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PIB: Host Communities insist on 10% equity Share holdin to guarantee security

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PIB

***Senate to Pass PIB April, Buhari to Sign it into law before May 29, Lawan

*** Says PIB will ensure Nigerians benefit optimally from resources

***As Senate begins public hearing on bill

***We haven’t seen significant development in this industry since 2000, NNPC

*** PIB must be a balanced one, PENGASSAN, NUPENG

***PIB should consider harmonising the taxes into a single tax system and allow for consolidated filing and tax reporting, OPTS

*** Say PIB should remove Hydro Carbon Tax 

***Crude prices crashed into negativity at the height of covid 19, that  necessiates the passing of the PIB, FG

By Henry Umoru

ABUJA-AS Senate on Monday  began  Public Hearing on the long awaited Petroleum Industry Bill, PIB,  Host Communities of Nigeria Producing Oil and Gas, (HOSTCOM) have said that they are insisting on 10% Equity Share Holding from oil companies,  just as they threatened to only guarantee the security of the area if the said fund is given. 

Speaking for HOSTCOM on Monday in Abuja at the beginning of a 2-day public hearing on the

the Petroleum Industry Bill (PIB ) 2020 by the National Assembly, the National President, High Chief Benjamin  Tamaranebi who noted that the host communities have been so relegated to the background, said that it has become very imperative for the 10 percent as provided for during late President Umaru Yar’Adua in order to enable the people participate fully through the protection of infrastructure and oil installation.

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The Host Communities who vehemently kicked against the  issue of percentage for host communities from oil companies pegged at 2.5% in the new bill, just as they said that  the 10% offered in the bill considered during the 7th Assembly should be retained if the required cooperation between host communities and operational oil firms is to be achieved.

According to him, the 2.5 Percent as contained in the bill will not be acceptable by the people of the Oil Producing areas, adding, ” This issue of host communities entitlements from oil firms operating in their domains is very important but seems not to be taken seriously in the  new bill and even the one before it. 

” Imagine a provision that was put at 10% during the 7th Assembly , reduced to 5% during the 8th Assembly and now further reduced to 2.5% in the new bill for consideration and approval by the  present 9th Assembly.

” This to us , is unacceptable . The earlier proposal of 10% should be replaced with the 2.5%.

 ” As it concerns the Host Communities of Nigeria Producing Oil and Gas in Chapter 3; the Host Communities stand on 10% equity share Holding. After 60years of marginalization and bearing the brunt of the negative impacts of exploration and exploitation.

“Today Some States have started discovering and enjoying their natural resources but the Producing states and HostCom are not envious of them therefore our position is sacrosanct. It will be very absurd and economically very illogical to deprive HostCom the right to equity share holding in both the establishment of the

NNPC Limited, the Commission, the Authority and the Boards.

“Rather than attempt to sell performing equity as stated in the 2020 PIB. No equity/asset is performing more than our Oil and Gas reserves.This quest to take over complete control of all our National assets by a very unpatriotic few has to stop.In the case of the Gas flare penalty funds, the Host Communities who are the direct recipient of the negative effects are the ones to receive the Gas flare penalty.

“Our Host Community, therefore demands that we create a robust National Petroleum Company which is structured to accommodate all interests. Accordingly, all appointments to the NationalPetroleum Company from the level of General Manager are representative of the six Geopolitical zones.

“The Company should be provided with Bench marks and targets to attain. The Presidency, and Minister of Petroleum, Finance as well as the National Assembly should allow the Company operate commercially like other successful National Oil Companies without Nepotism, without interference and without corruption. If Nigeria must divest or privatize our Oil and Gas assets, then the Host Communities must have the Rights to first refusal before you open up the sale or bid to other Nigerians because the Oil and Gas in Nigeria, indeed, belongs to the Producing States and Host Communities in the first place. It was the military decree of 27th November 1969 that took it away from us and vested it on the Nation. Rather than keep and use it as a Nation, the Nation now plans to give away our national resources to a few unpatriotic foreigners and their local collaborators.

We remain truly yours, On behalf of Host Communities of Nigeria.

“Regarding the environmental management and sustainable development of the Host Communities, it’s imperative that all

laws and polices precedent to the commencement of any active must be conformed with the existing international standards inherent in our submission.”

Meanwhile,  President of the Senate, Senator Ahmad Lawan  has said that the Senate was in s hurry to pass the PIB in April for President Muhammadu Buhari to assent to it before 29th May of this year against the backdrop that  Nigeria has lost a lot of resources following the non passage of the Bill.

Lawan who assured Nigerians that the bill will be passed April this year, said that PIB is very significant to Nigeria if the oil and gas sector must be revived and effective service delivery, however urged the Executive and other stakeholders to provide the National Assembly with the needed information and support for quick passage of the Bill, adding that the PIB would also provide for a competitive environment in the oil and gas sector.

President of the Senate, has also said that the PIB presently before the National Assembly will ensure that Nigerians benefit optimally from crude oil production and sale of fossil fuel reserves. 

Lawan who noted that the  National Assembly in its consideration of the piece of legislation, would ensure that the bill when passed into law, guarantees improved revenue earnings for the country, said, “let me say this, we (National Assembly) will pass this bill not without ensuring that it is a bill that satisfies certain conditions. 

“Nigeria is blessed with these resources, we want Nigeria to benefit optimally from them. In fact, we are in a hurry because we have lost so many years of benefits that we could have had.” 

The Senate President, however, noted that the non-passage of the PIB had been a major drag on the industry over the years, significantly limiting its ability to attract both local and foreign capital at a time when many other countries are scrambling to exploit their oil and gas resources. 

He said, “The mere knowledge that the nation’s oil industry is still being governed by laws enacted more than 50 years ago is ludicrous and extremely disappointing.

“As legislators, we will strive to deliver a Bill that will enhance the growth of our oil and gas industry, modernize our fiscal system and enhance competitiveness, while creating harmony for all stakeholders. This is a promise we have made and that we shall achieve.

“Nigeria must have an Oil and Gas Industry that benefits its people. Equally, our Oil and Gas Industry must be competitive. We must create a sustainable investment climate, where business in the sector will flourish ”

He added that the determination by the legislature to pass the Bill “is driven by the need to overhaul a system that has refused to operate optimally in line with global standards, resulting into loss of continental competiveness, transparency, accountability, good governance and economy loss for the petroleum industry and the country.”

The Senate President who noted that the challenges surrounding the future usefulness of petroleum resources and the increased level of uncertainty on oil demand calls for great concern, said, “It is estimated that with the evolving of new technologies, fossil fuel may be less attractive if not of no value in the next 20 years. 

“It is therefore time for us to make maximum benefit of our fossil fuel reserves through this reform before it fades away,”Lawan stressed. 

According to him, the Petroleum Industry Bill comprises of 4 chapters that outline how to create efficient and effective governing institutions with clear and separate roles for the petroleum industry; establish a framework for the creation of a commercially oriented and profit-driven National Petroleum Company; promote transparency, good governance and accountability in the administration of the petroleum resources of Nigeria among others.

He added that the piece of legislation among others, also seeks to promote the exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people; promote the efficient, effective and sustainable development of the petroleum industry;

According to him, the PIB upon passage and assent into law by the President, would “foster sustainable prosperity within host communities, provide direct social and economic benefits from petroleum operations to host communities; create a framework to support the development of host communities among others; and

“Establish a progressive fiscal framework that encourages investment in the Nigerian Petroleum Industry, balancing rewards with risk and enhancing revenues to the Federal Government of Nigeria; provide a forward-looking fiscal framework that is based on core principles of clarity, dynamism and fiscal rules of general application; establish a fiscal framework that expands the revenue base of the Federal Government, while ensuring a fair return for investors.”

Lawan assured that the National Assembly during the public hearing would deal with all issues relating to the oil and gas industry with thoroughness and effectiveness, so as to avert colossal losses to the nation’s economy.

In their presentation, Oil Producers Trade Section, OPTS said that the  PIB should harmonise  the taxes into a single tax system and allow for consolidated filing and tax reporting, as well as address issue of plethora of taxes, and stop the penchant for other Government agencies to see the oil and gas industry as an easy source of their internal revenue. 

Speaking for OPTS, Mike Sangster who noted the PIB should provide a clear path for transitioning to free market- based pricing, not add additional compliance conditions on domestic gas delivery obligations as a precondition for export gas supply and allow pre- existing contracts and agreements to run their course. 

On Deepwater development, he said, “Deepwater developments have contributed significantly in maintaining Nigeria’s oil production levels by offsetting the decline in the Joint Venture production. It has also enabled Nigerian content and local capacity development. 

“Unfortunately, our review of the PIB shows that the Deepwater provisions do not provide a favourable environment for future investments and for the launching of new projects. To ensure investors are encouraged to finance Deepwater projects, the PIB should grant Deepwater oil projects a full royalty relief during the first 5 years of production or a graduated royalty scheme as detailed in our submission. 

“PIB should also remove Hydrocarbon Tax considering that companies will still be subject to CIT. Deepwater non-associated gas resource development is particularly challenging and requires targeted measures to get projects off the ground. A full royalty relief during the first 5 years of production and a 1°%o royalty for natural gas, natural gas liquids as well as the condensate/ liquids from such development would encourage investment in Deepwater gas projects. 

“The PIB does not address the key challenges facing gas development in Nigeria, such as inadequate midstream infrastructure, regulated gas pricing, huge and long outstanding debts, etc., thereby potentially jeopardising the realization of Government’s aspirations for the domestic gas sector. 

“The PIB should provide a clear path for transitioning to free market-based pricing, not add additional compliance conditions on domestic gas delivery obligations as a precondition for export gas supply and allow pre-existing contracts and agreements to run their course. 

“Preservation of base business and rights simply means honouring existing agreements and it is critical to promoting a stable business environment and maintaining investor confidence. 

“OPTS recognises the government’s right to change laws. However, to maintain Nigeria’s reputation amongst investors, it is important for the PIB to explicitly preserve base businesses and rights for existing Joint Venture licenses and leases and Production Sharing Contracts, which form the basis for future growth. Operators should be allowed to retain the entirety of their lease areas and new terms should apply only to new contracts, licenses and leases. This will give investors the opportunity to consider the new terms prior to making investment decisions: Over the years, Nigeria has built a strong reputation for honouring its contracts. We hope that this long-standing tradition will be upheld in the PIB. 

“The PIB requires that companies operating consolidated upstream and midstream assets separate and incorporate their midstream assets as distinct legal entities. This proposed framework may be applicable for new projects, but not for assets developed on an integrated basis.

“PIB should consider harmonising the taxes into a single tax system and allow for consolidated filing and tax reporting. PIB should address this issue of plethora of taxes, and stop the penchant for other Government agencies to see the oil and gas industry as an easy source of their internal revenue. 

“Furthermore, a significant omission in the PIB is a clear dispute resolution mechanism, which is critical to strengthen investor confidence. Under the PIB, several agencies have the power to make final rulings on matters without recourse to judiciary or independent arbitration. Access to a fair and independent dispute resolution mechanism is key in providing an equitable and stable investment environment and is a globally-accepted practice.”

Earlier in his presentation,  the Group Managing Director of Nigerian National Petroleum Corporation,  NNPC, Engr. Mele Kyari said that 

since 2000 until this moment,  the oil  industry has not seen significant investment except one particular area, production sharing which, he said has challenges because of  the fiscal uncertainties.

Kyari said, “This industry does not tolerate uncertainties, when we started the journey to PIB in the year 2000, through the oil and  gas reform committee that was the beginning of the interruption of uncertainties in the industry. And since 2000 until this moment, that the industry has not seen significant investment except one particular area, production sharing which we still  have challenges because of  the fiscal uncertainties.

“This industry refused to develop from 2000 till today, we haven’t seen significant development in this industry since 2000 and the reason is very clear.

“The three attempts to make this legislation work that has not succeed but every time you have such situation you have uncertainties.We will not find other investors coming as long as we remain a very high cost environment, a very uncertain fiscal environment and with other associated issues that come with it.

“Passing the PIB so that we become more competitive, compared to where we are 20 years ago.

“PIB is to bring us back to reality that reality is to take advantage of the resources that we have today to enable us develop the midstream which is what is lacking today so that we have the possessive facilities and also focusing more on gas development so that this country can make progress.It will take people out of poverty.”

In his remarks,  Minister of State for Petroleum Resources,  Timipre Sylva said that the volatility of global crude prices which crashed into negativity at the height of covid 19, has underscored the urgency that necessiates the passing of the PIB.

According to the Minister,  it will go a long way to overhauling the legal and regulatory framework of the Nigerian petroleum industry and clarifies the rules of engagement for the monetisation of our  valuable hydrocarbon resources.

He said the proliferation of the country’s funding hydrocarbons that make it seem available for exploitation have also impacted on demand for crude as well as the revenue and profits accruable.

Sylva said, “This day has been anticipated for a very long time given the checkered history of the various attempt to pass the bill and has been made possible by the effort of the different stakeholders within the executive and legislature who have worked with patriotic and selfless zeal to make thi happen.

“I want to place on record, my gratitude to President Muhammadu Buhari for his immense support and guidance which culminated into transmission of the PIB to the National Assembly on Sept. 28, 2020.

“This bill was tabled before the 9th assembly on the 30th September and since then, the distinguished lawmakers have worked assiduously on it and this has accounted for the good purpose that had brought us to this public hearing.

“Distinguished Senators have also promised to consider and pass the bill into law expeditiously and I want to place on record the  sincere gratitude of the federal government and the good people of Nigeria who will benefit from the passing of the PIB by the senators. 

“The journey to improve a viable and investment -friendly regulatory framework for the Nigerian petroleum industry has been on for the past 20 years and has  been characterised by all sorts of challenges that have prevented that journey from  reaching the desired destination till date. 

“That notwithstanding, the necessity for reform of the Nigeria petroleum industry to make it conform to the current realities to proper position it for the challenges of the future has made it imperative for the effort to pas the bill to be sustained and finalised.

“Indeed the world had changed significantly since the first effort of reform was made in the year 2000 to pass the PIB.

“The Nigerian petroleum industry  faces  challenges arising not from the domestic environment but from the wider international environment, apart from the current covid 19 crises which has cost the strongest recession experienced globally since 2019, the industry faces other critical challenges, several nations have announced the intent to comply with the Paris agreement of 2016 and have adopted climate change policies.

“The volatility of global crude prices which  crashed into negativity into territory at the height of covid 19, the proliferation of country’s funding hydrocarbons and make it seem available  for exploitation have also impacted on demand for crude as well as the revenue and profits accruabl.

“The above scenario underscores the urgency that necessiates the passing of the PIB which overhauls the legal and regulatory framework of the Nigerian petroleum industry and clarifies the rules of engagement for the monetisation of our  valuable hydrocarbon resources.”

Speaking for the Petroleum and Natural Gas Senior Staff Association of Nigeria( PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, Comrade Festus Osifo who noted that they have over 100,000 in the oil sector, said that a balanced PIB must be passed and signed into law, adding that it must not be lopsided in nature. 

According to PENGASSAN and NUPENG, there must a single regulator for  the sector with departments that should be created  rather than have a dual or multiple regulators,  adding that the bill at the end of the day, must attract investment and development.

Vanguard News Nigeria 

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