Finally, the much-awaited Petroleum Industry Bill was passed by the two chambers of the National Assembly, recently. Of the 319 clauses and eight schedules that make up the bill, the ones concerning the host communities and the frontier development of oil have sparked national conversation, threatening to stir up a storm should reservations arising therefrom are not addressed before President Muhammadu Buhari’s assent. For them, giving three per cent, rather than the 10 per cent demanded, to host communities, stretching the definition to oil infrastructure transit communities and using other people’s oil profit to grope for oil in unlikely or impossible places, bring to remembrance some of the on-going open grazing controversy in the country. Chris Paul reports
After a clause-by-clause consideration of a report by the Joint Committee on Downstream Petroleum Sector, Petroleum Resources (Upstream), and Gas on the PIB, two decades of failed attempts later, the Senate passed the Petroleum Industry Bill (PIB), two Thursdays ago.
By this passage, the upper chamber approved the commercialisation of Nigerian National Petroleum Corporation (NNPC) and scrapping of the Petroleum Equalisation Fund (PEF) and Petroleum Products Pricing Regulatory Agency (PPPRA), while it okayed 30 per cent of profits accruing from oil and gas operations by the NNPC Limited for the exploration of oil in the frontier basins.
The bill also set aside three per cent of the operating expenditure of oil companies for the development of host communities.
Consisting of five distinct chapters, which include governance and institutions; administration; host communities development; petroleum industry fiscal framework; and miscellaneous provisions, the PIB has a total of 319 clauses and eight schedules.
In the NASS approved bill, Clause 53 empowers Petroleum Resources Minister to incorporate the Nigeria National Petroleum Corporation (NNPC) as a limited liability company to be known as NNPC Limited, six months after the commencement of the Act.
At incorporation of NNPC Limited, the minister is mandated, under this clause, to interface with the minister of finance to determine the number and nominal value of the shares to be allotted. This forms the initial paid-up share capital of NNPC Limited.
Ownership of all shares in NNPC Limited is to be vested in the government at incorporation and held by the ministry of finance incorporated on behalf of the government.
Funding mechanism of 30 per cent of NNPC Limited’s oil and gas profit in the production sharing, profit sharing, and risk service contracts to fund the exploration of frontier basins, also got the nod of the red chamber.
Estimated at $500 million annually, the Senate approved 3 per cent of operating expenditure of oil companies (OPEX), to be paid as contribution to the host community development fund.
The bill also include Clause 4 which seeks the establishment of the Nigerian Upstream Regulatory Commission to provide technical regulatory functions that would enforce, administer and implement laws, regulations and policies relating to upstream petroleum operations.
The approved bill makes provision for the establishment of Nigerian Midstream and Downstream Petroleum Regulatory Authority, which shall be responsible for the technical and commercial regulation of midstream and downstream petroleum operations in the petroleum industry in Nigeria.
To ensure that all monies received from gas flaring are channeled for the purpose of environmental remediation and relief of the host communities as against the development of infrastructure in midstream gas operations; the recommendation of the Joint Committee was amended in Clause 52(7d).
Uproar greeted the Senate-approved 3 per cent equity for host communities; as Senators were split on the right per cent of oil profits to be accrued to the Host Communities Trust; before the bill was passed.
In the executive bill, the Presidency had forwarded the proposed 2.5 per cent operational cost-share for the host communities to both chambers of the National Assembly last year.
Though opposed during the public hearings in February by leaders of the oil-producing communities, in the proposal, the Senate joint committee that worked on the bill, recommended 5 per cent; which, according to the committee, was to ensure adequate development of the host communities and reduction in the cost of production.
Predictably, the sensitivity of this host communities’ clause caused some tension in the red chamber when the Senate passed an amendment to Section 240 of the bill on the sources of funding for the fund, slashing the percentage to 3 per cent.
Senators from the Niger Delta did not take this lying down as they immediately rose against the amendment.
Proposing an amendment for the retention of the provision of five per cent in the report, Senator James Manager (PDP, Delta), said, “This particular thing that is before us is something that is very bitter for us to swallow, a very bitter pill for us to swallow.”
While Manager’s appeal was rejected, Senator George Sekibo (PDP, Rivers) called for a division to challenge the ruling of Lawan; after the Senate President ruled on the 3 per cent.
Senate Leader, Yahaya Abdullahi, intervened and prevailed on Sekibo to withdraw his motion, pleading that if it allowed division to happen, the Senate would be heading to the state of Armageddon.
Conceding that calling for division is the right of every lawmaker, he pleaded with Sekibo to allow the Senate progress with the bill.
Evidently overwhelmed, Sekibo agreed, but appealed that the percentage should be increased. Another contentious aspect of the bill is the joint committee’s recommendation on Frontier Basins.
In recognition of the need for Nigeria to explore and develop the Nigeria’s frontier exploration, the joint committee’s move was designed to take advantage of foreseeable threats to the funding of fossil fuel projects across the world; due to speedy shift to alternative energy sources.
This frontier basins funding idea, is as unattractive as the 3 or 5 per cent host communities fund is put offish to the Niger Delta region representatives, who believe this passed PIB is an unacceptable rape of the rights of the real oil producing communities in Nigeria.
To them, this move is reminiscent of the dreaded ranching or Rural Grazing Areas (RUGA) policy the federal government is creating to protect and pamper the herdsmen, who are predominantly Northerners of the Fulani extraction.
Necessitating a reassertion of the anti- open grazing Law in the Southern part of Nigeria, the Southern governors converged on Lagos, towards the end of last week, to respond to President Muhammadu Buhari’s directive to find grazing routes for cow herders, in his now historic Arise Television interview.
Their rationale is anchored, logically, on the fact that herding of cows is a personal business; just as any other trade and should be treated as such.
In other words, the Southern governors reckoned that open grazing of cows is done at the expense of other people’s sweat.
Allowing the herders to roam the streets and farms, unhinged, will impact negatively on people’s farms and eventually lead to hunger.
Claims by some members of the Northern intelligentsia, alluding to the fact that the North owns all the land space across the South for their cattle to graze on, were false.
Asking helpless farmers to surrender their land to intrusive, disruptive and destructive herders, (‘since only the living can argue about Land,’ as a Presidential Aide once said) is interpreted by Southern governors, as a joke taken too far.
So, seeking to allow 30 per cent of industry profits to prospect for oil in places that show no possible oil is similar to demanding for the building of RUGA settlement across the South.
While the redefinition of host communities, to include communities that have oil and gas infrastructure like pipes etc. running through their land, reflects the assertion in President Buhari‘s recent cow grazing route directive.
For the Southern governors and their people, Buhari’s insistence on turning the South into a grazing route for herders who are largely Northerners of Fulani extraction, is seen in the light of the President’s penchant for using his powers to twist the law just to favour his own kinsmen; in this case, giving the itinerant herdsmen same right as indigenes across territories in Southern part of Nigeria.
The growing insecurity, occasioned for the most part by invading criminal herdsmen, who kill farmers, rape their wives while their cows destroy farms is the cause of the resistance by the Southern governors against perceived forceful takeover of Lands in the South by the Fulanis.
But what is the rationale behind setting up such a huge chunk of profit made in the business by other people only to possibly waste it looking for oil where it is not likely to find a drop. In practical terms, it means that if after spending over $10 billion for industry operations for the year and generate a profit of, say, $20 billion, it means $6 billion will be dedicated to finance oil explorations in Frontier Basins. Meanwhile, non-oil producing communities will share a negligible 3 per cent with oil communities because both are impacted ab initio.
The resistance by Niger Delta lawmakers against the obviously defective part of the bill is a reflection of the Niger Delta people’s sentiment against these critical clauses in the bill.
As the two chambers prepare to transmit the bill to Buhari for his assent this week, opposition to the bill has begun to mount as Niger Delta youths and groups have started expressing their rejection of the bill.
Speaking at a media briefing in Abuja on Monday, National Leader of the Pan-Niger Delta Forum (PANDEF), Chief Edwin Clark, rejected the recently passed PIB, describing its provisions as unjust, satanic and provocative.
Clark said the bill as passed was part of a larger plot to continue the subjugation of the people of the Niger Delta by international oil companies (IOCs) and their northern collaborators.
Specifically noting the provision of 30 per cent of profits for further frontier oil exploration in the North, Clark called to question claims by the current regime that it was working towards an economy away from oil.
Represented at the press conference by PANDEF’s National Publicity Secretary, Ken Robinson, Clark said the IOCs faced a difficult operational environment if the bill was not revisited and the concerns of the people of the region properly addressed.
Also rejecting the bill is a coalition of Rivers State oil and gas host communities, in a statement, the group said the bill fails to address the aspirations of the communities; adding that the PIB, which offers the host communities three per cent equity participation, was unacceptable and described it as a mischievous piece of legislation.
Rather than the PIB to stand alone, the host communities advocated that the bill should be merged with the Solid Minerals Act to better tackle their plights as they were denied the right to their natural resources.
In a statement issued in Port Harcourt, the Chairman of the coalition, Barituka Loanyie, said the PIB would end up compounding them rather than solving the problems in the oil and gas sector.
“Having critically studied the Petroleum Industry Bill, 2021 recently passed into law by the National Assembly, we, the Coalition of Rivers Oil and Gas Host Communities reject it for the reason that it fails to address the lingering issues of the oil and gas host communities.
“The bill, rather than solve germane issues in the oil and gas sector, ends up compounding them.
“We want to state without equivocation that the law is a mischievous piece of legislation and a far cry from the yearnings of oil and gas host communities, which only ends up providing a legal framework for corruption and portends a sinister ploy to continue with the unhealthy practice of denying host communities the right to their God-given resources,” he said
He added that the provisions of the PIB were surreptitiously making every community that had a pipeline underneath them, oil and gas host community, stressing that the Solid Minerals Act, which governs the solid minerals sector, had better protection for the communities in extraction sites, hence would better serve the oil producing communities.
For the Ijaw nation, no less than 10 per cent, which the oil-bearing communities demanded during the public hearings on the PIB, would be acceptable.
Rejecting the three and five per cent allocated to the host communities in the PIB, the President, Ijaw National Congress, Prof Benjamin Okaba, described the proposed three and five per cent as a Greek gift, stressing that the slashing of host communities’ percentage was ridiculously painful.
Making the position of the Ijaw people known on Monday during a press conference in Yenagoa, Bayelsa State, he contended that the Ijaw nation deserved fair treatment as it had suffered long years of environmental pollution and injustice despite producing the wealth that had sustained the health of Nigeria.
He also posited that increasing the percentage for more petroleum reserves in the “frontier basin” to 30 per cent as well as redefining the meaning of host communities to include communities where oil pipelines pass through were disgusting and provocative.
“We reject in its entirety the three per cent and five per cent provisions as compensation; the redefinition of host communities and other provisions, including the allocation of 30 per cent of our oil resources to grope in the dark in the name of exploitation, a paradox of extreme kind that is not in symphony with common sense, equity and good conscience,” Okaba said.
He urged President Buhari to refrain from appending his signature to the PIB until the National Assembly prescribed 10 per cent.
Unlike the 13 per cent, which was constitutionally committed to the oil states as derivation royalties, this three per cent will be deducted from the annual operational expenses, OP-EX, of the oil companies and allocated to the Host Communities Development Trust, (HCDT).
The passage of this bill by the 9th National Assembly, makes it the second time in 20 years, the PIB has been passed by the Nigerian federal legislature.
Passed as the Petroleum Industry Governance Bill ( PIG-B), in 2018, President Buhari refused to sign it into law citing constitutional issues. Political and sectional interests have been the major reasons for the long tenure of the Bill at the NASS.
For decades, Nigeria has been denied billions of dollars in new investments and income coming to Africa annually; due to the absence of an enabling law that meets the contemporary needs of the oil industry in a competitive world market.
If this bill becomes law, it is hoped that many of these issues will be addressed; including the unbundling of NNPC, and the protocols laid out to tackle gas flaring and other environmental consequences of production.
If faithfully implemented, this long awaited legal framework, for the Nigerian oil and gas industry, will prove revolutionary.
Before it proceeds on its July 25 recess, the legislators are determined to transmit the bill to Buhari. Preparatory to that, the usual conference committee was constituted last week to harmonise the different versions and they are likely to submit their report early this week.
Spokesman for the Senate, Dr. Ajibola Basiru, said, “The National Assembly will carry out necessary legislative actions on the bill.”
The Senior Special Assistant to the President on National Assembly Matters (Senate), Senator Babajide Omoworare, commended the Senate for passing the much-delayed PIB.
In a statement, Omoworare said that passing the bill after several efforts by the previous assemblies was a testament that the executive and the legislature could really work together without compromising party position and individual perspective, in the most positive manner with a view to actualising the common goal and communal good for Nigerians.
Speaking after the adoption of the clauses, House of Representatives Speaker, Femi Gbajabiamila, commended his colleagues, saying, “Even with this feat of landmark legislation, we are going on a high note.”
In his remarks, Senate President Ahmad Lawan said the 9th Assembly had achieved one of its fundamental legislative agenda, emphasising that, “The demons (of PIB) have been defeated in this chamber. We have passed the bill.”
Given the growing opposition by the Niger Delta people against the passage of the PIB, which he presided over, the demons he defeated in the chambers may wear the agitation regalia and return to NASS with a renewed vigour, if the concerns raised are not decisively tackled before Buhari appends his signature to the bill.