PIB: Gov Emmanuel says no deal for host communities

*As Presidential Council proposes Single Industry Regulator

*NNPC for public offer

*Deregulate price of gas to power plants

By Udeme Akpan

THE Federal Government has concluded plans to effect three new changes – a single regulator, the Nigerian National Petroleum Corporation, NNPC’s public offer, and deregulation of the price of gas supplied to power plants – in the nation’s Petroleum Industry Bill, PIB.

Investigation by Energy Vanguard, showed that the three changes have already been proposed by the Presidential Economic Advisory Council, PEAC, as part of measures targeted at making the PIB more effective and beneficial to the nation, and were being considered by the government.

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Under the current PIB before the National Assembly, the government had proposed to put in place two institutions, a Commission for Upstream Regulation and an Authority to oversee mid and downstream regulation.

The PIB did not have many details on deregulation of gas pricing and immediate steps toward ownership as well as future structure of NNPC.

But in its presentation to the 6th Regular Meeting of the PEAC with the President, May 7, 2021, obtained by Vanguard, Professor Doyin Salami-led PEAC said a single regulator, sale of the NNPC shares to the public, and deregulation of gas price would make positive impact on the nation’s economy.

The council, which reports directly to the President, has the responsibility to advise the President on economic policy matters, including fiscal analysis, economic growth and a range of internal and global economic issues working with the relevant cabinet members and heads of monetary and fiscal agencies.

PEAC’s Recommendation

Specifically, it stated: “One regulator with relevant departments will be more efficient and allow for greater synergy in regulating the entire industry value-chain. Examples are Nigerian Communications Commission, NCC and the Nigerian Electricity Regulatory Commission, NERC.”

On the NNPC, it stated: “Prepare company for Initial Public Offer so the enterprise can raise its own funding. Board composition should have more independent members for governance.”

On the price of gas to power plants, it stated: “Deregulation is key to stimulating investment. To avoid price shocks, a transitional arrangement can be included. Such arrangement must specify timeline to end price regulation.”

The Council also identified other issues, which deserve urgent attention, stressing that, “Enactment of the Petroleum Industry Bill, PIB through the National Assembly will not of itself immediately stimulate investment needed in the Oil and Gas sector. Nigeria should identify key strategic projects that will enable the achievement of the various objectives – ranging from increased oil production through expansion of gas pipelines.

“These projects should then be the subject of discussion with Oil sector operators – International Oil Companies, IOCs and Indigenous companies. A process of accelerated approval can be established – similar to the NLNG model in 1982. The intention is to ensure that before the end of this administration, investment decisions can be taken.”

National Assembly

Nevertheless, in an interview with Vanguard, Sunday, Chairman, House of Representatives Committee on PIB, Hon. Mohammed Mongunu, said: “The PIB is an Executive Bill, meaning that the government is free to make changes in it.”

NNPC reacts

Similarly, in a text message to Energy Vanguard,  Group General Manager, Group Public Affairs Division, NNPC, Dr. Kenny Obateru, stated: “NNPC is owned by the government and the people of Nigeria. The ownership structure that shall be prescribed for the Corporation in the PIB shall, once passed into law and accented to, automatically become the new ownership structure of the Corporation.”


However, in an interview with Energy Vanguard, the Ghana National Petroleum Corporation, GNPC Professorial Chair in Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Ghana, Prof. Omowumi Iledare, said: “This is excellent advice that I identify with wholeheartedly. Of course, they are but advisory purely on what ought to be for value creation.

“Unfortunately, political expediency seems to matter much more than economic optimality. Most often than not, politics tend to trump economics. At least one can say without mincing words that those three recommendations put posterity much higher than prosperity.”

In another interview with Energy Vanguard, the Executive Director, Spaces For Change, Victoria Ibezim-Ohaeri, said: “The Petroleum Industry Bill 2020, is a proposed law seeking to introduce far-reaching industry reforms in the Nigerian oil and gas sector. Among other objectives, the bill aims to establish good governance, best practices, and ease of doing business in the industry by clarifying roles and responsibilities of officials and institutions, enable frontier exploration, mandate improved environmental compliance, and transform NNPC into a commercially viable enterprise.

“The laws regulating the oil and gas industry date back to pre-independence and pro-democracy rule in Nigeria when laws were made without inclusion and in the light of the peculiarities at that time. With the advancements in technology, the volatility of oil prices, climatic changes influencing the driving forces of the global economy, it has become imperative to review extant laws to bring them in alignment with current realities. Also, the law governing the industry is dispersed in a maze of legal frameworks and byelaws numbering over 16. Some of these laws contradicted each other while regulatory functions also overlapped. This means that the conflicting statutory provisions and overlapping regulatory powers between enforcement agencies offered violators and polluters the advantage of cherry-picking which law and regulator to obey.

“First, the bill proposes two regulatory bodies— Upstream Regulatory Commission and the Midstream and Downstream Regulatory Authority. They will exercise regulatory authority over all aspects of the industry, enforce standards and promote an enabling environment for investment in the Nigerian Petroleum Industry. The second development to note is the emergence of Nigerian National Petroleum Company Limited to carry out all crude and petroleum-related businesses commercially such as lifting and selling crude, royalty oil, profit oil, gas, etc. This company will replace and take over the assets and liabilities of the current NNPC.

“Third, the incorporation of host communities’ development trusts provides for the creation of a Host Communities Development Trust. The oil operators, described as settlors, are obligated to incorporate a trust for the benefit of the host communities and shall make an annual contribution to the host Community Development Trust Fund of an amount equal to 2.5 per cent of its actual operating expenditure.”

She added: “Fourth, the licensing regime will change. The Upstream Commission shall be responsible for granting petroleum exploration licences. A petroleum exploration licence shall be for three years and may be renewable for an additional period of three years subject to fulfilment of prescribed conditions.”


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