The Petroleum Industry Bill came about with the inauguration of the Oil and Gas Reform Committee (OGRC) in April 2000, under former President, Olusegun Obasanjo led administration.
17 years later, the Eight Senate plans to pass it before December 2017. Although, the Petroleum Industry Bill (PIB) is said to have a lot of advantage, it has also caused controversies in the past.
Speaker, House of Representatives, Yakubu Dogara, duly represented by the Chairman, House Committee on Petroleum Upstream, Victor Nwokolo, said the current efforts by the House on the bill would address the challenges in the sector, as well as boost the sector’s contribution to the economy.
“We are working seriously on it. I don’t think it will delay beyond this year”.
He stated this at a meeting, organised by the Civil Society Legislative Advocacy Centre, (CISLAC), in Abuja.
Executive Director of CISLAC, Auwal Ibrahim, said PIB remains the solution to the recurring cases of corruption and mismanagement of funds as well as environmental challenges facing the sector.
He noted that the slow pace of reform in Nigeria’s Petroleum Industry would continue to limit the capacity of the industry, especially in the face of current downturn.
Over the years, stakeholders have complained that the bill does not provide for the health, safety, and environmental concerns, stating that there is no provision for an end to gas flaring.
The aim of the PIB is to establish legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry, and to establish guidelines for the operation of the upstream and downstream sectors.
Controversies trailing the Petroleum Industry Bill
The Ijaw Youths Council (IYC) had earlier rejected the Petroleum Industry Governance Bill (PIGB), in totality, describing it as insensitive.
Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), had previously cautioned against inserting anti-labour laws into the PIGB.
Both Unions have also said the National Assembly must ensure workers interest are protected, insisting that no loss of job be recorded in the Nigerian National Petroleum Company (NNPC), and other agencies that the PIGB would be implemented.
PIGB seeks to repeal NNPC Act and replace it with commercially oriented and profit driven petroleum companies, to be incorporated by the Government.
Stakeholders have criticized the Bill, saying it has unproductive costs, was wasteful, bureaucratic and inappropriate.
The Director, Social Development Integrated Centre (SDIC), Dr Isaac A. Osuoka, said the PIGB has serious ambiguities and is flawed, adding that the National Assembly returns to the 2015 version of the Bill, especially as regards environment, as it has clear and effective environmental protection provisions and regulations for the sector.
Some Members of the Public have criticized the lack of independence for regulators and neglect of host communities’ interest in the proposed new institutions.
Sections of the previous PIB stipulated that oil companies must remit 10 per cent of their net profits to Host Communities, but was rejected by the Northern part of Nigeria.
They argued that the Niger Delta did not deserve additional funds, having received N11 trillion from derivation and other funds since 1999.
In a bid to be all inclusive, the PIB provided for the establishment of National Frontiers’ Agency to embark on oil exploration in the Chad and other basins.
Many from the North complained that the revenue a State in the Niger Delta receives monthly from the Federation Account is more than that of four States in the North, adding that the different State Governments in the oil-producing States had been receiving 13% derivation, but had nothing to show for it.
Others noted that in the original PIB, the Ministry of Environment had overriding authority on environmental matters, as it was necessary to appropriately enforce environmental regulations, while in the present PIGB, all provisions given to the Federal Ministry of Environment were struck out.
The implication of this is that the country will lose out on the opportunity of a new legislation, to correct the lapses in the regulation of environmental issues in the petroleum sector, thereby worsening environmental crisis in Nigeria.
One of the main hindrances to the passage of the PIB is the disagreement between the international oil companies and the Government over fiscal terms.
The people benefiting from the imperfections in the current systems are also problems as they are not keen on making progress on the PIB.
The Oil and gas companies also assumed that the tax regime in the previous PIB was unfriendly to investors and insisted that the multiplicity of taxes in the bill could make investment in Nigeria’s oil and gas globally less competitive. The operators had pointed out, among other things, that the bill contained 11 different forms of taxes.
Another challenge faced by the bill is that the bill contained many regulators, which could hinder international arbitrations. Meanwhile, the previous version of the PIB had two regulators; one for the upstream and one for the downstream, but the oil companies complained that there should be only one regulator for the oil and gas industry instead of two.
Also, in the previous bill, the Minister of Petroleum Resources had the right to re-assign oil blocks to operators in the industry, grant waivers, grant and revoke oil blocks unconditionally among others. A section of Northern Senators however, criticised the powers given to the Minister of Petroleum Resources, saying such powers would be detrimental to reforms in the sector.
Some members of the previous National Assembly had also criticised Section 119 of the bill, which gave the President the unilateral power to grant oil licences, saying it is against best practices.
