President Muhammadu Buhari yesterday accused his predecessors of not having the political will to transform the petroleum industry in the last two decades.
He also disclosed that Nigeria lost an estimated $50 billion worth of investments in 10 years, due to uncertainty over the non-passage and signing of the Petroleum Industry Bill (PIB) into law, lack of progress and stagnation in the petroleum sector.
Speaking at a ceremony to mark the passage of the PIA, which preceded the federal executive council meeting at the State House, Abuja, President Buhari gave the nine-man steering committee headed by the minister of state for petroleum resources, Mr. Timipre Sylva, which was constituted to oversee the implementation of the PIA 12 months to complete its assignment.
The president stressed that assenting to the PIB marked the end of decades of uncertainty and under-investment in the petroleum industry.
“We are all aware that past administrations have identified the need to further align the industry for global competitiveness, but there was lack of political will to actualise this needed transformation.
“This lack of progress has stagnated the growth of the industry and the prosperity of our economy.
“This administration believes that the timely passage of the PIB will help our country attract investments across the oil and gas value chain.
“In view of the value our nation and investors will derive from a stable fiscal framework for the oil and gas industry, our administration found it necessary to work with the two Chambers of the National Assembly to ensure the passage of the PIB.”
The president noted that signing of the bill was part of the administration’s commitment to building a competitive and resilient petroleum industry that would attract investment, improve the country’s revenue base, create jobs and support our economic diversification agenda.
The president said as a, “nation that depends on oil resources for the development of other sectors, Nigeria runs a petroleum industry that is governed largely by laws enacted over 50 years ago such as the principal legislation; the Petroleum Act of 1969 and other obsolete legislations.’’
He said the Presidential assent of the bill to PIA 2021 marked the beginning of the journey towards a competitive and resilient petroleum industry that would attract investments to support the nation’s Economic Recovery and Growth Plan.
“The PIA 2021 creates a regulatory environment that would ensure efficiency and accountability across the oil and gas value chain and reposition NNPC to a commercially driven National Petroleum Company that is accountable to the Federation.
“The Act also provides for a direct benefit framework that will enable sustainable development of Host Communities. I appeal to the host communities to look carefully at the contents of the Bill which in the implementation will bring real and lasting benefits to them.
“Furthermore, the Act provides for deliberate end to gas flaring which would facilitate the attainment of Nigeria’s Nationally Determined Contributions of the Paris Agreement through a funding mechanism to support gas flare out project in host communities,” he said.
While directing immediate implementation of the framework for the PIA, he urged all relevant stakeholders to comply and reposition for full activation within 12 months.
The president said Sylva, would head the implementation team, urging all ministries, departments and agencies to adjust to the transition, designed to reposition the economy.
“To consolidate the commitment of this administration to delivering the value proposition of this law, I have approved an implementation framework commencing immediately to ensure the industry envisaged in the new law begins to take shape.
“The implementation process to be headed by the minister of state, petroleum resources is hereby tasked with the completion of the implementation of this act within 12 months. I am therefore directing all relevant ministries, departments and agencies of government to fully cooperate in ensuring the successful and timely implementation of this law,’’ he said.
Other members of the steering committee are permanent secretary, ministry of petroleum resources; group managing director, NNPC; executive chairman, FIRS; representative of the ministry of justice; representative of the ministry of finance, budget and national planning; senior special assistant to the president on natural resources, Mr. Olufemi Lijadu as external legal adviser, while the executive secretary, Petroleum Technology Development Fund (PTDF), will serve as head of the coordinating secretariat and the implementation working group.
The primary responsibility of the steering committee shall be to guide the effective and timely implementation of the PIA in the course of transition to the petroleum industry envisaged in the reform program, and ensure that the new institutions created have the full capability to deliver on their mandate under the new legislation.
The ceremony was attended by the senate president, Mr. Ahmed Lawan; deputy senate president, Mr. Ovie Omo-Agege; deputy speaker of the house of representatives, Mr. Ahmed Idris Wase; members of the FEC managing director of the NNPC, Mr. Mele Kyari.
Meanwhile, the Nigeria Governors’ Forum (NGF) has picked holes in the new law.
The Forum had had six days before Buhari signed the PIB into law, expressed concern about the form that the legislation was passed by the national assembly, saying without considering the interest of the federating states it would be recipe for national disaster if signed into law.
The NGF’s warning was contained in a letter it addressed to the president dated August 10, 2021, which was titled, “Petroleum Industry Bill 2021- Appeal to Mr. President to Withhold Assent,” that was signed by its Chairman and Governor of Ekiti State, Dr. Kayode Fayemi.
In the letter, the 36 state governors had expressed, “great shock and displeasure that the interest of the sub-nationals were not put into consideration in the bill that was recently passed by both chambers of the national assembly.”
They said the PIB as passed by the national assembly without giving adequate consideration to all facets of Nigeria’s federation could be, “a recipe for disaster” and “we respectfully pray Mr. President to withhold assent pending resolution of all the thorny issues.”
The NGF was worried that the PIB conferred on the federal government alone the sole ownership of all the shares of the commercialised Nigerian National Petroleum Company (NNPC) Limited and the sole beneficiary of the proceeds of the NNPC and totally excluded state governments from owning a stake or enjoying from the proceeds that would accrue from the business operations of the NNPC.
According to the governors, none of the proceeds of the NNPC would be transferred to the Federation Account for onward sharing to all the tiers of governments in the country, adding that, “setting aside of 30 per cent profit oil and gas as frontier exploration funds constitute further depletion of the fund that should ordinarily accrue to the Federation Account.”
The NGF specifically had grudges with Section 53 of the PIB that provided for the incorporation of the NNPC Limited under the Companies and Allied Matters Act to carry out petroleum operations on a commercial basis.
It noted that the same Section 53(2) went on to provide for consultations between the Ministers of Petroleum and Finance on the number and nominal value of the shares to be allotted which, “shall form the initial paid-up capital,” of NNPC Limited and further added that the company shall subscribe and pay cash for the shares.
However, the NGF observed that the wording of sub-section (3), “suggested that only the federal government would have shares in this company and stated that all shares in the company shall be vested in the government and held by the Ministry of Finance as the sole custodian of the shares.
“We then recommend that a framework that accommodates states be worked out and included in the allotment of shares and incorporation of the NNPC Limited.
“We observed that excluding the states from this arrangement precluded them from having a voice in the running and administration of the company and exclude them from sharing in the distribution of dividends when they become due.”
The governors lamented that, “in the same vein, Section 53 (4) of the PIB provides that the Ministry of Finance incorporated in consultation with the government, may increase the equity capital of NNPC Limited.
“Here again, we note the non-inclusion of sub-nationals in the consideration of this very important provision and recommend that the Nigerian Sovereign Investment Authority (NSIA) and Central Bank of Nigeria in consultation with the Federation Governments and Federal Capital Territory, may from time to time increase the equity of NNPC Plc.
“The removal of the requirement to transfer fiscal payments to the Federation Account is unconstitutional and of grave concern to Nigerians. NNPC Limited is an entity created from a national asset whose proceeds always went to the Federation Account for distribution amongst the tiers of government and we are at a loss as to the reason for excluding a necessary component of the Federation from owing stakes in a successor vehicle.”
The NGF further observed that in Section 33, “the imposition of gas flare penalties arising out of midstream operations which penalty shall be paid into the Midstream and Downstream Gas Infrastructure Fund, an account within the control of the NNPC and one in which only the NNPC alone would have access to carry out any infrastructural projects, constitute significant loss of revenue to the federation account.”
Again, the NGF noted that, “Section 54 (1) and (2) of the bill empowered the Ministers of Petroleum and Finance to jointly determine assets, liabilities, and interests to be transferred to NNPC Limited.
“Again, we recommended that the states ought to be consulted and involved in the process to determine the transfer of these assets, liabilities and interest of the new company.
“Our advice was predicated on the joint ownership of these assets, liabilities, and interests. We extended our opinion on this to the winding down process covered by Section 55 (1).”
The NGF also disagreed with section 64 (b) that granted the NNPC an additional responsibility to act as state agent in all Production Sharing Contracts (PSCs) and entitled to oil and gas profits.
They were worried that this provision has made the NNPC to appear, “in every commercial arrangement making its status even less commercial oriented and more favoured than is obtainable today.
“We are concerned that rather than reforming and by extension the oil sector, the PIB as presently constituted makes NNPC Limited an even more powerful oil company.”
The governors hoped that the President would understand their shocks as the version passed by the National Assembly did not consider the concerns of the NGF and the states.
Meanwhile, the senate president said the grey areas in the PIA could be brought back to the national assembly for amendment.
He stated this while addressing journalists shortly after a brief ceremony at the Presidential Villa where the Buhari announced the setting up of an implementation Committee for the new law.
He said it is when implementation starts that people would start to see where amendments are required.
“So this is something we all have to address with some optimism and hope that it would be okay. But because we are human beings, no act of human beings could be perfect. So when we are able to see issues, the national assembly is there. Bring them for amendment. Even the most difficult issues can still be brought back to the national assembly.
“If it is worthwhile to do so. But I believe that there is no need for us to be emphasising the problems rather than the prospects.”
Responding to questions on the agitation for more funds for the host communities, Lawan described the host communities as winners as well.
“But you know from zero to over $500 million and with time, such issues will be further addressed, but I want to also caution that it is not the $500 million that is more but how we are able to prudently and transparently deploy this $500 million in the host communities. This time around, there should be no excuses for anybody to tamper with this money. The host communities have suffered enough, even when NDDC was established, I’m sure it was established because of the host communities’ issues and yet the host communities did not get much attention.
“This time, the host communities have been specifically mentioned and these funds should go there. We want to see people who will be appointed, taking this as trust and do what is right. Of course, there will be so much employment and jobs especially in the midstream of the value chain. This midstream has not been in existence so to speak. What we have is the upstream and then, the downstream. When our refineries will be better and more will be established, I’m sure the value chain will have opportunity for more Nigerians to have jobs and so on,” he added.
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