BOLAJI AJALA

The Bureau of Public Enterprises, BPE, has expressed concern on some issues in the proposed Petroleum Industry Bill, PIB, currently undergoing legislative scrutiny.

The bureau is particularly concerned about status of the Nigerian National Petroleum Corporation, NNPC as the National Oil Company, NOC.

The Director General of the BPE, Ms Bolanle Onagoruwa, speaking at a media forum in Lagos recently, noted that the only change in the status of the NNPC as being proposed is in the nomenclature, saying, “the fact that the bill refer the NOC as a group with a Group Managing Director and Board Chairman to be appointed by the President shows that the only difference between the NOC and NNPC is in mere appellation”

Onagoruwa, represented by one of the directors in the agency, Mr. Malo Yunana Jackdell, argued that this “is contrary to the spirit of the oil and gas sector reform implementation committee, OGIC, and radically opposed to the forward looking policy of the government, which saw the unbundling of NNPC as the panacea to its well documented sub-optimal performance.”

She noted that the NOC was intended by the reform to be incorporated as a private limited liability company under the Companies and Allied Matters Act, and owned solely by the federal government.

However, she pointed out that this section has been altered in the bill, thereby changing the NOC’s legal position from a private limited company to a state corporation, which is exactly what the PIB sought to cure.

Furthermore, she added that any “pending legal action by or against the corporation before the assets of NNPC are transferred to the NOC may be enforced or continued by or against the NOC in the same way as if the petroleum industry act had not passed,” which means that the NNPC is only changing its name to NOC.

“The PIB sought to insulate the NOC from liability of civil proceedings by providing in the bill a protection clause from litigation in certain actions.

This will work against the vision of having a responsive and efficient NOC. Similar provision was made in the bill requiring that a suit against the NOC, a member of the governing board or a staff must be commenced within 24 months of the cause of action and that a suit against NOC cannot be commenced without first giving 30 days notice to the company.

If the NOC is a private limited company then this provision ought not to be there as it applies only to the public corporations and public officers.

The BPE boss also noted that the bill assigned functions to the NOC. “The assumption of statutory functions by the NOC is contrary to the description of the company as a private liability company.

We must note that the only powers a private limited company may exercise are those donated by CAMA or the Articles and Memorandum of Association.

A company cannot be a hybrid exercising in one breath powers donated by a statute other than CAMA and in another breath powers donated by the memo and articles.”

Even in the area of financing, she argued that there is a twist in the area of borrowing. Under the proposed PIB, the borrowing powers of the NOC shall be exercised with the consent of the Minister of Finance, whereas, “the NOC is supposed to be a private limited company with a board of directors. Usually it is the board of directors of a private company that exercise the borrowing powers on behalf of a private company.”

The BPE boss also expressed reservations with issues relating to funding and Joint venture operations saying that the bill indicated that the NOC shall be funded by way of grants from the federal government.

“All federal government funds must be appropriated in the annual budget. This puts the NOC in the position of NNPC where the non release of funds by the government makes it impossible for it to honor its obligations,” she observed.

“The bill also includes that the NOC is empowered to undertake divestments and acquisitions, which invariably means that NNPC has empowered itself to privatise its properties. By the provision of the bill, the NOC will be empowered to hold onto existing facilities as well as acquire new ones.

“NOC will keep the proceeds of divestments to itself which is contrary to the current requirement whereby proceeds of privatization are paid into government coffers,” she said.

She argued that “To ensure efficiency and effectiveness, the institutions to be created were supposed to have a source of funding that gives them some level of independence and control as to enable them compete effectively with other operators to function properly as expected.”

But she said this type of funding was jettisoned and most of the institutions would now still depend on government’s budget for their survival.