwhile NNPC bosses, after their brainstorming session at the weekend at Transcorp Hilton, Abuja, also noted that for effective functioning of any National Oil company (NOC), the technical components of the country’s exploration and production must be integrated as part of the country’s NOC.

They posited that National Petroleum Investment and Management Services (NAPIMS) being the technical component of Nigeria’s exploration and production and not just an investment vehicle, must remain with and managed by NNPC.

They pointed out that PIB, which proposed the incorporation of NAPIMS and taking it out of the NNPC, would inhibit the effective functioning of the NNPC as a National Oil Company (NOC).

According to them this would make NNPC to operate at a different level compared to its peers in Organisation of Petroleum Exporting Countries (OPEC).

While the former GMDs have no issues with incorporation, they strongly advise against taking NAPIMS out of NNPC.

Anxiety Over PIB

However, Executive Director, Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN), Dr. Godwin Uyi Ojo, has expressed some anxieties over the PIB

He pointed out that while the newly introduced bill was first introduced in 2008 and with several billions down the line by law makers, they had not been able to enact an acceptable law that would guarantee the interest and concerns of the poor in the villages scattered across the swamps and creeks.

Unlike the earlier versions, the new Petroleum Industry Governance Bill 2015 (PIGB), currently before the law makers in the National Assembly, he said, fell far below the expectation of the people of the Niger Delta.

As major stakeholders in the legislative interactive process, citizens’ views should count for a people’s oriented PIGB to be passed into law and expeditiously too.

Ojo said that the event should be one in a series of continuous engagement in environmental policy initiatives to provide technical support and suggestions to law makers for peoples-oriented laws to be enacted in Nigeria.

Process And Lessons From Past Efforts

The Executive Director of ERA/FoEN informed that the proponents of the current bill seemed to have learnt some lessons from the past initiatives.

Among these are the removal of shady provisions such as the excessive powers granted to the petroleum minister to nominate board members, the acceptance of gifts by the minister and the president, and the award of oil blocks and contracts by the president.

He stated ERA/FoEN and other civil society groups laboured hard to ensure the passage of the bill with amendments proposed to the 7th Session of the National Assembly through media interactive sessions, seminars and conferences, policy briefs, memos and active participation in the various public hearings conducted by the Senate and the House of Representatives at the National Assembly in Abuja, Port Harcourt and Lagos. These efforts were principally to no avail because the will of the people did not prevail and the bill was not passed into law.

Ojo said: “Unfortunately, in the seventh Session of the National Assembly, the bill was not passed because some lawmakers may have been compromised, succumbed to cheap blackmail by the oil industry and became the mouthpiece of the oil companies threatening to pull out of Nigeria’s oil and gas operations and arguing that it will be unviable if the PIB with people-oriented provisions was passed.”

Narrow Scope Of PIB

In some other fundamental areas on environmental and livelihoods protection, ERA/FoEN Director said that the bill failed to imbibe lessons learnt.

He said: “Historically, the origin of the Bill in its various forms since 2008 when it was first introduced down to the present was to serve as a conflict resolution law to ensure that the multifaceted problems of the industry, inefficiency, corruption and environmental degradation were curtailed.

“It was also to address the years of human rights violations and the clamour for environmental justice by the rural folks who are often the receivers of oil extraction impacts felt in their health, environment and livelihoods sources.

“Oil revenue allocation are often to the exclusion of rural folks and without tangible benefits yet their rivers and farmlands are contaminated often leading to impoverishment.

“Arising from the above, it was expedient that local communities’ concerns, interests and participation in the industry through the establishment of the Petroleum Host Communities Fund (PHCF) was proposed.

“It was important to ensure that local participation in the allocation and use of oil proceeds for rural development gain priority concern. Hence it sought 10 per cent equity shares to be devolved to local communities and to be administered through institutional Community Trust Funds by the communities themselves.

“The idea was also to ensure that host communities who bear the burden of environmental destruction and livelihoods should also be involved in the allocation and use of oil revenue for their community development purposes.

“That there have been some resistance to this provision in some quarters especially from northern Nigeria is not sufficient to jettison this idea. The removal of this provision from the present Petroleum Industry Governance Bill is uncalled for, insensitive, and very unfortunate.

“The Bill must be seen as a security safety valve depending on which side it swings.  Thus, the objective of the proposed Commission in Section 1(d) pp.5 of the (PIGB) which is to “create a conducive business environment for petroleum industry operations” is cast in doubt.

“This is because the local people, their health and survival should be seen as part and parcel of the enabling environment in so far as their concerns are elevated or swept under the carpet.

“Importantly, the PIGB with a provision for community trust fund can be a security measure by binding communities as stakeholders with stakes in the oil sector and thus would be in position to protect and prevent vandalism and blow out of pipelines and oil facilities as is currently the case,” he stressed.

While funds should not be paid to entrepreneurs of violence, the root cause of the violent resource conflict, which is environmental degradation and livelihoods destruction, he added, should be dealt.

Ojo informed that those carrying guns were not the only one affected, calling on all the stakeholders, including the Federal Government, to consider the solutions that would enhance the welfare of all Nigerians, particularly those impoverished by the impact of oil exploration and production.

While citing the prime Minister of United Kingdom, who announced that everyone or households affected by shale gas and oil fracking would be compensated with 10,000 pounds or even more, ERA/FoEN Director said that contrary position was the case in Nigeria.

He stressed: “Importantly, in the PIGB, the word “environment” is only mentioned incidentally and in relation to conflict. What constitutes infractions on the environment, and penalties and remediation measures have not been fully addressed.

“The Bill has not opened up the option to scrutinize the lax environmental and operational standards and practices of the oil industry at this stage.

“Instead, it has mostly built on current existing and faulty laws and practices assumed as the basis of the provisions of the Bill. In other words, the proponents of the bill have not placed all the cards on the table.

“Where are the subsequent bills referred to that would be forth coming? When and how will the bill be introduced and when will they be passed if at all such bills will ever see the light of day?

“This is highly unacceptable. This bill cannot be read and passed in anticipation or in isolation of other vital bills. In a nutshell, by avoiding to deal directly with contentious issues of quantity and volume of oil produced and standard measurements through metering, the Bill attempts to kick the can down the road.

“Notwithstanding the goal of PIGB unbundling, salient areas of environmental governance, local participation and issues of security and survival of the local people cannot be jettisoned.

“There is the need to expand its provisions to accommodate these issues and many more. The bill is wishy-washy, and, lacking strong teeth to bite and address the corporate impunity pervading the oil industry. As it is the bill stands rejected.

“More work needs to be done. It is expected that our law makers at the National Assembly duly scrutinize the bill and take on board people’s concerns. In particular, the host community funds should be restored forthwith,” he added.