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    The Petroleum Industry Bill 20122 (Part three)

    F.       PETROLEUM EQUALISATION FUND

    100. Establishment of the Petroleum Equalisation Fund

    (1)  There shall continue to be the Petroleum Equalisation Fund (“the Equalisation

    Fund”) into which shall be paid:

    (a) any net surplus revenue recovered from petroleum products marketing

    companies pursuant to this Act; and

    (b) such sums as may be provided for  purpose of the Equalisation Fund by the

    Federal Government. 57

    (2) The Equalisation Fund is a body corporate with perpetual succession, a common

    seal and which may sue and be sued in its corporate name.

    (3) The Equalisation Fund shall have power to acquire, hold and dispose of property

    and subject to this Act perform all acts that corporate bodies may perform by

    law.

    (4) Where the Government decides that petroleum product markets have been

    effectively deregulated, the Minister shall take the required actions to ensure that

    the Equalisation Fund ceases to exist and its assets  and liabilities   transferred

    to the Government to be controlled and managed by the Ministry and at such

    time the provisions of the sections of this Act relating to the Equalisation Fund

    shall stand repealed.

    101. Establishment of the Petroleum Equalisation Fund Management Board

    (1)  There shall be for the Equalisation Fund a Board  to be known as the Petroleum

    Equalisation Fund Management Board (in this Act referred to as “the Board”)

    which shall manage the Equalisation Fund.

    (2) The Board shall consist  of –

    (a)  the Minister who shall be the chairman.

    (b)   a representative of the Ministry of Petroleum Resources;

    (c)   a representative of the Federal Ministry of Finance;

    (d)   a representative of the Agency;

    (e)   a representative of National Association of Road Transport Owners;

    (f)    a representative of the Major Marketers Association of Nigeria;

    (g)   a representative of the Independent Petroleum Marketers Association of

    Nigeria;

    (h)    a  representative each of the Nigerian Labour Congress and the Trade

    Union Congress of Nigeria;

    (i) three other persons who shall be of high integrity and substantial

    professional experience appointed by the President on the

    recommendation of the Minister; and

    (j) the Executive Secretary of the Equalisation Fund. 58

    (3) Membership of the Board shall be on a part-time basis..

    (4)  The provisions of the Second. Schedule to this Act shall have effect with respect

    to the proceeding of the Board and other matters contained therein.

    102. Powers of the Board

    The Board shall have power to –

    (a) determine the method by which net surplus revenue shall be collected from

    petroleum products marketing companies;

    (b) recover the net surplus revenues from the sale of petroleum products from

    petroleum products marketing companies, as may be prescribed  by the Agency;

    and

    (c)    inspect and inquire about any activity relating to the movement or storage of

    petroleum products and to that extent, inspect books and facilities, take

    measurements, and inquire into the correctness of information provided in

    support of claims for reimbursement.

    103. Functions of the Board

    The Board shall –

    (a) receive any net surplus revenue recovered from petroleum products marketing

    companies in accordance with the provision of section  102 of this Act;

    (b) receive any such sums as may be provided for the purpose of the Equalisation

    Fund by the  Government;

    (c) hold the Equalisation Fund in safe custody and in trust, for the reimbursement of

    petroleum products marketing companies suffering loss solely and exclusively as

    a result of the sale by them of petroleum products at uniform benchmark prices

    throughout the country, being benchmark prices set by the Agency pursuant to

    this Act;

    (d) make payment of all disbursements of the Equalisation Fund authorised under or

    by virtue of this Act;

    (e) account for all money collected, paid or otherwise expended in relation to the

    Equalisation Fund and pursuant to the provisions of this Part;

    (f) keep proper public accounts and records of transactions on the Equalisation

    Fund;

    (g) prepare in respect of each financial year a statement of accounts in such form as

    the Minister may direct; 59

    (h) ensure the proper administration of the Equalisation Fund in accordance with the

    provisions of this Part;

    (i) make rules and regulations for carrying out the functions of the Equalisation

    Fund; and

    (j)   do such other things as are necessary, expedient, legal, and in conformity with

    the provisions of this Act for the efficient performance of and in connection with

    all or any of the functions of the Board as specified under this Part.

    104. Utilisation of the Equalisation Fund

    The Equalisation Fund shall be utilized for:

    (a) the proper administration of the Equalisation Fund;

    (b) the reimbursement of petroleum products marketing companies for any loss

    sustained by them solely and exclusively as a result of sales by them of

    petroleum products at uniform prices throughout Nigeria, being benchmark prices

    set by the Equalisation Fund; and

    (c) the management of the Board.

    105. Executive Secretary

    (1)    There shall be for the Equalisation Fund an Executive Secretary, appointed by

    the President on the recommendation of the Minister.

    (2) The Executive Secretary shall be a person with vast knowledge and cognate

    professional experience in management and selected through a transparent

    merit-based recruitment process. The Executive Secretary shall be the chief

    executive and accounting officer of the Board and shall be responsible for

    running the day-to-day  administration of   the  Equalisation Fund under the

    direction of the Board.

    106. Responsibilities of the Executive Secretary

    The Executive Secretary shall –

    (a) determine the net surplus revenue recoverable from any petroleum products

    marketing company and accruing to such company from the sale by  the

    company  of petroleum products at such prices, as may be sold in accordance

    with the methodology established by the Agency;

    (b) determine the amount of reimbursement due to any petroleum products

    marketing company which has suffered loss as a result of the operation of any

    enactment or law;

    (c) ensure the  disbursements of all authorized payments under of this Act; 60

    (d) account for all monies collected, paid or otherwise expended under this Act and

    publish same in the way and manner prescribed by the Board in consultation with

    the Agency; and

    (e) carry out such other functions as may, from time to time, be specified by the

    Board.

    107. Other officers of the Board

    The Board may, on the advice of the Executive Secretary, appoint as employees of

    the Equalisation Fund such number of persons as may be necessary for the

    administration of the Equalisation Fund, who shall be subject to the general control of

    the Executive Secretary and  perform such duties as the Executive Secretary may

    direct.

    108. Collection of net surplus revenue

    (1) Net surplus revenue due and payable by petroleum products marketing

    companies shall be payable to the Equalisation Fund in accordance with

    directives issued by the Board from time to time,

    (2)   The Equalisation Fund shall have no obligation to issue a demand notice in

    respect of the outstanding net surplus revenue and the failure to issue a demand

    notice shall not constitute a defence for non-payment of outstanding sums.

    109.  Bridging and equalisation allowances

     

    Nothing in section 103 of this Act shall derogate from the right of any petroleum

    products marketing company maintaining storage facilities to collect bridging and

    equalization allowances prior to the release of petroleum products to petroleum

    products marketing companies and to remit same to the Board in accordance with

    such directives as may be issued by the Board.

    110. Claims by petroleum products marketing companies

    (1)  Petroleum products marketing companies may, as necessary, bring claims for

    the recovery of losses sustained under paragraph (b) of section 106 of this Act in

    the manner prescribed by the Board.

    (2) Where a company brings a claim under sub-section (1) of this section, the Board

    shall with the written request of the Executive Secretary, and with or without

    notice, have the right to enter upon, inspect and inquire about any activity

    relating to the movement or storage of petroleum products and to that event, to

    inspect books and facilities, take measurements, and inquire into the correctness

    of information provided in support of claims for reimbursement.

    (3) The Board shall have the power to- 61

    (a) demand details of production, supplies, loading and dispatches from

    refining companies, import terminals and storage facilities; and

    (b) gain unimpeded access to information relating to petroleum product

    imports, refining and sales collated and maintained by any government

    agency, including third party monitoring agencies, with authority to monitor

    or inspect petroleum products.

    (4) The power provided under subsection (3) of this section is limited to refining

    facilities, reception terminals, storage facilities and retail outlets.

    (5) Decisions as to payment of claims shall be made by the Board within thirty days

    from the date on which the claim was first made and where the claim is

    successful, payments shall be made within ten working days from the date of the

    decision.

    (6) Where a claim is successful and the Board fails to pay the claim to the company

    in accordance with the terms and conditions of this section, the Board shall pay a

    penalty to be prescribed by the Minister.

     

    111.  Calculation of surplus revenue recoverable

    The net surplus revenue recoverable from a petroleum products marketing company

    under this Act shall be calculated by reference to the volume of the affected products

    sold on zonal basis and to the amount by which the uniform prices at which the

    products were sold exceeded, or were less than, the prices of those products

    prevailing immediately before the fixing of the uniform prices of the products.

    112.    Prescribed dates for payment and penalty for non-payment

    (1)  The Board shall by notice served on the petroleum products marketing company

    concerned, specify the date on which any surplus revenue due from  that

    petroleum products marketing company shall be paid to the Board.

    (2)  If any sum is not paid within twenty-one days of the specified date, a sum equal

    to ten per centum of the amount unpaid shall be added for each month or part of

    a month after the date on which payment should have been made.

    (3) The Board may for just cause, waive in whole or in part any penalty imposed

    under this section.

    (4) Where the Board waives a penalty under the provisions of subsection (3) of this

    section, the Board shall give its reasons in writing.

    113.  Certificate as evidence 62

    A copy of an entry in the accounts of the Board or other extract from the records of

    the Board shall, when certified by the Executive Secretary, be received in all courts

    as prima facie evidence of the truth of the contents thereof and as the case may be,

    of the debt to the Board by any petroleum products marketing company.

    114.   Reporting obligations

    (1)  All petroleum product importers, including the National Oil Company, and

    petroleum products marketing companies shall, prior to but not later than twentyone days following each importation, report details of all petroleum products

    imported into Nigeria to the Equalisation Fund, and the reports shall include

    quantities, date of delivery and place of discharge.

    (2) All licensed petroleum product storage facilities, including storage facilities

    belonging to the National Oil Company, shall on a monthly basis, deliver to the

    Board:

    (a) logs of product movements into and out of the facilities; and

    (b) returns of bridging and equalization allowances collected from petroleum

    products marketing companies and remitted to the Board.

    (3) Marketing companies shall deliver quarterly statements of all petroleum products

    lifted and discharged, including details of load and discharge points, dates and

    times of  loading and discharge to the Board.

    (4) The Executive Secretary may, with the approval of the Board –

    (a) require any petroleum products marketing company to furnish  returns and

    keep records or any other relevant information as  may be determined to be

    necessary for the proper administration of the provisions of this Act; and

    (b) produce the records for examination by the Executive Secretary or any

    authorized officer of the Board necessary for the proper administration of

    the provisions of this Part.

    115.  Dispute resolution

    (1)  Disputes between a company and the Equalisation Fund in respect of any matter

    under this Part shall be referred to the Agency and shall be subject to the dispute

    resolution mechanism referred to in subsection (2) of this section.

    (2)  Where the Equalisation Fund is a party to a dispute under this Part, the relevant

    provisions of the Arbitration and Conciliation Act, shall apply.

     

    G.  PETROLEUM HOST COMMUNITIES FUND 63

    116.   Establishment of the Petroleum Host Community Fund

    There is established a fund to be known as the Petroleum Host Communities Fund (in

    this Act referred to as ‘the PHC Fund’).

    117.   Purpose of the PHC Fund

    The PHC Fund shall be utilized for the development of the economic and social

    infrastructure of the communities within the petroleum producing area.

    118.  Beneficial entitlements to the communities

    (1) Every upstream petroleum producing company shall remit on a monthly basis ten

    percent of its net profit as follows -.

    (a)  for profit derived from upstream petroleum operations in onshore areas and

    in the offshore and shallow water areas, all of such remittance shall be

    made directly into the PHC Fund; and

    (b)  for profit derived from upstream petroleum operations in deepwater areas,

    all of the remittance directly in to the Fund for  the benefit of the petroleuml

    producing littoral States.

    (2) For the purpose of this section ‘net profit’ means the adjusted profit less royalty,

    allowable deductions and allowances, less Nigerian Hydrocarbon Tax less

    Companies Income Tax.

    (3) At the end of each fiscal year, each upstream petroleum company shall reconcile

    its remittance pursuant to subsection (1) of this section with its actual filed tax

    return to the Service and settle any such difference.

    (4)  The contributions made by each upstream petroleum company pursuant to

    subsection (1) of this section, will constitute an immediate credit to its total fiscal

    rent obligations as defined in this Act.

    (5)  Where an act of vandalism, sabotage or other civil unrest occurs that causes

    damage to any petroleum facilities within a host community , the cost of repair of

    such facility shall be paid from PHC Fund entitlement unless it is established that

    no member of the community is responsible. .

    (6)   The Minister shall, subject to the provisions of section 8 of this Act, make

    regulations on entitlement, governance and management structure with respect

    to the PHC Fund established under this Act.

     

    H.  NATIONAL PETROLEUM ASSETS MANAGEMENT CORPORATION

    64

    120.  Establishment of the National Petroleum Assets Management

    Corporation

    (1)  There is established under this Act the National Petroleum Assets Management

    Corporation (“the Corporation”), as a body corporate with perpetual succession,

    a common seal and which may sue or be sued in its corporate name.

    (2)  The Corporation shall be a holding company operating fully on commercial

    principles.

    (3)  The Corporation shall have power to-

    (a)  enter into contracts and incur obligations;

    (b)  acquire, hold, mortgage, purchase and deal howsoever with property,

    whether movable or immovable, real or personal;

    (c)  establish and maintain subsidiaries  for the discharge of its functions as the

    Corporation may determine;  and

    (d)  do all such things as are necessary for or incidental to the carrying out of its

    functions and duties under this Act.

    (4) Subject to the provisions of this Act, the functions of the Corporation are to –

    (a)     acquire  and manage investments of  the  Government in the Nigerian

    upstream petroleum industry; and

    (b)     undertake such other activities as are necessary or expedient for giving full

    effect to the performance  of its functions under this Act.

    121. Funding

    (1) The Corporation shall maintain a fund (‘the Fund’) into which shall be paid –

    (a) such sums as may be made available by the Government for the purpose of

    funding  the subsidiaries of the Corporation established pursuant to the

    provisions of subsection (3) of section 120 of this Act; and

    (b)  such monies as may be received by the Corporation in the course of its

    operations or  in the exercise of its functions under this Act

    122. Utilization of the Fund of the Corporation

    The Corporation shall utilize the proceeds of the Fund established under section 121

    of this Act for –

    (a) funding the first two years work programme of its subsidiary  to be  established

    pursuant to this Act; and65

    (b) defraying all expenses incurred by the Corporation.

    123. Incorporation of Nigerian Petroleum Assets Management Company

    Limited

    (1) The Minister shall not later than three months after the Effective Date take such

    steps as are necessary under the Companies and Allied Matters Act to

    incorporate a company limited by shares which may be known as Nigerian

    Petroleum Assets Management Company Limited (‘the Management Company’)

    or such other name as shall be available, and be vested with certain assets and

    liabilities of NNPC.

    (2) At the time of its incorporation, the initial shares of the Management Company to

    be established shall be held in the ratio of 99% by the Corporation and 1% by the

    Permanent Secretary of the Ministry in trust for the Corporation.

    124. Exemption from certain existing laws

    The Management Company to be established shall not be subject to the provisions of

    the Fiscal Responsibility Act, 2007 and the Public Procurement Act, 2007.

    125. Transfer of Assets and Liabilities

    (1)  Following the incorporation of the Management Company the assets and

    liabilities comprising exclusively the interests in all the unincorporated joint

    ventures held by NNPC on behalf of the Government and excluding any asset

    that the Government may have vested in the National Oil Company shall be

    vested in the Management Company  within twelve to twenty-four months from

    the Effective Date.

    (2)  The Government may thereafter vest in  the  Management Company any

    upstream asset as the Government may from time to time deem fit.

    (3)  The transfer of liability or obligation under this section without any further

    assurance other than this section releases NNPC from any further liability or

    obligation in respect of the assets or liabilities.

    (4)   The Management Company shall without further assurance be entitled to enforce

    or defend all obligations for or against NNPC in respect of the portion of interests

    mentioned in subsection (1) of this section as if the Management Company were

    the original party to such obligations.

    (5)    The  relevant transferred assets, all bonds, loans, financing agreements,

    alternative financing agreements, joint operating agreements,  sole risk

    agreements, hypothecations, securities, deeds, contracts, instruments,

    documents and working arrangements subsisting immediately before the initial

    transfer date and to which NNPC was a party shall,  on and after the initial date,

    be as fully effective and enforceable against or in favour of   the Management 66

    Company  as if, instead of NNPC, the Management Company  had been named

    therein.

    (6)  Any pending action or proceeding  in relation to the transferred assets, brought

    by or against NNPC immediately before the initial transfer date may be enforced

    or continued, as the case may be, on and after that date by or against   the

    Management Company in the same way as if this Act had not been passed.

    (7)  Notwithstanding the provision of subsection (3) of this section

    (a)  no action or other proceeding shall be commenced against  the

    Management Company  in respect of any employee, asset, liability, right or

    obligation if, had there been no transfer, the time for commencing the action

    or other proceeding would have expired; and

    (b)  the transfer of assets and liabilities to  the Management Company  under

    subsection (2) of this section shall not be deemed to –

    (i)  constitute a breach, termination, repudiation or frustration of any

    contract, including a contract of employment or insurance;

    (ii)   constitute a breach of any Act, regulation or by-law;

    (iii)  constitute an event of default or force majeure;

    (iv)  give rise to a breach, termination, repudiation or frustration of any

    licence, permit or other right;

    (v)  give rise to any right to terminate or repudiate a contract, licence,

    permit or other right; or

    (vi)  give rise to any estoppel.

    (8)  Subsection (7) of this section shall not apply to such contracts as may be

    prescribed by any regulation made for that purpose..

    (9)  Subject to subsection (8) of this section, nothing in this Act and nothing done as

    a result of a transfer under subsection (2) of this section shall create any new

    cause of action in favour of a –

    (i)   holder of a debt instrument issued by NNPC before the transfer date; or

    (ii)  party to a contract with NNPC that was entered into before the transfer

    date.

    (10)  Any guarantee or surety which was given or made by the Government or any

    other person in respect of any debt or obligation of NNPC, and which was 67

    effective immediately before the initial transfer of the principal debt or obligation,

    shall remain fully effective against the guarantor or surety on and after the initial

    transfer date in relation to the repayment of the debt or the performance of the

    obligation, as the case may be, by  the  Management Company  to which the

    principal debt or obligation was transferred.

    126.   Exemption from Stamp Duty

    (1)  Stamp duty shall not be chargeable under the Stamp Duties Act in respect of any

    transfer made or transaction entered into pursuant to this Part on which, except

    for the exemption granted under this section, stamp duty would have been

    payable.

    (2) Stamp duty shall not be chargeable –

    (a)  during the incorporation of any subsidiary of the Management Company

    and  or any subsequent increase to their authorised share capital of any

    such subsidiary prior to the transfer of a majority interest there to the public

    or private investors; or

    (b)  in respect of any other transfer of rights and assets pursuant to this Part.

    127.    Transfer of employees of NNPC

    The transfer of employees of NNPC to the Management Company shall be in

    accordance with the provisions of section 358 of this Act.

    128.     Directions to NNPC on matters related to transition

    Prior to the vesting of assets and liabilities of NNPC in the  Management Company,

    the Minister  may give the Board of Directors of NNPC directions in writing to ensure

    the proper transfer of the assets and liabilities of NNPC  to the  Management

    Company, and the Board of Directors shall, without delay, comply with every such

    direction.

    129.  Certain exemption from rates

    (1)  Oil pipelines and other installations transferred to the Management Company

    shall not be regarded as hereditaments or tenements to be valued for rating

    purposes.

    (2)  For the purpose of this subsection, the expression “oil pipelines and other

    installations” include oil rigs, refineries, power generating plants, pumping

    stations, tank farms and similar installations but shall not include office or

    residential buildings.

    (3)  Except as provided in subsection (1) of this section, nothing in this Act shall

    be deemed to exempt the Management Company from liability for any tax, 68

    duty, rate, levy or other charge whatsoever, whether general or local; provided

    that the  Management Company shall not be liable to pay any such tax, duty,

    rate, levy or charge unless every company liable to tax under the Part VIII of

    this Act is also liable for such payment.

    130.  Borrowing Powers

    (1) Subject to the provisions of this section, the Corporation may, from time to

    time, borrow by way of overdraft or by any other means such sums of monies

    as it may require in the exercise of its functions under this Act.

    (2) The Corporation shall not without the approval of the President, borrow any

    sum of money whereby the amount in aggregate outstanding on any loan or

    loans at any time exceeds such amount as is for the time being approved by

    the President.

    (3) Notwithstanding the provisions of subsection (2) of this section, a person

    lending to the Corporation shall not be bound to enquire whether the

    borrowing is within the power of the Corporation or not.

    (4) Where any sum of money required to be borrowed by the Corporation –

    (a) is to be in a currency other than Naira; and

    (b)    is to be borrowed by the Corporation other than temporarily,  the

    Corporation shall not borrow such sum without the approval of the

    President.

    (5) Subsection (4) of this section, shall not apply to any money borrowed by the

    Corporation from any of its subsidiaries or by a subsidiary of the Corporation

    from the Corporation or any other subsidiary.

    131.    Establishment of the Board

    (1)  There is established for the Corporation, a Board of Directors (in this Part

    referred to as “the Board”).

    (2)  The Board shall comprise of—

    (a)  the Minister of Petroleum, who shall be the chairman;

    (b)  the Permanent Secretary, Federal Ministry of Finance;

    (c)  the Managing Director of the Management Company, the subsidiary

    company to be established by the Corporation pursuant to this Part;  69

    (d)  two persons to be appointed by the President, who shall be persons of

    high  integrity, substantial corporate experience and professional

    accomplishment from the private sector.

    (3)  The persons appointed pursuant to paragraph d) of subsection (2) of this

    section shall hold office for a term of four years in the first instance which term

    may be renewed for another term of  four years only, on such terms and

    conditions as may be specified in the letter of appointment.

    (4)   The proceedings of the Board of the Corporation and other ancillary matters

    shall be as provided in the Second Schedule to this Act.

    (5)  The conflict of interest provisions contained in the Second Schedule to this Act

    shall apply to all members of the Board.

    132.    Functions and powers of the Board

    The Board shall:

    (a)  provide general guidelines on the functions of the Corporation;

    (b)  approve the annual programme of action and budget for the Corporation;

    (c)  oversee the affairs of its subsidiaries;

    (d)     do such other things as are necessary, expedient, and in conformity with the

    provisions of this Act for the efficient performance of and in connection with all

    or any of the functions of the Board under this Act.

    133.   Remuneration of members of the Board

    Members of the Board shall be paid from the funds of the Corporation such

    remuneration and allowances in accordance with the guidelines of the Government.

    134.  Disqualification

    (1)  No person shall be appointed as a member of the Board unless the person –

    (a)  is a Nigerian citizen;

    (b)  has not, in terms of the laws in force in any country:

    (i)  been adjudged or declared bankrupt or insolvent; or

    (ii)  made an assignment to, or arrangement or composition with his

    creditors which has not been rescinded or set aside;

    (iii)  been declared to be of unsound mind;70

    (iv)  been convicted of an offence involving fraud or dishonesty;or

    (v)  been disqualified by a competent authority from carrying out any

    assignment, responsibility or function in his professional capacity

    in any part of the world.

    135.  Removal of a member of the Board

    (1)  A member of the Board may be suspended or removed from  office by the

    President if the member –

    (a)  is found to have been unqualified for appointment as a member of the

    Board after his appointment;

    (b)  has demonstrated inability to effectively perform the duties of his

    office;

    (c)  has been absent from five consecutive meetings of the Board without

    the consent of the Chairman except for good cause shown for such

    absence;

    (d)  commits an act of serious misconduct;

    (e)  in the case of a person possessed of professional qualifications, he is

    disqualified or suspended from practicing his profession in any part of

    the world by an order of a competent authority; or

    (f)  is in a breach of the conflict of interest rules set out in the  Second

    Schedule to this Act.

    136.  Resignation of a member of the Board

    A member of the Board may resign his office by giving three  months written notice

    addressed to the President through the  Minister.

    137.  Vacancy on the Board

    (1)  A vacancy on the Board shall occur if a member of the Board—

    (a)  dies;

    (b)  is removed from office in accordance with section 159 of this Act; or

    (c)  resigns from office; or

    (d)  completes his tenure of office. 71

    (2)  A vacancy on the Board shall be filled by the appointment of  another person


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