ON July 1, the Senate passed the Petroleum Industry Bill (PIB) 2021. The passing of the bill came 13 years after its initial presentation to the National Assembly in 2008. The bill, which had earlier been passed by the House of Representatives, is to be harmonised at the joint committee of the National Assembly. The bill has been celebrated because it is expected to enhance good governance and ease business transactions by introducing far-reaching reforms in Nigeria’s oil and gas industry. The bill clarifies the roles and responsibilities of officials and institutions, enables frontier exploration, and aims to improve environmental compliance in the industry. It also seeks to transform the Nigerian National Petroleum Corporation (NNPC) into a commercially viable enterprise.
However, several issues continue to provoke controversy. Chief among these is the equity shareholding for host communities. While the Senate committee recommended five per cent equity share, the Senate eventually gave host communities only three per cent. On the other hand, the House of Representatives gave the host communities five per cent. Granting the host communities five per cent equity stake in the Host Communities Trust Fund, as against the agitation for 10 per cent by host communities, is criminally oppressive and unjustifiable. But reducing it to three per cent is completely abhorrent. On this issue, a number of groups and communities have called on the legislators to address these concerns. In a statement, the national president, Host Communities of Nigeria Producing Oil and Gas (HOSTON), Chief Benjamin Tamanarebi, said it was insulting for the Senate and House of Representatives to cede only three and five per cent equity shareholding respectively to the oil and gas producing communities in the PIB.
The Southern Governors’ Forum, in its communique issued after a meeting in Lagos, called for the retention of five per cent equity share for the host communities. We think that given the environmental degradation and social dislocations that have occurred in the communities over many decades of oil and gas exploitation, the communities deserve the 10 per cent clamoured for. To ensure lasting peace in the Niger Delta region, the operations of the oil and gas industry must have direct positive impact on the host communities, and we believe that five per cent remains inadequate to achieve the desired impact.
Another controversial area in the passed bill is the fund earmarked for oil exploration in the frontier basins, which the Senate left at 30 per cent, while stakeholders in the Niger Delta had demanded that it should be reduced to 10 per cent. With this decision, 30 per cent of profits accruing from oil and gas operations by the NNPC will be set aside for oil exploration in the frontier basins. To believe that the same representatives of all segments of Nigeria would allocate five per cent equity to the host communities while allocating 30 per cent of all profits accruing from the operations of the NNPC to oil exploration in the frontier basins where nobody is sure there is oil in commercial quantities shows that the senators do not care about the fate suffered by oil-producing communities.
It is bad enough that the representatives of the North in the two chambers want to corner all resources for themselves and their people, but the acquiescence of the representatives of the southern communities who failed to protect the interests of their own communities is outrageous. By not taking adequate care of the interest of the impoverished oil-producing communities who bear the brunt of oil production, the lawmakers showed that they are not worthy representatives of the people. They have written their names into the infamy section of history books, and of course the bill will be difficult to enforce. Furthermore, both the Senate and the House of Representatives agreed that the NNPC should become a limited liability company to strengthen accountability and transparency. The new status brings the NNPC under statutory and regulatory oversight with better returns to its shareholders, the Nigerian people. It is also believed that the PIB would attract and unlock capital investment inflows to the country’s oil and gas industry since it contains enhanced incentives in the land, swamp, shallow and deep water terrains. Provisions have also been made for better and attractive tax incentives to achieve this goal. However, putting the new NNPC under the Federal Ministry of Finance gives the impression that the company is owned by the Federal Government.
This is contrary to the Nigerian constitution which states very clearly that Federation Funds belong to the Federal and state governments together. Why would the Federal Government seek to be the sole owner of the government equity in the new NNPC? It is not surprising that the Southern Governors’ Forum has rejected this ownership structure of the proposed Nigeria National Petroleum Company Limited (NNPC). The forum has maintained that the company should not be vested in the Federal Ministry of Finance but should be held in trust by the Nigeria Sovereign Investment Authority (NSIA) since all tiers of government have a stake in that platform.
While the PIB has been hailed as a long-awaited law that will provide the long-expected business and investment environment for operators and other stakeholders in the oil and gas industry, the reality is that the world is in transition from fossil fuel to cleaner, renewable energy sources targeted at tackling global climate problems. While oil may still play a significant role in the global energy mix beyond 2050, Nigeria must ensure that it utilises the opportunities created by the PIB to fully harness the total hydrocarbon value chain to generate the capital that will propel its transition into the renewable world.
We reject this bill as it is until the issues raised above are fundamentally addressed. We remind the representatives of the southern states in the National Assembly that history is recording all their acts of betrayal of the interests of their people and history will not be kind to them.