NOEL ONOJA

The Nigeria Extractive Industries Transparency Initiative (NEITI) has called on the National Assembly to use the opportunity presented by the Petroleum Industry Bill (PIB), to ensure uniformity in addressing community problems in mineral producing areas.

Addressing a section of the Senate on the PIB and on the proposed Host Community Fund, the Chairman of NEITI, Mr. Ledum Mitee, urged the lawmakers to take a cue from the existing Minerals and Mining Act, to ensure that host communities were fully involved in the execution of the fund.

He said: “NEITI believes that the preferred option is for the communities to be directly impacted by the funds through a process which pertains in the minerals sector in Nigeria, whereby the communities enter into an agreement with licensee or lease-holder, as the case may be, and agree as to terms and conditions regarding the fund.”

Beyond this, the NEITI Chairman called for clarity in the mode of administration of the fund to ensure direct impact to the benefiting community.

He drew the attention of the Senate to a provision in Section 2 of the PIB, saying: “The entire property and control of all petroleum in, under or upon any lands within Nigeria, its territorial waters or which forms part of its Continental shelf and Exclusive Economic Zone, is vested in the Government of the Federation.”

He noted that although that Section of the PIB conformed with the provisions of Nigerian’s constitution, there is the need to recognise other tiers of government such as states and local governments as well as Nigerian citizens as co-stakeholders.

He added that it will also be a reminder to government that it was accountable to the people for the utilisation of the revenues derivable from the petroleum resources.

Mitee therefore called for the re-drafting of the Section to read: “The entire property and sovereign ownership of petroleum within Nigeria, its territorial waters, the continental shelf, the Exclusive Economic Zone and the extended continental shelf shall vest in the sovereign state of Nigeria in trust for and on behalf of the people of Nigeria.”

He also enjoined other stakeholders to call for the creation of strong independent regulatory institutions, adding that deliberate effort should be made to limit the powers of the minister on policy formulation monitoring, and oversight.

Contract transparency
NEITI further urged the National Assembly to ensure that contract transparency is clearly embedded as key provisions in the PIB.

Defending its position in a Memo to the legislators during the recent Public Hearing on the PIB, the Executive Secretary of NEITI, Mrs Zainab Ahmed, noted that contract transparency is already a law in the United States through the recent Dodd –Frank Act, while the European Union had also recently endorsed similar legislations for adoption by all EU member countries.

“In conformity with the global trends and EITI principles, which Nigeria is a signatory; NEITI is proposing the creation of a register that will contain comprehensive information and data about holders of oil, gas and mining licenses. Such a register should also contain information on corporate entities of all those that bid for, or invest in the upstream sector of the oil and gas industry, the identities of the beneficial owners of oil blocks and licences including all exploration and production contracts.”

NEITI disclosed that the global Extractive Industries Transparency Initiative (EITI), recently aligned with the trend by formulating executive principles to promote openness in the award of oil, gas and mining licenses. The EITI principles also cover transparency in developing contractual obligations that guide businesses in the oil and gas industry.

Confidentiality clause
On the contentious issue of confidentiality clause, which determines the nature of information that companies can share with the public on their operations, the NEITI Executive Secretary observed that Section 174 of the PIB contained contradictory provisions on the issue of confidentiality clauses.

“These created mixed signals on what information shall or shall not be made public by the companies. NEITI is therefore of the position that the process of maintaining confidentiality of industrial information by the companies should be clarified in the legislation.”

Crude production
On the growing public concern that Nigerians don’t know exactly the quantity of crude oil it produces, Ahmed drew the attention of the legislators to NEITI’s recommendations that the PIB should provide for the installation of dependable metering infrastructure.

It argued that this will guarantee accurate measurement of crude produced at the oil flow stations, and the crude export terminals, adding that this was the trend in developed countries such as the United States, United Kingdom, Norway and a host of others.

Against this backdrop, Ahmed expressed concerns that the PIB as presently constituted has no clear provision for the installation of metering infrastructure for accurate measurement of crude produced in Nigeria, and requested for a redress of the situation.

The Executive Secretary also conveyed NEITI’s position that oil and gas companies in Nigeria should be compelled by the proposed legislation to embrace the installation of metering measurement at identified critical points in the production chain.

Lease licensing
On the allocation of oil blocks and mining licenses, the NEITI scribe disclosed that the transparency watchdog supports the position being widely canvassed that the PIB should provide for transparent, open and competitive bidding process in the award and allocation of oil blocks and licenses.

She however added that NEITI should be empowered by the PIB to effectively monitor the exercise as well as scrutinize all contractual obligations and carry out other functions by widening and strengthening the scope of its responsibilities as already provided in section 190(6) of the draft legislation of the Bill.

She observed that the enthronement of competitive bidding process will attract wider business opportunities, capacity development, professionalism, efficiency and huge diverse foreign direct investments to Nigerian economy in general and the extractive industry in particular.