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Bottlenecks as National Assembly debates Petroleum Industry Bill

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Bottlenecks as National Assembly debates Petroleum Industry Bill

By John Akubo, Abuja

The 9th Senate’s determination to pass the Petroleum Industry Bill (PIB) before the end of the first quarter in early April and await the president’s assent in May would seem a welcome development for stakeholders. However, roadblocks are being mounted by major stakeholders, which could affect the early passage of the bill.
Nigeria’s oil and gas sector, which is the mainstay of the economy, is still largely governed by the Petroleum Act and the Petroleum Profit Tax Act enacted since 1969. But since the enactment of these laws, the global oil and gas industry has changed significantly.

Although certain obsolete aspects of the aforementioned acts have been amended, many inadequacies still abound, which now necessitate the development of the PIB, which was first presented to the National Assembly in 2008. More than 10 years after, the bill is yet to see the light of the day, leading to increased uncertainty hindering the flow of desired investment to the oil and gas sector. 
On September 28, 2020, President Muhammadu Buhari sponsored another version of the Petroleum Industry Bill (PIB) to the National Assembly for consideration. The bill seeks to introduce pertinent changes to the governance, administrative, a regulatory and fiscal framework to the Nigerian oil and gas industry to ensure transparency, strengthen governance institutions and attract investment capital, among other objectives.
However, there is a sharp division among stakeholders over some of its provisions. The issue of percentage for host communities from oil companies is one of the main contentions, as the National Assembly prepares for the passage of the much-awaited bill
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It would be recalled that the Umar Musa Yar’Adua administration proposed 10%, but lawmakers from the north in the 7th Assembly rejected it. The same 10% was retained by the Goodluck Jonathan administration but it was equally rejected. In the 8th Senate, led by Bukola Saraki, it was brought down to 5%, yet it could not sail through.
The 2.5% proposal in the current bill is the source of agitation among host communities, who insist on 10%, which Yar’Adua presented, saying anything less than 10% will be an effort in futility. The Senate is stuck at determining what percentage to be given to host communities, which is the major point of disagreement that has stalled passage of the PIB since 2007.
Also, the host communities find some provisions in the bill unacceptable, beginning with the introductory part in chapter one, which says that the Federal Government owns oil and gas. They have kicked against that clause, asserting that oil and gas are owned by host communities, which the Federal Government can only hold in trust. They said also that there are no good roads, hospitals and other amenities in oil and gas host communities.
“For well over 60 years that oil and gas activities have been going on in host communities, there is little or nothing to show for it,” a stakeholder stated. “But with the 10% equity shares, the communities would be in the position to address some of the challenges, which are man-made that have been bedeviling us for over 60 years.”
As the argument on the agreeable percentage remains unresolved, stakeholders are calling for compromise to facilitate the passage of the bill in view of the teething problems that caused the delay in the past 10 years. At the recent public hearing place by the Senate Committee on Petroleum, stakeholders called for action, saying the time for action was now.
The Minister of State for Petroleum, Timipre Sylva, had said the 10 per cent Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) is demanding would create room for oil companies to shortchange host communities, adding that the 2.5% proposal is the best option that government could give, as it would be based on operational cost. He said with the 2.5% operational cost, there was no way oil firms would play games with host communities.
He indicated that with 10 per cent for host communities, when a company makes N100m if they want they can say it is N10m and in that case host communities would find it difficult to determine their exact percentage is. But host communities faulted Sylva’s argument, saying if they could not determine what 10 per cent because oil firms would under-declare, what’s the guarantee that they would not under-declare with 2.5%?
While rejecting the 2.5% provided in the current PIB, HOSTCOM at the public hearing at the Senate made it clear that nothing short of 10 per cent would be acceptable to them.
In a presentation by its National President, Mr. Benjamin Style Tams, HOSTCOM declared: “As it concerns the Host Communities of Nigeria Producing Oil and Gas in Chapter 3, the host communities stand on 10% equity shareholding after 60 years of marginalization and bearing the brunt of the negative impacts of exploration and exploitation.

“Today, some states have started discovering and enjoying their natural resources but the oil-producing states and HOSTCOM are not envious of them. Therefore, our position is sacrosanct.”
The host communities argued that it would be absurd and economically illogical to deprive HOSTCOM of the right to equity shareholding in both the establishment of the NNPC Limited and any other agency relating to oil and gas business.
The host communities further made it clear, “this quest to take over complete control of all our national assets by a very unpatriotic few has to stop. In the case of the Gas Flare Penalty Funds, the host communities, which are the direct recipient of the negative effects, are the ones to receive the gas flare penalty.
“Regarding the environmental management and sustainable development of the host communities, it’s imperative that all laws and policies precedent to the commencement of any action plan must conform with existing international standards inherent in our submission.”  
IN their own presentation, the Oil Producers Trade Section (OPTS), led by Mr. Mike Sanger, made a case against the Bill for not making serious provisions for investment in the oil and gas sector. 
OPTS stated, “if the PIB is passed in its current form, it will not meet the government’s objectives of making Nigeria the leading destination for oil and gas investment and the recent scarcity of investment – only $3bout of $70b in Africa – will continue.
“Nigeria faces ever-increasing competition for investment and, despite having the largest reserves, only $3 billion out of the $70 billion committed in Africa for projects sanctioned between 2015 – 2019 were attributed to Nigeria, representing a meagre 4%.

“This lack of competitiveness is caused in part by the high cost of doing business in Nigeria, with overall project and operations costs being 69% and 42% higher than the global average respectively.
“A PIB, which safeguards existing projects and introduces competitive terms, is required to fully utilise the country’s resources for the benefit of all Nigerians.”  
Also, Women In Energy Network (WIEN) has raised concerns over the proposal in the Petroleum Industry Bill which stated that “each settlor, where applicable through the operator, should contribute an amount equal to 2.5% of actual operating expenditure in respect of all petroleum operations.”
According to Egbema and Gbaramatu Communities Development Foundation (EGCDF), the provisions of the Petroleum Industry Bill 2020 in relation to host communities’ development, as contained under chapter three from sections 234 to 257, would generate instability, agitations and eventually massive conflict between oil companies and their host communities if the concerns raised were not addressed before the bill is passed into law
Chairman of Egbema and Gbaramatu Communities Development Foundation (EGCDF), Amb. Jude Ebitimi, said the overriding constitutional function of the National Assembly in the 1999 Constitution (as amended) is to make laws for the peace, order and good governance of the Federal Republic of Nigeria. 
“Then section 234 of the PIB seeks to foster prosperity within host communities, social and economic benefits from petroleum operations, enhance the peaceful and harmonious relationship between companies and communities and support development of host communities,” he said. “However, the Petroleum Industry Bill 2020 in its present form in relation to host communities’ development does not promote or enhance any of the aforementioned objectives. 
“It would neither promote peace and order nor good governance in the oil-producing communities. In short, if the bill is passed into law in its present form, it would lead to great instability, the consistent conflict between communities and companies and violent agitations in the oil-producing communities.”
He recommended a governance model that does not provide a uniform governance structure for all the host and impacted communities. 

According to him; “The different oil-producing communities have their peculiarities. Therefore, the governance and management structure should be left for the different communities to decide. The governance and management structure of the EGCDF has proven to be effective and acceptable to all parties concerned, and we are comfortable with it.”
He said the present structure, totally driven by communities with slight oversight by the state governments, with a regular briefing by the oil companies of activities is sufficient, adding; “There is no basis at all for persons from outside oil-producing communities to be involved in the management of host and impacted communities’ funds.”
On funding, he said the contribution of oil companies to the funding of oil-producing communities’ development fund should be tied to the quantity or amount of production from first oil or commencement of production or before production at the point of exploration.
According to him, it should be operating cost, which in all cases should be 10 per cent of the revenue from production or operating cost.

“The unnecessary administrative structures under sections 235, 247, 249 and 251 of the PIB should be eliminated. They would not in any way aid the development of the oil-producing communities. Instead, they would lead to unnecessary bureaucracy at the expense of the development and orderly management of the affairs of oil-producing communities,” Ebitimi said.
MEANWHILE, President of Senate, Ahmad Lawan, said the National Assembly in its consideration of the piece of legislation, would ensure that the bill when passed into law, guarantees improved revenue earnings for the country. 
Lawan said, “let me say this: we (National Assembly) will pass this bill not without ensuring that it is a bill that satisfies certain conditions. 

Lawan lamented; “Nigeria is blessed with these resources; we want Nigeria to benefit optimally from them. In fact, we are in a hurry because we have lost so many years of benefits that we could have had.”
On the stance of HOSTCOM on percentage shareholding, Lawan said;
“The 10% demanded by host communities and the side of the government offering 2.5% operational cost is a clear indication that they want to shortchange host communities. Host communities are not beggars; they are not asking for grants. They are not asking for favour, but rather host communities are asking for equity participation as shareholders. 
“States also were given 13% but these things are not trickling down to the communities that bear the brunt. For us to be a partaker as stakeholder, let there be 10% set aside for host communities. 10% equity would guarantee the operating companies their safety the assets and personnel, and also will minimise or remove totally pipeline bunkering, vandalization, crude oil theft, and many more because host communities now know that 10% equity is coming to them.
“For example, if one particular well is producing 10,000 barrels of crude per day and 100 barrels are meant for the community, if they sabotage it the community would lose, but if they are sure of the 10%, nobody will go to sabotage oil facilities again, because they will consider it as their own business. Since they are partakers, they will treat it as their own.”

In his contribution, Chief George Bucknor, said; “When you talk of giving somebody something, on what basis? We are not asking for a grant. We are not asking for a loan or asking them to throw some peanuts at us. What we are saying in law is the Citizens Development Mechanism and the Nigerian Environmental Act. They have all talked about stakeholders’ consultation.
“The CDM, which is global international law allows the inputs of the stakeholders to protect their interests; that is the essence of the stakeholder’s consultation.” 
He wondered who government consulted before arriving at 2.5%, adding; “The truth is, the communities provide land in the contract and they are the ones living where they are getting the oil and gas, with all the attendant negative consequences. 
“The truth remains that somebody is where you are doing your business and you are poisoning the person. He is only saying you cannot take care of him because the negative effect of your activity is irreparable, meaning that when my lung is affected by your gas flare, my soil is poisoned with benzine, nitrogen oxide, carbon dioxide, criogene and I go to the hospital, there is no cure for me. I am a living corpse. The women, because of gas flaring, are suffering from high mortality rate, because of the same poisoned air and poisoned soil and it impacts on our economy; the quality of our soil is gone. 

“Our creeks are polluted; we cannot plant cassava and get cassava as it should be. We said we don’t want to quarrel with you. You have facilities; let us follow the rule the way it is. After all, it is there in our laws; it is not like we are propounding it on our own. It is legislators that put the laws together.
“We are saying a 10% equity share for the host communities. Thank God, oil is being discovered in Taraba, Kogi and the far North, good; so, oil-producing states are growing. Look at Zamfara; what they discovered was gold. Gold is a natural resource and then they allowed them to do their thing by themselves as the state that produces it, along with their communities and even sell it.
“The President and the CBN gave them a contract of N5b to supply Gold which they delivered and received their money. 
“We are magnanimous enough to say since our own was the first to be discovered and it serves the entire country, we are not saying since Zamfara has gotten their own we would destroy everything, nobody should come to Niger Delta, no, we are not saying so, but we are saying let us have a fair share of the deal.

Culled from the Guardian

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FG assures Nigerians of availability of PMS as it blames tanker drivers, employers feud for fuel scarcity

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FG assures Nigerians of availability of PMS as it blames tanker drivers, employers feud for fuel scarcity

The Federal Government has shifted its responsibility to ending fuel scarcity blaming the sudden return of queues at filling stations in parts of the country on unresolved feud between petroleum tanker drivers and their employers, among other issues.

The Federal Capital Territory (FCT) is worse hit as fuel stations have suddenly started witnessing long queues of motorists struggling to buy petrol since Saturday.
Group Managing Director (GMD) of Nigerian National Petroleum Corporation (NNPC), Mele Kyari, had assured the nation that the queues would soon disappear, but the harrowing experiences of motorist continue.
He gave the assurance Tuesday, while fielding questions from newsmen at the Presidential Villa, Abuja after he debriefed President Muhammadu Buhari on the happenings in the nation’s petroleum sector.
Kyari attributed the observed scarcity to suspension of operations by the tanker drivers, who are protesting with their employers over some labour issues, assuring Nigerians that the worst was over as the strike had been suspended for one week.
The GMD said the tanker drivers, as at yesterday, had resumed lifting fuel from depots across the country.
“These queues will go away. It is because there was an industrial action by petroleum tanker drivers against their employers, the National Association of Road Transport Owners, around their compensation package. Those issues were not resolved up till yesterday (Monday) until we intervened to ensure that there’s an amicable settlement between the parties so that they will have peace and then normal loading operations will commence from the depots.
“As I speak to you, loading has commenced in all depots in the country, dispatching of trucks is ongoing in all the depots. They have called off the strike for a period of one week to enable us intervene and find a solution. So there’s really nothing fundamental that is happening now.”

The NNPC boss added that the agreement arrived at with the aggrieved drivers would enable the authorities to concretise a more lasting solution to the issues.
On the plan to end the petrol subsidy regime, Kyari said government was still in the process of coming up with the best way out of the debacle for the best interest of Nigeria.
“Subsidy is a policy matter. I’m sure you’re aware of this, there are engagements going on within government to get the best framework for having a fully deregulated PMS market.
“As this is going on, we are engaging all parties and all stakeholders as government and to make sure that at the end of the day, there’s an exit that is beneficial to the ordinary man.”

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NNPC insists, it will not increase fuel price in May

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NNPC insists, it will not increase fuel price in May

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Malam Mele Kyari, has said that the corporation will not increase the ex- depot price of Premium Motor spirit also known as petrol in May as being speculated.

He gave the indication at the end of a closed door meeting with Petroleum Transport Drivers (PTD), National Association of Road Transporters Owners (NARTO) and oil marketers in Abuja on Monday.
Ex-depot price is the price marketers buy products from depot owners which determines the pump price at filling stations.

He informed oil marketing companies that NNPC will not increase the pump price of PMS in May.
“I am giving the assurance and I ask Nigerians to go about their normal businesses; we have over 20 billion litres of petrol in our custody.
“Many of you are aware of this and with the assurance with tanker drivers and NUPENG, there is no need for panic buying of the product.
“Petrol will be available in all the depots in the country including NNPC dispatched depot across the country, so nobody should panic in buying the product,” he said.
On the strike by PTD, he said the strike was associated with NARTO’s inability to increase their compensation which was not resolved last week.
“We have given commitment to both NARTO and PTD that we will resolve the issue within a week and come back to the table to have a total closure on the issue.
“We also have a robust engagement with our oil marketing partners in respect of increase in the volume product that is check in the Nigerian market.
“We have agreed to work jointly with all the security agencies to contain any possible infractions seen in our borders.
“We will work as a team to curtail this fraudulent practice with the help of the security agencies,” he added.
He added that the meeting also discussed issues on payment by Petroleum Equalisation Fund (PEF) to oil marketing companies.

He said that all stakeholders agreed in making PMS available to marketers.

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AISA raises concern over inaction of FG in sustaining MoU with Russia on Ajaokuta resuscitation

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AISA raises concern over inaction of FG in sustaining MoU with Russia on Ajaokuta resuscitation

The African Iron and Steel Association (AISA) has raised issues over the inaction of the Nigerian Government to sustaining the bilateral agreement to revamp the Ajaokuta Steel Complex ocasioned by the recent visit by President Muhammadu Buhari to his Russian counterpart President Vladimir Putin.
It would be recalled that Shehu Sharagi and Leonid Brezhnev led Nigeria and Russia when the two countries first started to build the Ajaokuta steel rolling mill in 1979.
In October 2018 almost forty years later, Nigeria returned to the bilateral agreement with Russia to resuscitate the now derelict steel factory complex.
The accord to revive the Ajaokuta project was reached during a meeting between Nigerian President Muhammadu Buhari and Russian President Vladimir Putin in Russia
The partnership was aimed at helping to get sections of the factory into production before the end of 2019, however the COVID-19 pandemic disrupted the arrangement
Former secretry African Iron and Steel Association, Dr. Sanusi Muhammed said the Nigerian President’s effort in returning to Russia that originally started the Ajaokuta Steel and the New agreement was a welcome development for the country.
Muhammed spoke during a visit by the National Association of Material and Meturlogical Engineering Students (NAMMES) led by its national President Umah Riseline Ojochogwu to the headquarters of AISA in Abuja.
He said,
“During the visit of President Muhammadu Buhari to Russia he met president Putin and they signed some agreement and it was aired all over the country. 
“That gladened our hearts. We felt yes we are now moving forward, unfortunately COVID-19 came in and the efforts for the Russians to come to Nigeria to see what is left of Ajaokuta and how they can move it forward had to be postponed. 
“The minister of mines and steel development severally mentioned the suspension of international flights due to COVID-19 that the Russians could not come into Nigeria again but that immediately the window for flights landing and taking off in Nigeria is opened the Russians will come to Nigeria and they will start off.”
Muhammed expressed dismay that even though the window for flight operation has been opened for over one year for international flights unfortunately they are not seeing the Russians again. 
He said, “According to the initial agreement, the Russian Government through it’s own financial institutions was going to fund Ajaokuta $450m. African Bank, a Bank established by African  countries to help develop the Continent promised pumping in $1b. 
“So a total of $1.45b was there and we were very happy to hear that, even though these figures were mentioned before the technical board of Ajaokuta steel company. The technical board is a very critical arm of Ajaokuta. That is is what inform us what is required and how we will go forward.”
He said they have not been able to get to that. 
“Of recent I heard some information, I have no proof, that that agreement is not the way we thought it was. The African bank says they cannot fund $1b unless there are certain conditionalities. Very strigent conditionalities so we began to feel some drawbacks. 
He said they are still trying to find out the true situation adding that they will still continue. 
Muhammed said,
“The ministry has been informing Nigerians on the developments of the steel industry unfortunately for the last six months we have not heard anything from the ministry. 
“We tried to find out, the information was in a sketch so we have not received the kind of information we expected.
Speaking against the backdrop of posers from the students on their future and the fate of the meturlogical industry in Nigeria he said, the National Association of Material and Meturlogical Engineering Studens, (NAMMES) in Nigeria is the reservoir for meturlogical profession. 
He said they have been doing all their best to get things done. “Unfortunately persistence comes with a lot of challenges we have been fervently pursuing this course since the 70s. 
“The initiation of Ajaokuta steel company and Itakpe has brought in great opportunity for meturlogists. “Unfortunately along the line, some people say they were saboteurs who didn’t want to see Nigeria developed and to kill Nigeria is to make sure the meturlogical center does not take off. So we have been fighting along that line.” 
According to him, they have been closely linked up with the ministry responsible for meturlogical industries in Nigeria, the ministry of mines and steel development. “We have written to them, we have discussed with them, we have interacted with them, there is nothing we have not said, to revive the meturlogical industry, we need the support of the ministry of mines and steel development . 
“Steel is one of the meturlogical materials but Meturlogical industry is composed of so many things.So we are looking at the bigger field when we talk about meturlogical industry. 
“Steel has been the backbone for meturlogical development this is why any nation that is developed today they pay premium to the meturlogical development, they pay all the necessary attention to that sector unfortunately Nigeria did not seem to have the wherewithal to get the meturlogical institute on with the meteorological industry. 
He said all the efforts that were made, the saboteurs are all over the place, to ensure that the Ajaokuta does not function. “Those abroad are using Nigerians, you and me, this is why permanent secretaries and ministers would say they would not put any money in Ajaokuta again. 
“Most of those nations that are developed their Government played vital roles in the initiation of of their industries particularly the steel industry. 
“They nurtured it till it developed. It is after it developed to a certain level they then start talking of privatization but initially they were at the helms of affairs for the development of the meturlogical industry. 
“So we have been trying to see in Nigeria we have leaders who thinks about Meturlogy and its importance. I am sorry to say until today we have not started. “

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