The Petroleum Industry Bill is a compendium and assembly of all the laws as at date regulating the upstream and downstream petroleum operations, including gas in Nigeria.
As at date, all these laws are in different volumes of Laws of the Federation as from time to time updated. These laws are now sought to be repealed by this Bill.
This Bill was first introduced in the Legislature by President Yar’adua when Dr. Rilwanu Lukman was Minister of Petroleum Resources. This was and is now inherited by Dr. Goodluck Jonathan as President and the new Minister of Petroleum, Allison Maduekwe.
The intendment of this Bill is good because it makes it easy for all the Laws governing the Petroleum industry to be seen in one volume and body of laws referred to in one Act instead of the situation where the Petroleum Act, Petroleum Product Pricing Regulatory Agency, Petroleum Technology Development Fund, Associated Gas Re – injected Act among others are found in different volumes of Laws, made in different dates and possibly with conflicting provisions.
I have read the provisions of this Bill, and compared them with the provisions of the extant Acts and found them to be the same in material particulars. Take for example the provisions of the provision of the Petroleum Equalization Fund (Management Board) Act as well as the Petroleum Technology Development Fund Act amongst others as listed below and compare them to the provisions of the Petroleum Industry Bill.
|PROVISION OF THE PETROLEUM EQUALIZATION FUND (MANAGEMENT BOARD) ACT||PROVISION OF THE PETROLEUM INDUSTRY BILL|
|1||SECTION 1: There is hereby established a Fund to be known as the Petroleum Equalisation Fund (in this Act referred to as The Fund) into which shall be paid
||SECTION 100 (1): There shall continue to be the Petroleum Equalisation Fund (“the Equalisation Fund”) into which shall be paid
|2||SECTION 2: The fund shall be utilised for the reimbursement of oil marketing companies for any loss sustained by the solely and exclusively as a result of the sale by them of petroleum products at uniform prices throughout Nigeria being prices fixed by the Minister pursuant to Section 6 (1) of the Petroleum Act||SECTION 104: The Equalisation Fund shall be utilised for:(b): the reimbursement of petroleum products marketing companies for any loss sustained by them solely and exclusively as a result of the sale by them of petroleum products at uniform prices throughout Nigeria being benchmark prices set by the Equalisation fund.|
|PROVISIONS OF THE PETROLEUM TECHNOLOGY DEVELOPMENT FUND ACT||PROVISIONS OF THE PIB|
|1||SECTION 1: There is hereby established a fund to be known as the Petroleum Technology Development Fund (in this Act referred to as “the Fund”) into which shall be paid moneys comprising the following, that is to say—
and moneys in the said Fund together with interest (if any) payable in respect thereof shall be applied for the purposes specified in section 2 of this Act.
|SECTION 74: There shall be paid into the Development Fund, monies comprising:
|2||SECTION 2: The Fund shall be available for the purposes of training Nigerians to qualify as graduates, professionals, technicians and craftsmen, in the fields of engineering,geology, science and management in the petroleum industry in Nigeria or abroad; and in particular; and without prejudice to the generality of the foregoing, the Fund shall be utilised as follows—
|SECTION 76 (1): the Development Fund shall be used for the purposes of training Nigerians to qualify as graduates, professionals, technicians and craftsmen, in the fields of engineering, geology, science and management and other related fields in the petroleum industry and in particular, and without prejudice to the generality of the foregoing, the funds shall be utilised to:a. Provide scholarships and bursaries, wholly or partially to universities, institutions and in petroleum undertakings in Nigeria or abroad;b. maintain, supplement, or subsidise such training or education as specified in this subsection;
c. to make suitable endowments to faculties in Nigerian universities, colleges, or institutions approved by the Board;
j. to make available suitable books and training equipments in the Nigerian tertiary institutions;
k. sponsor visits to oil fields, refineries, and petrochemical plants for the purpose of training;
l. sponsor or finance participation of Nigerians in petroleum related seminars, workshops and conferences within or outside Nigeria
Again, even in the composition of the Boards, other than the expansions, the provisions are the same.
Having commended the general provisions, presentation and intendment of the draft legislation, may I draw attention to some of the matters that the Committee to which this Bill will be committed may note and recommend amendments. For example:
POWERS AND FUNCTIONS OF THE MINISTER
The powers and functions vested in the Minister are excessive and should be reviewed so that the institutions established and statutory powers conferred can operate with minimal interference and conflict from the Minister.
There should be caution in the definition and assignment of functions to the Minister because the need may arise in the future to split the functions and powers of the Ministry under the Petroleum Industry to 2 or 3 Ministers, even for gas, so that amendment of the Act may not then be necessary before it can be affected.
FRONTIER EXPLORATION FUND/AGENCY
There is a fundamental omission in the Bill which I urge should be provided for when considered in the Committee. It is the Frontier Exploration Fund/Agency which is responsible for exploring oil in areas not yet producing. In Nigeria, oil is produced mainly in the Niger Delta and off – shore Atlantic Ocean and the Gulf of Guinea. Large deposits of oil are found in the Benue Trough (Benue, Plateau, taraba States etc), the Bauchi trough (Bauchi, Gombe States et al) and the Chad Basin (Borno, Yobe states in Nigeria), Republic of Cameroon, Niger Republic, Chad Republic are oil bearing, and up to produce, and it is the Frontier Exploration Agency or Fund that should be used in sustaining and funding preliminary activities to be used for the actual exploitation to contribute to the Federation Account.
The implication of this is that these states, in addition to derivation from solid minerals through the Federation Account would also earn derivation from oil, with attendant environmental challenges.
EQUITY AND FEDERAL CHARACTER IN THE DISTRIBUTION OF OIL BLOCS, MARGINAL FIELDS AND OIL PROSPECTION LICENCES.
Let us consider the following:
- Cavendish Petroleum, the operators of the OML 110, awarded to Alhaji Mai Deribe of Borno State – North East, nets an average of about N4 Billion monthly.
- Seplat/Platform Petroleum, operators of the ASUOKPU/UMUTU Marginal Field with Mallam (Prince) Sanusi Lamido as a major shareholder and Director.
- South Atlantic Petroleum Limited (SAPETRO) established by General T. Y. Danjuma, who is also the Chairman of Eni Nigeria Limited. SAPETRO partnered with Total Upstream Nigeria Limited (TUPNI) and Brasoil Oil Services Company Nigeria Limited to become operators of the OPL 246.
- AMNI International Petroleum and Development Company is owned by Alhaji (Colonel) Sani Bello of Kontangora, Niger State. They are operators of OML 112 and OML 117. A former Petroleum Minister and former OPEC Chairman, Rilwanu Lukman, another northerner, manages AMNI Oil blocs and with very key interests in the NNPC/Vitol trading deal.
- Oriental Energy Resources Limited, a company owned by Alhaji Indimi runs three oil blocs: OML 115, the Oldwok field and the Ebok field.
- Alhaji Aminu Dantata’s Express petroleum and Gas limited operates OML 108.
- OML 113 allocated to Yinka Folawiyo petroleum Limited is owned by Alhaji W. I. Folawiyo.
- OPL 291 was awarded to Starcrest Energy Nigeria Limited, owned by Emeka Offor which was sold by Starcrest to Addax Petroleum. Emeka Offor still has a stake in Addax operations in Nigeria.
- Mike Adenuga’s Conoil is the oldest indigenous oil exploration industry in Nigeria with 6 oil blocs.
- Alhaji Saleh Mohammed Gambo North East petroleum Limited is the holder of the OPL 215 License. NOREAST Petroleum, which it is known as, was awarded the blocs OPL 276 and OPL 283 and closing thereupon a Joint Venture Agreement with centrica Resources Nigeria Limited and CCC Oil and Gas.
- INTEL is owned by Atiku, Yar’adua and Ado Bayero and has substantial stakes in Nigeria’s oil exploration industry both in Nigeria and Sao Tome and Principe.
These need to be looked into, revoked and re – awarded. The federal character which is a principle applicable in every aspect of our national existence should also be brought to bear in the application of our oil blocs, marginal fields and prospection licences.
- Section 149 and other provisions of the Bill provide that the national oil company as well as other bodies established in this Bill shall not be subject to the provisions of the Fiscal responsibility Act and the Public Procurement Act.
These two bodies are public institutions established to ensure and assure accountability and rule of law in the conduct of Business, particularly public business. These laws were made for all public institutions in Nigeria and not lesser mortals. It was to strengthen these laws that the Nigeria Extractive Industry Transparency Act was made by the National Assembly and assented to by Mr. President, and it became law. Therefore, this provision that the Bodies should not be subject to the Fiscal Responsibility and the Public Procurement Acts, wherever it appears in the Bill, should be expunged.
- DERIVATION FUND AND HOST COMMUNITY DEVELOPMENT FUND
The proviso to Section 162(3) of the Nigerian Constitution 1999 provides:
“Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than 13% of the revenue accruing to the Federation Account directly from any natural resources”.
Derivation applies to states which actually produce any minerals or resources. Such derivation fund will naturally apply to the States and such states are solely responsible for how they would use such funds for their development. The principle of identifying and making payments to the States or regions from where resources that contribute to the central government’s finances has been a factor in Nigeria’s fiscal federalism since the early times of the Federal political system in Nigeria.
There is now a misunderstanding or mixed understanding of the meaning and application of the derivation fund. The PIB 2012 has sought to address this by the setting up of the Petroleum Host Communities Fund. Section 116 of the Bill provides:
“There is established a fund to be known as the Petroleum Host Communities Fund (in this Act referred to as the PHC Fund)”.
The purpose of the Fund is spelt out in Section 117 of the bill. The section states that the fund shall be utilized for the development of the economic and social infrastructure of the communities within the petroleum producing area.
Section 118 (5) says where there are acts of vandalism in any community, the proceeds from the funds shall be used for any repair works in the said area.
When bills are sent by the Executive, President, Legislators or the public to the Legislature for consideration, they always come in a draft and imperfect form.
The Petroleum Industry Bill as forwarded to the National Assembly has come in with various inconsistencies for consideration. It, as such, demands thorough review and passage and forwarding to the President for assent.
It is my utmost believe that this Bill will sail through when the National Assembly has gone through it with the required due diligence.
Senator Ita Solomon Enang, Chairman of the Committee on Rules and Business, represents Akwa Ibom on the platform of the People’s Democratic Party, PDP