A group of civil society organisations advancing transparency and accountability in the extractive sector has said the existing Petroleum Industry and Governance Bill (PIGB) before President Muhammadu Buhari would enhance fiscal efficiency and streamline operations in the oil and gas sector, if eventually transmitted into law.
The group, led by Civil Society Legislative Advocacy Centre (CISLAC) with support from FOSTER, gave this hint during advocacy visits to media outfits in Abuja.
Speaking during the visits, the Programme Manager on Environment and Conservation of Nature, CISLAC, Kolawole Banwo, recalled that the Bill was passed by both chambers of the National Assembly on March 28, 2018 and transmitted for assent by the President on July 3, 2018.
According to Mr Banwo, the Bill offers sweeping reforms in the oil and gas industry to make for increased fiscal benefits and streamlined operations in line with best global practices.
He said in order to enable the desired reform in conformity to the global standard, the “Bill creates new entities like Nigerian Petroleum Regulatory Commission (NPRC), Petroleum Equalization Fund (PEF) and incorporation of three commercial entities—Nigeria Petroleum Assets Management Company (NPAMC), National Petroleum Company (NPC) and the Nigeria Petroleum Liability Management Company (NPLMC).
“The NPRC will be a fusion of the Department of Petroleum Resources (DPR) and the Petroleum Products Pricing Regulatory Agency (PPPRA) and will serve as the regulatory entity for the whole industry.
“The NPAMC will manage production sharing contracts and back-in rights provisions, while NPC will be in charge of current NNPC joint ventures with international oil companies (IOCs) upon incorporation.”
In line with fiscal discipline, the Bill creates a clear fiscal management regime for the sector as funding of the NPRC shall be from the appropriation act passed by the National Assembly.
“For the PEF, a 5% levy on all fuel sold and distributed within the country will finance its operations within the budget passed by the National Assembly. For the NPAMC and NPC, the National Assembly shall appropriate funds for their initial capitalization and subsequent financing.
“Given the huge controversies around subsidy regime in the country, the retention of the PEF by the PIGB is meant to ensure economic balance of petroleum prices across all regions that will be achieved through re-reimbursement of oil marketing companies for any loss that they incur solely and exclusively as a result of the transportation of petroleum products and for their provision of financing for infrastructural development throughout the federation,” Banwo explained.
On the environmental impacts of the extractive processes bedevilling the health and socio-economic of the host communities, the National Coordinator, Publish What You Pay (PWYP), Peter Egbule, added that the Bill “gives full responsibility for environmental matters in the petroleum industry to the NPRC and not the Federal Ministry of Environment.
“This includes strict implementation of environmental policies and standards as it pertains to oil and gas operations. The Bill however allows a voluntary collaboration with the Ministry of Environment on related matters.”
He continued: “The bill introduces new corporate governance codes in the operations of the sector by whittling down the powers of the Minister of Petroleum Resources. For instance, the regulatory functions of the Minister under the Petroleum Act and the Oil Pipelines Act will be transferred to the NPRC.
“The Commission will in turn be governed by a nine-man board with a fixed tenure and its composition includes representatives from the Ministries of Petroleum Resources, Finance, and Environment.
“The PIGB requires the federal government to divest 10 percent of shareholding in the NPC in a transparent manner, within five years from the date of incorporation; and an additional 30 percent is to be further divested within 10 years. This divestment is to allow citizens own a stake in the national oil company subject to terms put forward for the privatization exercise.” (CISLAC)
