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PIB pushes existing regulation

There is a lot of expectations from the Petroleum Industry Bill, PIB, currently undergoing scrutiny at the National Assembly. The 223-page bill has successfully passed its second in the hallowed chambers, and it is hoped that it would have a more successful history than the previous bill.

All around the world changing national and global interests as well rapidly changing environmental situations call for better regulation in the way operational activities are being carried out for sustainable development.

In the case of Nigeria, enhancing operational efficiency in the over five decade oil and gas industry becomes even more imperative in the light of outdated laws, rising environment degradation, and decreasing impact of petroleum on the lives of the common Nigerians. The contributions of industry to the nation’s Gross Domestic Product, GDP, remains below 40 percent, even as it remains the country’s highest foreign exchange earner.

Over the past decade, the Federal Government has struggled to enhance the regulation of the petroleum but the process has been met with stiff resistance by the oil majors, who argue that government has not justified the need to increase its revenue take from oil and gas operations.

As a result, efforts to amalgamate over 22 laws currently guiding industry operations into one omnibus PIB have not been particularly successful, as the bill has been going back and forth in the legislature. This is due to the plethora of issues relating to the ownership and the management of the oil and gas resources.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, maintained that the legislation will change the face of the petroleum industry in Nigeria, adding that the law is designed to capture and address potential environmental and operational hazards associated with the oil and gas operations.

Objectives of the new PIB
The PIB, which has often been described as being ambitious, seeks the establishment of a legal, fiscal, and regulatory framework for the petroleum industry in Nigeria, and for other related matters. The objectives of the bill are to:

President Jonathan and Petroleum Minister, Diezani
President Jonathan and Petroleum Minister, Diezani

? Create a conducive business environment for petroleum operations;
? Enhance exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people

? Optimise domestic gas supplies, particularly for power generation and industrial development

? Establish a progressive fiscal framework that encourages further investment in the petroleum industry while optimising revenues accruing to the Government

? Establish commercially oriented and profit driven oil and gas entities
? Deregulate and liberalise the downstream petroleum sector
? Create efficient and effective regulatory agencies
? Promote transparency and openness in the administration of the petroleum resources of Nigeria

? Promote the development of Nigerian content in the petroleum industry;
? Protect health, safety and the environment in the course of petroleum operations; and
? Attain such other objectives to promote a viable and sustainable petroleum industry in Nigeria.

The PIB provides for the setting up of a number of industry regulators that would assist the Minister of Petroleum Resources, who supervises the affairs of the sector on behalf of government to achieve these objectives.

Currently, there are overlaps of functions among the existing industry regulators, leading to friction among government agencies contradictory legislations, often leading to operational confusion. But with the establishment of these agencies, functions are being streamlined to reduce inefficiencies and overlaps.

Among the agencies are:
Petroleum Technical Bureau – to consist of a special unit in the office of the Minister, consisting of professionals with expertise in the upstream and downstream sectors of the petroleum industry that will offer technical advice as the Minister may from time to time deem appropriate for the effective discharge of the functions of the Bureau.

Upstream Petroleum Inspectorate – will in collaboration with other relevant government agencies, where applicable administer and enforce policies, laws and regulations relating to all aspects of upstream petroleum operations which are assigned to it under any law; ensure and enforce compliance with the terms and conditions of all leases, licences, permits and authorisations issued or in respect of upstream petroleum operations and a host of others.

Downstream Petroleum Regulatory Agency – will administer and enforce policies, laws and regulations relating to all aspects of downstream petroleum operations as may be assigned to it by law; ensure and enforce compliance with the terms and conditions of all licences, permits and authorizations issued in respect of downstream petroleum operations, and more.

Petroleum Technology Development Fund – which will be used for the purposes of training Nigerians to qualify as graduates, professionals, technicians and craftsmen in the fields of engineering, geology, science and management and other related fields in the petroleum industry and in particular, and without prejudice to the generality of the foregoing, the funds shall be utilised to –

Petroleum Equalisation Fund – into which shall be paid any net surplus revenue recovered from petroleum products marketing companies pursuant to this Act; and such sums as may be provided for purpose of the Equalisation Fund by the Federal Government. However, 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 or if this section of the Act is repealed.

Petroleum Host Community Fund – to be utilised for the development of the economic and social infrastructure of the communities within the petroleum producing area


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