On January 17, 2013, Thisday Newspaper published an opinion piece credited to one Ejiofor Alike titled “PIB: Powers of Minister Similar to UK, Malaysian, Norwegian Laws” where the author attempted to educate his readers and justify the contentious powers assigned to the Minister of Petroleum resources. Ejiofor said “Contrary to the impression that the Petroleum Industry Bill (PIB) granted enormous powers to the Minister of Petroleum Resources, investigations have revealed that the powers vested on the Nigerian minister by the reform bill are not very different from those vested on the minister’s counterparts by the petroleum laws of the United Kingdom, Malaysia and Norway.”
Granted that it is sensible to consider this writer’s piece a simple, innocent or altruistic contribution to knowledge, the reality and extent of schism and subterfuge often deployed by African leaders against their own people to keep them uninformed and misinformed has accustomed the reading public to deliberate well calibrated articles designed to mislead or cripple the resistance of the people to leaders’ impunity and arbitrariness. The piece could only have reinforced the position of those who drafted a bill that gave the power of god over the Nigerian oil and gas industry to an individual. It is the duty of professionals that are knowledgeable about the oil and gas industry, members of civil society groups and other patriots to see beyond the facade of logic with which articles are often garnished and have misleading ones shot down in the overall interest of the development of an oil and gas industry that fulfils the fundamental principles and the minimum conditions of the global extractive industry transparency initiative of which Nigeria claims unquestionable allegiance.
This rejoinder will not focus on Malaysia or Norway – especially if readers can recollect the manner the judiciary’s power to review was crushed in Malaysia way back in 1987 by the hero Mahathir bin Mohamad in order to stifle his opponent’s access to justice (Please see Milne & Mauzy 1999, pp. 46–49). Why should Nigeria then emulate Malaysia in the area of legislation? Other areas, yes, but not rule of law! Norway on the other hand has a population that is less than that of Rivers State despite being the world’s largest producer of oil and natural gas outside the Middle East on a per-capita basis – meaning that the negative impact of favouritism and bias in the use of discretionary power by the Norwegian King may not immediately impact national development as it would in a densely populated, multi-ethnic, multi-religious country that is grappling with institutional crises and good governance challenges like Nigeria.
The relevant portions of the 1998 Petroleum Act of the United Kingdom that was deployed out of context by the author are:
Part 1, Section 3 (1) under Licences to search and bore for and get petroleum which states that “The Secretary of State, on behalf of Her Majesty, may grant to such persons as he thinks fit licences to search and bore for and get petroleum to which this section applies”.
Part 1, Section 4 (1) under Licences: further provisions which stipulates that the Secretary of State shall make regulations prescribing—
(a) the manner in which and the persons by whom applications for licences under this Part of this Act may be made;
(b) the information to be included in or provided in connection with any such application;
(c) the fees to be paid on any such application;
(d) the conditions as to the size and shape of areas in respect of which licences may be granted;
(e) model clauses which shall, unless he thinks fit to modify or exclude them in any particular case, be incorporated in any such licence.
At face value, particularly to those working deliberately or innocently to undermine the evolution of an oil and gas industry where equity, transparency and accountability reign supreme, these provisions in the Petroleum Act of the UK would appear a smoking gun evidence – an in-your-face conclusive proof to the Nigerian people that their quest to eliminate the opacity in the Nigerian’s oil and gas industry had no precedence even in a democracy as sophisticated as the United Kingdom’s.
On the contrary however, the active legislations governing the UK Oil and Gas industry’s actual practice include the ‘Hydrocarbons Licensing Directive Regulations’, a statute enacted in compliance with the European Union 1994 directive (Directive 94/22/EC) which laid down strict rules that member states must comply with when issuing petroleum licences. Directive 94/22/EC, which is the effective law in the UK in this context, specifically stipulates that “the procedures for granting authorizations for the prospection, exploration and production of hydrocarbons must be OPEN to all entities possessing the necessary capabilities; whereas authorizations must be granted on the basis of objective, published criteria; whereas the conditions under which authorizations are granted must likewise be known in advance by ALL entities taking part in the procedure” (emphasis mine).
Article 3 of Directive 94/22/EC goes further to so impose that all interested parties must be able to submit applications (competition) and that notices must be advertised at least 90 days before the commencement of bid rounds (transparency/anti-opacity);
Specifically, Article 3 states that;
1. Member States shall take the necessary measures to ensure that authorizations are granted following a procedure in which all interested entities may submit applications in accordance either with paragraph 2 or 3.
2. This procedure shall be initiated:
(a) either at the initiative of the competent authorities by means of a notice inviting applications, to be published in the Official Journal of the European Communities at least 90 days before the closing date for applications;
(b) or by means of a notice inviting applications, to be published in the Official Journal of the European Communities following submission of an application by an entity without prejudice to Article 2 (1). Other interested entities shall have a period of at least 90 days after the date of publication in which to submit an application.
Overall, the European Commission summarises it thus “National governments can determine the geographical areas for prospecting, exploring for and producing hydrocarbons. However, they have to follow a specific procedure when granting licences: an invitation for applications has to be published in the Official Journal of the EU at least 90 days before the closing date for applications. This notice should specify information such as the geographical area, the type of authorisation and selection criteria for applicants. All interested companies can submit applications.”
This legal stipulate has constrained possible misuse of discretionary powers in this regard in the UK since 1995 when the country formally complied with this directive. Some parts of this domesticated regulation titled ‘Hydrocarbons Licensing Directive Regulations’ of the UK under Determination of applications are hereby reproduced:
Directive 3 (1) Subject to paragraphs (2) to (4) below, EVERY (emphasis mine) application for a licence shall be determined on the basis of criteria concerning —
(a) the technical and financial capability of the applicant;
(b) the way in which the applicant proposes to carry out the activities that would be permitted by the licence;
(c) in a case where tenders are invited, the price the applicant is prepared to pay in order to obtain the licence; and
(d) where the applicant holds, or has held a licence of any description under the Petroleum (Production) Act 1934, any lack of efficiency and responsibility displayed by the applicant in operations under that licence,
This is not all. The law provides specific conditions, such that anything a Secretary of State does outside what has been expressly provided for under the law, would be ultra vires. For example an application cannot just be rejected. The conditions under which the Secretary of State may be able to reject an application under Directive 3 are:
AND the Secretary of State may refuse an application for a licence (in the following instances).
(2)In a case where two or more applications for a licence have equal merit when assessed according to the criteria provided for in paragraph (1) above, other relevant criteria may be applied in order to determine which application should be granted.
(3)Subject to paragraph (4) below, the Secretary of State shall not apply any of the criteria in paragraphs (1) and (2) above in a DISCRIMINATORY (emphasis mine) manner.
(4)An application for a licence may be refused on grounds of national security where the applicant is effectively controlled by, or by nationals of, a State other than a member State.
(5) Where an application for a licence is refused, the reasons for the decision shall be notified to the applicant on request.
Directive 4 (3) “The terms and conditions provided for … shall be applied in a non-discriminatory manner.”
Above provisions show that while one UK law does indeed grant discretionary power to the UK Secretary of State, actual industry practice is guided by other sets of strict laws and regulations that inhibit tendency to abuse that power and that constrain him from exercising those discretionary powers discriminatorily or with bias or, simply put, in the manners obtainable in Nigeria or intended in the draft PIB. That way, in the UK, the discretionary powers become patriotic and powerful tools to eliminate rigidity, promote efficiency and the common good of all – particularly the welfare and economic wellbeing of the state. The Secretary of State for instance cannot reject an application by not thoroughly considering the application or on the basis of irrelevant issues such as the political or religious affiliations of the applicant and neither can he approve applications on the basis of the political weight or connections of the promoters of the companies involved. Several common laws (pronouncement of judges) have clearly defined the limit and mode of use of discretionary powers (Please read JUDICIAL REVIEW, Corbett Haselgrove-Spurin, 2004 and Misuse of Discretion, under What Makes a Decision Unlawful in a Brief Guide to Judicial Review Procedure by the Public Law Project, UK). A celebrated example is R v Minister of Transport ex parte Upminster Services (1934) where in spite of the wide discretionary power granted ministers to make regulations, the court held that a minister empowered to hear licensing appeals did not have the power under the statute to lay down conditions for the holding of licences. Basically upholding the sanctity of Nemo iudex in causa sua – a person cannot be a judge in his own case.
To be continued…
Tunji Ariyomo is a Chattered Engineer and the Policy Chair on Energy, Infrastructure and Technology for the NDi.
Email: email@example.com ; Phone: +447532127503.
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