PIB: NEITI seeks reduction in powers of Petroleum Minister

on   /   in Energy 12:10 am   /   Comments

By MICHAEL EBOH

The Nigeria Extractive Industries Transparency Initiative, NEITI, has kicked against certain provisions of the Petroleum Industry Bill, PIB, especially sections that seek to increase the powers of the minister of petroleum, calling for a review of the Bill to limit the powers of the minister.

“In order to ensure transparency in the administration and regulation of the petroleum industry, it is necessary to limit the powers of the minister — who is presently in charge of policy, regulations and operations — to policy formulation, review and monitoring and create strong autonomous institutions that will promote effective governance and controls in the management of Nigeria’s petroleum resources,” NEITI said, in a report titled, ‘NEITI position on the Petroleum Industry Bill 2012.’

NEITI said the PIB creates a very powerful Minister, even more than under the Petroleum Act 1969, adding that the new Bill has restored and enlarged the powers of the minister which were expunged in the PIB 2009 by the Senate of the sixth National Assembly.

It maintained that the concentration of immense powers in the hands of a political appointee may affect transparency and accountability, and compromise the due process that the Bill seeks to enthrone.

Petroleum Minister, Diezani Madueke

Petroleum Minister, Diezani Madueke

Empower institutions

NEITI is of the opinion that the institutions of the PIB must be empowered and given sufficient autonomy, adding that it is in line with best international practice, and in the best interests of the country for the Ministers regulatory and managerial powers in the PIB to be reduced, leaving the Minister to be primarily concerned with policy matters, and not with the day-to-day running of the industry.

“Appointments and removal of heads of institutions created by the Bill should be subject to the approval of the national assembly except where an institution is privatised. This is to reduce possible interference by the executive, thereby aiding the full functioning of the Nigerian oil and gas industry,” NEITI stated in the report made available to Sweetcrude.

Powers of the Minister

Continuing, NEITI said, “The office of the Minister is central to the structure of the Nigerian oil and gas industry under the PIB 2012. The Minister formulates and monitors government policy and advises the government on all matters pertaining to the petroleum industry.

“He or she advises the President on the appointments of the Chief Executives of the Upstream Petroleum Inspectorate, Downstream Petroleum Regulatory Agency, the National Oil Company, the National Asset Management Corporation and any other Government agency or corporate entity established pursuant to this Act (Section 6).

“The Minister is the Chairman of the Boards of the Petroleum Technology Development Fund (PTDF), Petroleum Equalisation Fund (PEF) Management Board and the Nigerian Petroleum Assets Management Corporation Board, contrary to previous drafts, while the Minister’s representative is a member of the Boards of the Upstream Petroleum Inspectorate and Downstream Petroleum Regulatory Agency.

“The powers of the Minister are such that several critical functions of the agencies are stipulated to be subject to the Minister’s approval. For instance, the power of the Downstream Petroleum Regulatory Agency to develop and implement market rules for trading in wholesale downstream gas is subject to the approval of the Minister (Section 45).

“The Minister may, upon the advice of any of the PIB institutions, make regulations necessary to give effect to the provisions of the PIB 2012 (Section 8). The extensive powers of the Minister include the right of pre-emption of all petroleum and petroleum products obtained, marketed or otherwise dealt with under any license or lease granted under this Act (Section 7).

“There are valid fears that this centralisation of decision-making powers will create unnecessary bureaucratic bottlenecks. In addition, the processes involved in obtaining the approval of the Minister for key activities of the institutions could hinder the over-all effectiveness of the oil and gas industry in Nigeria. “

Furthermore, NEITI kicked against the planned structure of some of the regulatory agencies in the petroleum industry, especially the movement of certain key and sensitive agency to the office of the minister of petroleum as a special unit, saying this move will undermine transparency and professionalism in the oil industry.

PTB’s proposed structure will undermine transparency

A case in point is the proposed Petroleum Technical Bureau, PTB, which NEITI said will run contrary to the tenets of reform, especially as it will undermine transparency and professionalism.

It said, “Section 9(3) of the PIB creates the Petroleum Technical Bureau as a special unit in the office of the Minister, stating that it shall, ‘in addition, carry out the duties of the former Frontier Exploration Services of the NNPC.’

“NEITI is aware that this represents a complete departure from what was previously envisaged. Not only is it unknown to any jurisdiction in the world, it is clearly contrary to international best practice, as it creates a weak policy arm for the national petroleum industry.

“No practicable reason can be given for this departure from the norm. NEITI is also aware that the previous PIB provided for the creation of a strong institution for the creation of policy and the coordination of the industry, to be staffed with experienced professionals.

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