At long last, PIGB passes
In a development that promises to change the face and structure of the Nigerian petroleum industry, the Senate passed the Petroleum Industry Governance Bill [PIGB] last week. It was initially sponsored as the Petroleum Industry Bill (PIB) but was later re-designated as PIGB following amendments to it in the course of legislative processing. This re-designation […]
In a development that promises to change the face and structure of the Nigerian petroleum industry, the Senate passed the Petroleum Industry Governance Bill [PIGB] last week. It was initially sponsored as the Petroleum Industry Bill (PIB) but was later re-designated as PIGB following amendments to it in the course of legislative processing.
This re-designation was contrived in the light of the unbundling of PIB’s provisions into separate bills with PIGB dedicated to the first tranche of provisions. These are with respect to administrative and regulatory aspects of the industry. The other forthcoming tranches which also derive from the parent PIB are the Upstream Petroleum Licence and Lease Administration, Downstream Oil and Gas Administration, Petroleum Funds, Petroleum Revenue Management and Petroleum Host Community Fund bills. Essentially the PIGB is expected to create efficient and effective governing institutions with clear cut and separate mandates to supervise the industry.
Its passage was after the Third Reading by Senate plenary of the Report of the Committee on Petroleum Upstream, Petroleum Downstream and Gas presented by Senator Donald Alasoadura. Until then the bill had lasted in the National Assembly for over a decade and was perhaps the longest lasting legislative proposal in the history of the country. In its provisions for a more robust regulatory regime for the industry, the bill pushes for a heightened inclusiveness, development of the sector away from mere production and sale of crude oil to more diversified product and by-product lines. Another aim of PIGB is mutually beneficial engagement between key stakeholders such as the Nigerian government, local and international oil companies as well as oil facilities bearing/hosting communities. Specific areas of attention include streamlining of investment protocols and modifications in Joint Venture Partnerships and cash call obligations. The bill emphasises a new focus on the expansion of indigenous participation and local content, as well as just and fair management of compensation of oil producing areas along with transparency and accountability in the industry.
If assented to by the President, PIGB will unbundle the Nigeria National Petroleum Corporation (NNPC) into two companies namely Nigeria National Petroleum Assets Management Company and the National Petroleum Company. All extant regulatory functions and power of the NNPC will devolve to a new agency to be referred to as Petroleum Regulatory Commission. The two companies shall be created and supervised by the Ministry of Petroleum Incorporated within six months of the coming into effect of the law. As designated the first company shall be responsible for managing the current assets under the Production Sharing Contracts (PSCs) and Back-in-Right (BIRs) assets currently held by NNPC, while the second company shall take over the assets of NNPC other that the PSCs and BIRs.
With the bill’s passage, it is expected that the industry will have a slim, forward looking and robust framework for its growth and delivery of expected dividends from this critical sector that remains a lifeline for the country. This will derive from the orientation of the sector along profit making lines in which the indigenous private sector will enjoy wider latitude of participation. The primary merit of this dispensation is its reflection of the perennial expectation of indigenous operators in the industry as well as oil facilities bearing communities who had been complaining over the domination of the sector by foreign operators, and the government’s disturbing silence and inaction all along.
We commend the Senate for the effort in ensuring that this bill comes to light, with the expectation that the subsequent tranches also enjoy accelerated consideration. The long delay in its passage has already this country a great deal. It is a matter of concern that after almost sixty years since oil was first produced in Nigeria in 1956, the country is yet to get its act together. This is hoping that with the advent of PIGB the story will change for the better.