Friday, April 18, 2014

Petroleum Industry Bill: Oil minister’s powers, UK laws and deft propaganda (2), By Tunji Ariyomo

Published:

Tunji Ariyomo

Continued from last week.

Having examined other extant regulations in the United Kingdom (UK) in the first part of this article which showed clearly that it is a serious error to conclude that the guiding UK law expressly permit the sort of unfettered powers assigned the Nigerian Petroleum Minister in the PIB (Petroleum Industry Bill), it is good to examine further evidence within that same law as well as the key fundamental institutional differences that marked Nigeria apart from the UK. For instance, the specific law (1998 UK Petroleum Act) generously quoted by Ejiofor Alike in his article makes it clear that when the Secretary of State makes regulations, such would be subject to the concurrence of the legislature.

This is in furtherance of the principles of separation of power and check and balance [See Petroleum Act 1998, Section 4 (3) which states that “Any such regulations shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament”] – thereby subjecting ministerial regulations to parliamentary override if required. Put pointblank therefore, the power to make regulation by the inister in the PIB is not subject to any check as is the case with the equivalent UK law other than this requirement for consultation which is also implicitly ousted via a carefully constructed exception clause. Section 8(6) for instance annuls any envisaged gain of consultation when it was declared that “Notwithstanding the provision of subsection (2) of this section, the Minister may, due to the exigency of the circumstances, make any regulation without conducting an inquiry, where he deems it necessary to do so.”

Ejiofor’s position which celebrates such provisions as delegation of duties and mandatory public consultations by the Nigerian Petroleum Minister in the PIB as evidence that the draft bill is good is therefore ill advised. He essentially equated such tokenisms as adequate mechanism for check and balance. He cannot be more wrong. He who delegates owns the actual reins of power and as far as the Nigerian context is concerned, he who calls the shot dictates the tune! So delegation of functions by a Nigerian Minister is no guaranty that he would not doctor or manipulate processes through those same subordinates. The nation’s history is replete with many examples! Although it must be stated that it is not correct that duties are not delegated in the UK or that there are no mandatory consultations before any ministerial regulation is produced (readers who are members of professional institutes in the UK know better). Some practices are established norms that have also been adequately captured in other bodies of laws and there may just not be any sensible reason to repeat them as distinct requirements in a UK Petroleum Act – when it is even commonsensical that UK’s approach to development is multi-sectoral unlike Nigeria where each department of government operates as an island.

Even in deciding the consideration (cost etc) to be furnished for such licences, the Secretary of State will not act alone as he must seek the concurrence of the Department of Treasury (equivalent of the Nigeria’s Ministry of Finance) compulsorily. Ref Part 1, Section 3 (3) “Any such licence shall be granted for such consideration (whether by way of royalty or otherwise) as the Secretary of State with the consent of the Treasury may determine”.

If we even concede that the author is legally correct (he is wrong as we have so far seen) without forfeiting our right to correct the folly in the article, the most fundamental flaw of the argument advanced would be the boldface commission of fallacies of context – UK versus Nigeria. For instance the article failed to state that the administrative and cultural environment that make the Secretary of State accountable to the people of the United Kingdom is absent in Nigeria. It failed to mention that the institutional framework as well as the internal regulatory mechanism available and embedded generously in the tonnes of patriotic laws and regulations in the United Kingdom are absent in Nigeria.

The article failed to mention for instance that a UK Defence Secretary (Liam Fox) resigned in October 2011 within a week of media accusations that his friend appeared to enjoy certain special privileges involving official trips (he never waited for a committee to confirm the allegation). Neither did the article mention that Labour MP David Chaytor was jailed for 18 months after the media broke the news that he illegally claimed about N5million (£20,000) as accommodation allowance (the expenses scandal). It equally failed to mention that similar scenarios play out every day in government institutions in Nigeria, involving Ministers, legislators, governors and other top government functionaries while the usual response would be “is my wife/friend/brother/relative not qualified?” Of course, the article did not mention that Nigerians do not even know what their Ministers’ expenses are or even their legitimate earnings and neither did it state that members of the National Assembly, in a rare display of camaraderie, unity and solidarity across party affiliations (PDP, ACN, CPC, ANPP etc) are presently unanimously in court actively frustrating the legitimate request of Nigerians seeking to invoke FOI in order to know how much money their honourable representatives in the hallowed chambers are earning!

The article failed to mention that on 3rd of February 2012 the United Kingdom’s Secretary of State for the Department of Energy and Climate Change (that’s the counterpart to Nigeria’s Petroleum Minister), Chris Huhne, resigned from his post after it was announced that he would be prosecuted for perverting the course of justice, in relation to mere accusations that he dodged direct responsibility for speeding penalties (he had passed it to his ex-wife’s record to avoid losing his own licence). The article also failed to mention that when, under the watch of a Nigerian petroleum minister, subsidy payment ballooned from N300billion to N2.1trillion within one year – in spite of this being naked evidence of grave incompetence (if that isn’t, what else is?) and in the face of several damning accusations of culpability – that Minister went ahead to be the judge in her own case (in violation of the maxim Nemo iudex in causa sua), set up committees to probe the industry’s activities under her watch for which she and the directors appointed by her were being accused of complicity, received the reports of the committees – the rest they say is history.

The courts in the United Kingdom have established that the discretionary power of public officers does not protect against actions, activities and commissions of the officials that undermine natural justice – that the power must be exercised without bias or favouritism, and in a manner that would not negatively impact the welfare of the State. This is a powerful check to ensure that such powers are not abused. Such discretionary use of power in Nigeria that has led to continuous inefficient infusion of tax payers’ money in endless cycles of turnaround maintenances (TAMs), that has led to subsidy ballooning to N2.1Trn in 12 months, that has resulted in one of the most opaque oil and gas industry in the world cannot be said to favour the welfare of the Nigerian state or its people under any guise or using any known development metrics.

Flowing from above referenced legal stipulates and principles, it is clear that while a girlfriend, madam’s hairdressers, oga’s tailors, notable politicians etc could theoretically be allocated oil blocks and licences in the United Kingdom as rewards for running domestic errands, in practice such actions would not only result in unprecedented scandal and public opprobrium, but could likely land the wielder of that discretionary power in prison for abuse of privileges. Do the administrative culture and legal environment and practice in Nigeria support such institutionalized inhibitions against abuse?

Finally, in designing a law, the architects of the legislation owe it a duty to ensure that they consider good fit between the legislation being proposed and its purpose. Varda Bondi and Andrew Le Sueur (2012) said it is a statement of principle that “when designing a redress mechanism it is necessary to anticipate what kinds of grievances are likely to arise from the decision-making process”. The primary afflictions of the Nigeria’s oil and gas industry have been lack of accountability and gratuitous corruption manifesting as favouritism, nepotism, collusion, arbitrariness and outright stealing. No sane nation would attempt to correct those by enacting a legislation that would strengthen an individual rather than the institution or create opportunity for opacity, corruption and arbitrariness in lieu of transparency.

Recommendations

  1. The National Assembly must as a service to the nation expunge all such clauses from the PIB that confer power to act arbitrarily on the Minister or any officer of the state that would be presiding over activities in the Oil and Gas industry. Even if there is a good person today who will use discretion power in good faith, what is the guarantee that there shall always be a good person as minister? Nigeria must be inching towards a legal drafting strategy that ensures that even if an evil man is in charge, the internal control mechanism in the law would force his hands to act in good faith and in the interest of the state.
  2. The National Assembly should introduce specific rules that will guide the use of discretion, if any, in the PIB. The writer recommends adopting the EU stipulates wholly (or with minimal adjustments). Unfettered power of discretion will lead to legalising favouritism. There is no way our youths would ever be inspired to be patriotic or embrace hard-work if they see many becoming wealthy overnight solely on the basis of their connections and closeness to people in positions of authority.
  3. The PIA (PIB when it becomes law) must be made to address the ills of the Oil and Gas industry and not to legitimize those ills. Non-compliance with the principles of the global extractive industry transparency initiatives led to the evolution of an opaque industry where licences and oil blocks became personal recompense for buddies and allies rather than being invaluable instrument for developing a competitive knowledge driven economy. The national assembly should introduce specific clauses into the PIB aimed at ensuring unprecedented degrees of transparency and accountability.
  4. A case must be made in the law for a mandatory (and published) weekly and monthly activity (if it captures all activities without exemption, the better for Nigeria) and financial reporting (the goal should be to make it daily or as-is in future) by all the agencies involved and for these reports to be made available in official gazettes and on the official websites of the agencies. Joseph Pulitzer once famously proclaimed that “There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice which does not live by secrecy.” A possible direct impact of this suggestion is that it eliminates the scenario where costly infractions committed only come to light 12 months or years after as revealed in the fuel subsidy probe of the National Assembly in 2012.

 Conclusion

Nigeria is unable to derive maximum benefits from its oil and gas. Why? Even the oil producing states of Nigeria, being about the size of Ghana in combined population with combined annual earnings from 13% derivation that is higher than Ghana’s yearly budget remain underdeveloped. Why? It’s obvious that something bigger than money is wrong – absence of accountability, transparency and efficiency in resource allocation. I commend the commitment of Dr. Goodluck Jonathan and his predecessor Umaru Musa Yar’Adua to the PIB.

The President must not allow his effort to be undermined. With the compulsory acreage relinquishment scheme, the enhanced local content structure, the massive potential for increased taxes and earnings, the PIB is a bill that the National Assembly must promptly pass. In passing the bill however, the legislators must be well guided so as to remove all provisions that are deliberate landmines inserted to further personal agenda and kill the primary objectives of the PIB.

Read first part of this article here.

Tunji Ariyomo is a Chattered Engineer and the Policy Chair on Energy, Infrastructure and Technology for the NDi.

Email: oariyomo@nd-i.org ; Phone: +447532127503.

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