PIB: Concerns over equity at Senate hearing

CHUKWU DAVID reports that the Senate has subjected the Petroleum Industry Bill (PIB) to public hearing and highlights some salient issues that took place including concerns raised by stakeholders on some of the provisions of the bill

The Senate recently conducted a public hearing on the Petroleum Industry Bill (PIB). The two-day exercise, which held between January 25 and 26, was organised by the Senate Joint Committee on Petroleum Downstream, Upstream and Gas Resources.

Two critical stakeholders attended the hearing and played prominent roles in the discussions that took place. They are the Host Communities (HOSTCOM), producing Oil and Gas in Nigeria and the Oil Producers Trade Section (OPTS).

The first concern raised by the Host Communities was the issue of equity shareholding. In the current PIB document, only 2.5 per cent was proposed as the equity shareholding for the oil and gas producing communities by the Federal Government, which submitted it as an executive bill to the National Assembly. The 2.5 per cent is far below the 10 per cent which was proposed in the first draft of the bill, introduced to the National Assembly in the Sixth Assembly.

This is definitely one of the reasons some influential political stakeholders from some sections of the country, made sure that it was not passed by the apex Assembly then. The Host Communities, vehemently expressed its rejection of the paltry 2.5 per cent shareholding as provided in the legislation, and insisted that they would not accept anything less than 10 per cent, threatening that the bill would not see the light of the day if the National Assembly failed to meet their demand.

Presenting the position of the HOSTCOM at the public hearing, the National President of the group, Benjamin Style Tamaranebi, said: “As it concerns the Host Communities of Nigeria Producing Oil and Gas in Chapter 3; the Host Communities stand on 10 per cent equity share holding.

“After 60 years of marginalization and bearing the brunt of the negative impacts of exploration and exploitation, today, some states have started discovering and enjoying their natural resources. But the Producing states and HostCom are not envious of them therefore our position is sacrosanct.”

The Host Communities further said that it would be economically illogical to deprive the producing communities of the right to equity shareholding in both the establishment of the Nigeria National Petroleum Corporation (NNPC), the commission, the authority and the boards. They warned that the attempt to take over complete control of all their national assets by those they described as the “unpatriotic few” would be resisted.

The group also demanded that the gas flare penalty funds captured in the proposed law should be given to the Host Communities because they are the ones directly suffering the consequences of gas flaring in their areas. “In the case of the gas flare penalty funds, the Host Communities who are the direct recipient of the negative effects are the ones to receive the gas flare penalty”, the Host Communities insisted in their submission to the Senate Joint Committee.

It cautioned that failure by the Federal Government to honour the 10 per cent demanded by the Host Communities would endanger the peace being enjoyed in the Niger Delta, while threatening that the bill might also not see the light of the day in terms of becoming law, expressing serious displeasure of the minister’s comment during the second day of the public hearing.

“As far as the PIB is concerned, for it to see the light of the day in a way that it will guarantee safety for the operational companies in all the affected communities and give the communities themselves, equity participation and required sense of belonging, the 10 per cent equity share must be honoured.

“The Minister of State for Petroleum, should take his 2.5 per cent operational cost to the marine because the people of the affected communities are not morons or beggars begging for peanuts or grants from anybody”, the group said.

It also noted that the peace being enjoyed across the nine oil producing states was because of hope of fairness and equity they saw in PIB which was about to be dashed, with the 2.5 per cent shareholding offered to the Host Communities in the bill.

“The world is transisting from fossil oil (petroleum) to gas, indicating a new world order requiring favourable working environment for all stakeholders, which the entire leaders of the host communities are ready to guarantee if the needful is done by government as well.

“The people of the area are dying from cancerous emissions they take in without commensurate compensation in anyway. Not even a single cancer centre is established in any of the oil and gas producing communities,” HostCom lamented.

In a related development, the Oil Producers Trade Section (OPTS), in its presentation at the hearing, observed that the PIB did not address key challenges facing gas sector development in Nigeria.

The Chairman of the OPTS, Mr Mike Sangster, who expressed the concerns of the body said: “if the PIB is passed in its current form, it will not meet the government’s objectives of making Nigeria the leading destination for oil and gas investment and the recent scarcity of investmentonly $3 billion out of $70 billion in Africa-will continue.

“Nigeria faces ever increasing competition for investment and, despite having the largest reserves, only $3 billion out of the $70 billion committed in Africa for projects sanctioned between 2015 and 2019 were attributed to Nigeria, representing a meager four per cent”.

“This lack of competitiveness is caused in part by the high cost of doing business in Nigeria, with overall project costs and operations costs being 69 per cent and 42 per cent higher than the global average respectively.

A PIB, which safeguards existing projects and introduces competitive terms, is required to fully utilise the country’s resources for the benefit of all Nigerians,” Sangster stated. He, however, said that OPTS had conducted a detailed review of the PIB and commended the Federal Government’s efforts to introduce a comprehensive bill to address a number of issues affecting operations of the oil and gas industry.

He said that OPTS had observed some positive provisions in the bill which includes lower headline taxes rates for onshore and shallow water oil development activities. He added that the PIB also made provision for commercialisation of the Nigerian National Petroleum Corporation (NNPC) to bring about improved business efficiency among other laudable initiatives in the PIB.

Meanwhile, the President of the Senate, Ahmad Lawan and the Minister of State for Petroleum Resources, Timipre Sylva, expressed optimism that the passage of the bill would boost socio-economic fortunes of the Host Communities and Nigeria in general. While declaring the event open, Lawan said that the National Assembly will ensure that when passed into law, the legislation would guarantee improved revenue earnings for the country as well as protect the investors and the oil producing communities.

His words: “Let me say this, we (National Assembly) will pass this bill not without ensuring that it is a bill that satisfies certain conditions. Nigeria is blessed with these resources, we want Nigeria to benefit optimally from them. In fact, we are in a hurry because we have lost so many years of benefits that we could have had.”

He, however, noted that the nonpassage of the PIB had been a major drag on the industry over the years, significantly limiting its ability to attract both local and foreign capital at a time when many other countries are scrambling to exploit their oil and gas resources. “The mere knowledge that the nation’s oil industry is still being governed by laws enacted more than 50 years ago is ludicrous and extremely disappointing.

As legislators, we will strive to deliver a Bill that will enhance the growth of our oil and gas industry, modernize our fiscal system and enhance competitiveness, while creating harmony for all stakeholders. This is a promise we have made and that we shall achieve. “Nigeria must have an Oil and Gas Industry that benefits its people. Equally, our Oil and Gas Industry must be competitive.

We must create a sustainable investment climate, where business in the sector will flourish,” he said. On his part, the Minister of State for Petroleum Resources, said that the passage of the PIB would assist host communities in petroleum operation areas to achieve their aspirations.

Calling for expeditious passage of the bill, Sylva said that the host communities would benefit immensely, noting that the objectives of the bill included promotion of economic growth through increased oil and gas production. Other objectives according to the Minister, are to stimulate economic growth through investment in midstream gas infrastructure and to institute a strong regulatory framework with increase emphasis on midstream development.


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