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RMAFC picks holes in PIA Act

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has drawn the Federal Government’s and relevant bodies attention to inconsistencies in key provisions in the Petroleum Industry Act (PIA 2021), which the Commission said are at variance with the provisions of relevant sections of the 1999 Constitution (as amended).

Rising from a four-day retreat in Uyo, Akwa Ibom State, convened to deliberate on enforcement of the PIA 2021, participants at the RMAFC retreat spotted inconsistency in provisions of section 24(4)-(5) of the PIA, 2021 which stipulates remittance of operating surplus of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) into the Consolidated Revenue Fund, while the Commission itself is being funded from the Federation Account.

A copy of the retreat’s communiqué, signed by RMAFC’s Acting Chairman, Umaru Faruk Abdullahi, shared with New Telegraph showed that participants were drawn from select agencies, such as the Federal Inland Revenue Service (FIRS), Nigerian Content Development and Monitoring Board (NCDMB) and Nigerian Upstream Petroleum Regulatory Commission and related bodies.

It described as vague, the new structure created by section 53(1) of the PIA, 2021 i.e. Nigerian National Petroleum Company (NNPC) Limited which vests ownership of all shares in government to be held by Ministry of Finance Incorporated and Ministry of Petroleum Incorporated.

Also of concern to participants, is the establishment of the NUPRC under the PIA 2021. It noted that, revenue accruable to the Federation Account is expected to increase as a result of the new fiscal regime embedded in the Act through the introduction of changes in tax regime, non-allowable deductions, change in penalty regime, and reduction and volatility of government revenue.

 

To correct observed inconsistencies in PIA Act, participants called for urgent efforts to be made in addressing grey sections of the PIA, 2021 that are inconsistent with the relevant sections of the 1999 Constitution.

Such efforts, retreat participants suggested may include judicial action to interpret those aspects of the PIA that are deemed inconsistent with the 1999 Constitution or through legislative actions to amend same.

With regards to the operating surpluses accruing from the operations of NUPRC and NMDPRA as provided in the PIA, 2021, it suggested it should be remitted into the federation account in addition to royalties based on production for crude oil and condensates, the PIA introduced “royalty by Price” and “non-discriminatory basis”.

 

It noted with commendation the creation of 3% of operating expenses of the upstream oil companies in favour of host community development trust fund, adding it will foster the enhancement of peaceful and harmonious coexistence between operators and host communities.

 

The four day retreat which ended over the weekend had as its theme: ‘Petroleum Industry Act (PIA) 2021 and its impact on federation revenue’.

 

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