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RAGE OVER OIL BILL: Petroleum Industry Bill, a threat to the polity?

THE turnout at the beginning of the three-day public hearing on the Petroleum Industry Bill (PIB) last Monday was unprecedented in the ten year history of the present National Assembly. It was perhaps reflective of the serious dominance of oil in the nation’s economy that the Senate hearing was thronged by virtually all stakeholders to the Nigerian project.

“I have already spent ten years in this building as a Senator of the Federal Republic of Nigeria and I have never really seen a Public hearing that has attracted as many people as we have today,” the President of the Senate, Senator David Mark said while flagging off the hearing on the bill which was held under the aegis of the Senate joint committees on Upstream, Downstream and Gas.

The Senate Hearing Room One venue was filled to capacity that the adjoining hearing Room Two served as a useful overflow.

President Yar'Adua
President Yar'Adua
The National Assembly parking lot was for the three days of the hearing also jammed to capacity as never before as hundreds of lobbyists, stakeholders and agitators for and against the bill flooded the premises to promote their cause.

The turnout for the hearing on the PIB was shadowed by the controversies that have trailed the bill since it was first presented to the National Assembly towards the ending of last year.

The first controversy was the allegation by a presidential aide that Senators who attended a retreat facilitated by the Organsied Petroleum Trading Section (OPTS) of the Lagos Chamber of Commerce in Ghana were bribed by the oil industry to kill the bill.

The allegation of bribery was instigated by suggestions that imprints in the bill would compel greater demands on the International Oil Companies (IOCs) in terms of taxes and other areas of demands. For the oil companies that have for long operated as laws unto themselves, it was suggested that the bill was aimed at cutting their wings.

Along the way criticisms against the bill were also fanned by governors and activists from the South-South geopolitical zone who mused that the bill was harmful to the interests of the zone.

Rising from an all night meeting in Asaba penultimate Friday four of the six governors from the zone in a meeting hosted by Governor Emmanuel Uduaghan demanded the immediate withdrawal of the PIB and flayed the actions of the Minister of Petroleum Minister, Dr. Rilwanu Lukman who they accused of championing an anti-Niger Delta tendency.

Further controversy around the PIB was lately fanned by reports of the circulation of fake versions of the bill.

Told that the opening ceremony had been shifted from morning to the afternoon of that Monday, Agajoh’s retort was “We will wait for them let them shift to anytime.”

Ufot Ekaette, Niger Delta Minister
Ufot Ekaette, Niger Delta Minister
Welcoming the stakeholders at the opening ceremony Senator Lee Maeba chairman of the Senate committee on Upstream Petroleum and chairman of the tripartite committee noted with dismay what he said was the circulation of a alternate versions of the bill.

Affirming that the Senate was only considering the bill that was presented to it by the President, Senator Maeba said:

“Before I continue I just want to clear an issue, members of the public, stakeholders and several representatives from organised private oil companies operating in Nigeria, indigenous companies have approached me and questioned which version of the bill we are treating.

“We aware of a document like this, and I believe that if the President in his wisdom that sent the bill to the Senate has any reason to make further amendment, by convention, it has been done severally in the past, the President will officially write the Senate withdrawing the first bill that was sent and in its place he will send back another bill incorporating those amendments but this has not been done.”

“The President in his wisdom has not withdrawn the bill sent to us and we have only copy of the bill that was sent us by the president of the federal republic of Nigeria so anybody who will publish any new version of the bill is doing so at his own risk,” Senator Maeba said as he affirmed that the Senate would not project any bill that will not project the interests of Nigerians in the industry.

Flagging off the public hearing Monday, Senator Mark who was accompanied by the Deputy President of the Senate, Senator Ike Ekweremadu said that the current situation in the Niger Delta would not affect the outcome of the bill.

The Minister of Petroleum, Dr. Rilwanu Lukman who had been repeatedly flayed for his alleged stance against the oil producing Niger Delta region was absent at the hearing and his address was presented by the Minister of State (Petroleum), Mr. Ajumogobia.

In the prepared address, the Minister said:

“The Bill is based on the report of the Oil and Gas Reform Implementation Committee (OGIC) set up by the Federal Government in year 2000 to carry out a comprehensive reform of the oil industry.

“The PIB in essence is, therefore, a reform legislation which aims to put in place of the existing myriad of legislative and administrative instruments governing the petroleum industry one omnibus legislation that establishes clear rules, procedures and institutions for the administration of the petroleum industry in Nigeria.

“The PIB establishes the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry. It also stipulates guidelines for operations in the upstream, midstream and downstream sectors and for purposes connected with same.”

Also speaking in support of the bill, the Minister of Information and Communications Prof Akunyili said the bill was a demonstration of government’s resolve to show transparency in its activities.

“The Bill also seeks to ensure that 50 years after oil and gas production commenced in Nigeria, a level playing field for all stakeholders, including small, medium and large investors is established,” she said.

The Group Managing Director of the NNPC, Barkindo said the bill was aimed at ensuring the successful transformation of the national oil company into a fully commercial enterprise capable of competing with its competitors in other climes.

However, the confidence of the government was seriously eroded by the presentation of the Inter-Agency Technical Group comprising the NNPC, Department of Petroleum Resources, Federal Inland Revenue Service (FIRS), Nigerian Extractive Industry Initiative (NEITI) which faulted the provisions of the bill. The group faulted the bill as defective and against the full interest of Nigeria and the oil producing communities.

In the presentation articulated by Dr. Tim Okon, the group faulted the provisions for the host community saying that there was no provision for the host community. He said that there was a “flimsy mention of host community as a stakeholder with no law backing what the oil companies are expected to do.”

He also said that the bill does not sufficiently deal with fiscal issues prevalent in current dispensation in such a way to achieve optimal revenue for government.”

On confidentiality provisions, he said “Many issues still remain confidential resulting in lack of transparency.” The Inter-Agency Technical team also faulted the provisions for the implementation of the gas master plan saying that there was no strong regulatory framework to implement the approved master-plan.

He also said that the “incorporated joint venture provisions do not provide adequate protection for the interests of the Nigerian government.”

The Ijaw National Congress in its presentation articulated by its President, Dr. Atuboyedia Obianime dismissed the bill as demonic saying:

“We are seeing a demonic bill that wants to bestride the landscape of Nigeria and Nigerians should not be ruled by it.” He said that the Solid Mineral Act passed by the National Assembly gave 10% royalty to the host community and as such wondered why no such provision was made for the host community in the PIB.

Outpouring of disaffection against the omnibus Petroleum Industry Bill (PIB) continued on the second day of the hearing on Tuesday as the major oil producers warned that their plans to invest $95 billion in the sector over the next five years could be derailed by the provisions of the proposed law.

Besides the major producers who spoke on the bill, the Rivers State government, the Indigenous Oil Producers flayed some major thrusts of the bill.

In the presentation of the Oil Producing Trading Section (OPTS) made by its Chairman, Mr. Basil Ominiyi the group said the industry was proposing expending over $80 billion over the next five years on oil and gas projects.

While noting that the gas sub-sector grew by 90% with an expenditure outlay of $5 billion in the last five years, he said the gas sub-sector proposed to expend $15 billion over the next five years.

On plans to grow the oil sector, he said:

”Our multi billion dollar investments in the deep offshore mega projects have led to an additional oil production of more than 600,000 barrels/day with more production coming on stream. The industry plans to invest over 80 billion USD in oil projects for the coming five years.”

He, however, picked loopholes against the bill citing fiscal provisions, limited capacity for self financing.
According to him the fiscal provisions in the bill would make new oil and gas projects estimated at $95 uneconomic.

“The aggregate impact of multiple taxes, higher royalty rates and loss of incentives under the PIB, as currently proposed, will have a significant negative impact on gas and deep water projects. Majority of gas and deep water projects will not be viable under the PIB as currently proposed,” Ominiyi who is also Chairman of Shell Companies in Nigeria.

In its own submission, the Rivers State government flayed the concept of the bill which it claimed was done without consultation with major stakeholders from the oil producing regions of the country.

On the final day of the hearing Dr. Lukman made a surprise appearance before the committee affirming that the bill was only a proposal and that the government was open to amendments. He said:

“The bill is meant to protect investment and ensure the conditions are better for more investments. There is shortage of finance and the need for more investment necessitated the bill. Government wants the joint venture companies in oil and gas sector without having to resort to government funds”

“I want to assure you that what government is trying to do is to put oil and gas sector on a smooth plane. We want everybody to operate in an atmosphere in consent with the spirit of fair play and justice.

“We want to ensure that the law is fair and just and anybody who tries to pretend we are operating a law to deny some people is not true.

It will not make sense for the country to enact a law that denies investment where huge money is required and to enact such a law will be a disservice to the country”.

“The law was not crafted to prevent operators but to allow new entrants to come in. We want the industry to be run in a transparent manner to ensure operators are accountable”.

Rebuffing allegations that the bill was inimical to the interests of the Niger Delta and the environment, he said:

“It is very important to point out that the bill has taken due care to prevent environmental problems and ensure fair deal for the oil communities.

“It does not make sense to make life difficult for our people especially the oil producing areas. This is the first time in the history of the country there is a deliberate effort to protect the local communities.

“We have not drafted a law that is sacrilegious; it is not the Bible or the Koran; the government is open to suggestion and intends to improve on the law.

“The committee should be able to separate selfish interest from national interest because some people will come and make recommendations for selfish interest, the committee should be able to decipher the facts from such presentations.”

“Provided those against the bill have something new on fiscal regime and if they can come with better fiscal regime, fine and we are ready to listen.

Our intention in coming up with the bill is to serve the best interest of the nation and it is meant to protect the interest of the people in the areas concerned.”

The Minister’s claims nonetheless, Senators from the South_South region that same evening fired back at him declaring that the PIB alongside some of his other actions were against the region. The Senators at a press briefing on Wednesday called on the President to fire Dr. Lukman as a sign of reassurance of his interests to the zone.


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