PIA implementation: Stakeholders call for speed, transparency, accountability

The focus at the Strengthening Civic Advocacy and Local Engagement (SCALE) consultative forum of Legal Framework Review in Extractive Sector, organised recently by the Civil Society Legislative Advocacy Centre (CISLAC) in Lagos State, was the need for speed, transparency and accountability in the implementation process of the Petroleum Industry Act. SULAIMON OLANREWAJU reports.

After over two decades of vacillation, the Petroleum Industry Bill (PIB) was finally signed into law by President Muhammadu Buhari on August 16, 2021 with the expectation that the new law would promote transparency and accountability in the extractive sector, eliminate regulatory/legal hurdles, attract critical investments, unlock financial resources, accelerate local content development, and enhance employment, among other opportunities.

A few days after signing the bill into law, the Federal Government set up a steering committee to oversee the implementation of the new law.

According to a statement by Mr Femi Adesina, the president’s spokesman, the committee headed by the Minister of State for Petroleum Resources, Timipre Sylva, was saddled with the responsibility “to approve or ratify the appointments of consultants who will support the Implementation Working Group/Coordinating Secretariat; to approve all recommendations for the institutional design and personnel movements as envisaged by the Law.

“Coordinate timely preparation of appropriate model licences, leases and regulations including reviews and endorsements for presidential approval; to approve all recommendations of actions or outcomes required to implement any provision of the law.

“And to do all such things as may be necessary and appropriate to give effect to and implement any provision of the law as approved by Mr President.’’

Although some steps have been taken towards meeting some conditions in the implementation of the Petroleum Industry Act (PIA) in the upstream sector of the oil and gas industry through the consultative forum for regulations held in April 2022, the fact is that there is still so much to be done for the country to properly appropriate the benefits inherent in the PIA.

Concerned about this, the Civil Society Legislative Advocacy Centre (CISLAC), the national chapter of Transparency International in Nigeria, on behalf of the Accountability in Extractive Sector (AES) Cluster within the framework of the Strengthening Civic Advocacy and Local Engagement (SCALE) project being implemented by Palladium with funding from the United States Agency for International Development (USAID), recently  organized a forum in Lagos to assess the progress in the PIA implementation process; identify possible factors, actions and inactions that have contributed to delays; and to contribute to the advancement of the effective implementation in the extractive sector.

The forum provided a review and further clarification for six draft regulations including the Nigerian Upstream Fee and Rent Regulations, the Petroleum Licensing Round Regulations, the Domestic Gas Delivery Obligations Regulations, the Nigeria Conversion Regulations, and the Nigeria Royalty Regulations and the Nigeria Host Community Regulations, and the eventual firming up of the final regulations for use.

Stakeholders at the SCALE consultative forum stressed that deliberate efforts should be made by the relevant government agencies to fast-track the implementation of the law in a manner that would achieve the PIA objectives in line with the yearnings and aspirations of Nigerians whose lives will be impacted by the consequences of the decisions and actions of responsible state actors.

Among participants at the consultative forum were Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS), and some members from the host communities.

In his opening remarks, CISLAC Executive Director, Auwal Ibrahim Rafsanjani, said the stakeholders considered the consultative forum important as a reminder to the nation about the government’s obligation to make the PIA work for the benefit of the Nigerian people and to also ensure that the objectives of the Act were fully complied with.

He added that, “The other objective is to see that those who are supposed to benefit under this new Act are taken care of and their entitlements fully implemented because that would go a long way in de-escalating tension, violence, and gross injustice that communities have continued to suffer as a result of the extractive activities.

“A lot of these communities have been devastated and their means of livelihood destroyed. Therefore this Act is an attempt to address and right the wrongs and if there is a slow implementation, it would create the impression that some people do not want the status quo to change. Also, the sector needs a reform to be able to stamp out corruption.”

The CISLAC boss also noted that stakeholders are of the belief that there are provisions in the PIA to block lapses and opportunities for corrupt practices, looting and even oil theft if the Act is well implemented.

Rafsanjani also said the proper implementation of the Act would improve and increase the productivity and efficiency in the oil sector, adding that it was shameful for Nigeria, an oil-producing country, to suffer conditions far more terrible than those countries that do not produce oil.

“We want to see Nigeria utilizing the natural resources that God has given it. We cannot continue to have oil and our communities being destroyed, with poverty on the increase in the land, and yet, we keep subsidizing corruption.”

Rafsanjani described subsidy as a means of siphoning the nation’s resources that is still going on, adding that Nigeria would suffer gravely from the practice unless a decisive step is taken to discontinue financing subsidy.

“This is why CISLAC is working with relevant government agencies, especially the committee saddled with the responsibility of ensuring that the PIA framework is implemented.

“We also urge them to engage communities and other stakeholders, and the media in their activities so that Nigerians can appreciate what they are doing and understand their obvious challenges.

“If there is no public engagement, Nigerians would still believe that it is the same old way of doing things. Hence they need to intensify the process and also engage all relevant stakeholders in the industry especially the host communities so that Nigerians can see how much progress is being achieved with this law.

“It’s not just enough to have the law. Yes, we struggled for it for 20 years, but we cannot afford to have a dormant law.”

He, therefore, commended the Nigeria Extractive Industries Transparency Initiative (NEITI) for being proactive in pointing out what should be done in the sector. He said it was through NEITI that CSOs were able to know how many companies are paying taxes. He said that it was also through NEITI’s records that many companies avoiding tax payments were revealed.

“We can know that so much was going on in the extractive sector and more transparency has been created through NEITI records.

“The natural resources are supposed to help in providing more blessings for our country. But due to corruption, natural resources have become a ‘curse’ to our country. This is not good, especially as Nigeria has marked five decades of exploration and this oil has not helped in addressing poverty.

“It has not helped in improving or creating more industries or infrastructure that we are supposed to use as seen in other countries where oil has brought development. In our own country, it has brought more misery; it has exposed more people to corruption. It has also institutionalised laziness,” he said.

While welcoming participants to the programme, Director of Finance and Administration, SCALE, Domini Madugu, said the consultation engagement was to help in the area of capacity building by CSOs in Nigeria.

According to her, SCALE has the mandate to build the capacity of the CSOs in Nigeria so that they can push policy reforms in all sectors in the country. She said that SCALE had been working with 17 organisations of CSOs across the country.

Giving assurances to the host communities and other stakeholders at the forum on the effectiveness of the implementation to cover every concern, while also providing stakeholders with an update on the PIA implementation process on behalf of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), NUPRC Executive Commissioner, Economic Regulation and Strategic Planning, Dr Kelechi Ofoegbu, revealed that draft model licenses, licensing conditions and model contracts for the PIA implementation have been finalised and presented to the industry for input.

He equally revealed that the Petroleum Prospecting Licenses (PPLs) are scheduled to be presented to the successful awardees from the Marginal Fields Bid Round 2020 on 28 June 2022, even as Host Community Development Trust Regulations will also be unveiled on that date to give guidance to Operators.

On delineation of acreage, he said discussions were ongoing with the industry operators, and sizing was being done to comply with the PIA 2021 requirement of a grid system based on the Universal Traverse Mercator.

“Delineation is a necessary precursor to the issuance of PPLs and PMLs as prescribed by the PIA 2021,” he noted.

Speaking on the role of the Federal Inland Revenue Service (FIRS) in the implementation of the PIA, Technical Assistant to the Executive Chairman, FIRS, Femi Olarinde, said FIRS was responsible for the enforcement of the provisions of Chapter 4 of the Act as it was related to taxes.

He said FIRS was also saddled with the task of assessing and collecting hydrocarbon taxes, companies’ income tax, and education taxes from the oil and gas industry. “The commission is also to determine and collect royalties, signature bonus and related payments of production shares, profit oil from the upstream petroleum sector.”

“We are also the authority to determine and collect all related payments from downstream and midstream sectors of the industry including gas flare penalty. And all monies collected (taxes, royalties, profit oil, signature bonuses, etc) from the petroleum industry due to the government shall be timely transferred to the Federation account.”

Speaking on the expectations of host communities from the implementation of the PIA, representative of HRM Oduosa of the Utagba-Ogbe Kingdom, Delta State Nigeria, High Chief, Dennis Ejechi, expressed concerns on the impact of the activities of oil companies on neighbouring communities to host communities, which according to him were not given recognition in the PIA.

He likewise expressed concerns about the environmental effect of gas flaring, transparency and competence of auditors in charge of the oil company’s account, and how to rightfully determine the three per cent ascribed to be paid to host communities by the oil companies as recommended by the PIA, and the company’s compliance level to the dictates of the PIA.

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