Inside Passed PIB: Senate Okays 30% Of NNPC Profit For Oil Search In North, 3% For Oil Communities

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  • Lawan: ‘Demon’ Behind Non-passage Finally Defeated

The Nigerian Senate has allocated 30 per cent of accruing profit from Nigerian National Petroleum Corporation (NNPC) to the aggressive pursuit of oil exploration in Northern Nigeria in the Petroleum Industry Bill (PIB) passed on Thursday after about two decades of stalling.

The 30 per cent funding mechanism approved for oil exploration in the north by the upper legislative chamber is to come from NNPC limited’s oil and gas profit in the production sharing, profit sharing, and risk service contracts.

It would be recalled the federal government had in February 2020 announced that about one billion barrels of crude oil has been discovered in the Nigeria’s Northeast, which has been beleaguered by jihadists’ attacks and humanitarian crisis for over 10 years.

Also, The New Diplomat checks reveal that hydrocarbon deposits have been discovered in the Kolmani River II Well on the Upper Benue Trough, and the Gongola Basin, while oil search in the Mid-Niger (Bida Basin), Chad (Borno Basin) and Sokoto Basin (Illumenden) are also in the pipeline.

Among the so-called frontier basins, The New Diplomat understands that only the Niger Delta, Dahomey (primarily along the Lagos-Ogun coastline), Anambra and lower Benue Trough are located in Southern Nigeria, the rest basins are all found in the north.

While success was recorded by the NNPC in the search for oil in the Upper Benue Trough in Bauchi (Kolmani River II), only gas was reported to have been discovered in about 23 wells drilled on the Nigerian side of the Chad Basin.

Meanwhile, in the bill which was passed after a clause-by-clause consideration of a report by the Joint Committee on Petroleum — Downstream, Upstream and Gas, the Senate approved 3 per cent for oil producing communities as trust fund, falling short of the 5 per cent recommended in the report by the Joint Committee of the National Assembly.

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The New Diplomat had reported that the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) had asked the National Assembly to consider 10 per cent shareholding for the oil communities.

The Deputy Senate President, Senator Ovie Omo-Agege (Delta Central) during the contentious session, pleaded with colleagues for an upward review of the host community fund to 10 per cent to address the developmental deficits in the oil communities and overall quell agitation in the Niger Delta region, however, the plea was ignored as the Upper Legislative Chamber went ahead to give a nod to 3 per cent.

But the House of Representatives approved 5 per cent for oil host community fund while passing the bill, Thursday, as both chambers are now expected to harmonize provisions in the PIB before President Muhammadu Buhari’s assent.

The Chairman of the Joint Committee, Sabo Muhammed Nakudu, delivered a presentation on the Committee’s report moments before the upper chamber held a closed session to receive briefing by the Petroleum Minister, Timipre Sylva, and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari.

In his presentation, the Senator said that the Petroleum Industry Bill consists of five distinct chapters which include Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Fiscal Framework; and Miscellaneous Provisions comprising 319 clauses and 8 schedules.

According to him, the bill’s passage and eventual assent into law would strengthen accountability and transparency of NNPC limited as a full-fledged company under statutory/regulatory oversight with better returns to its shareholders – the Nigerian people.

He added that the Joint Committee’s recommendation on Frontier Basins recognized the need for Nigeria to explore and develop the country’s frontier basins to take advantage of the foreseeable threats to the funding of fossil fuel projects across the world due to speedy shift to alternative energy sources.

It also approved Clause 4 of the bill which seeks the establishment of the Nigerian Upstream Regulatory Commission to provide technical regulatory functions that would enforce, administer and implement laws, regulations and policies relating to upstream petroleum operations.

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The Commission would, among others, ensure compliance with applicable national and international petroleum industry policies, standards and practices for upstream petroleum operations; and establish, monitor, regulate and enforce health, safety and environmental measures and standards relating to upstream petroleum operations.

In addition, the upper chamber while adopting the Committee’s recommendation to retain provisions in Clause 29 of the bill, approved the establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority.

Clause 29(3) empowers the Authority to be responsible for the technical and commercial regulation of midstream and downstream petroleum operations in the petroleum industry in Nigeria.

Its function include implementing Government policies for midstream and downstream petroleum operations as directed by the Minister; and to promote, establish and develop a positive environment for international and domestic investment in midstream and downstream petroleum operations.

Others are to ensure strict environmental
implementation of policies, laws and regulations for midstream and downstream petroleum operations; and to develop and enforce a framework on tariff and pricing for natural gas and petroleum products.

The recommendation of the Joint Committee was amended in Clause 52(7d) to ensure that all monies received from gas flaring be channeled for the purpose of environmental remediation and relief of the host communities as against the development of infrastructure in midstream gas operations.

The upper chamber, however, retained the recommendation of the Joint Committee in Clause 53 which empowers the Minister of Petroleum Resources to incorporate the Nigeria National Petroleum Corporation as a limited liability company to be known as NNPC Limited, six months after the commencement of the Act.

Accordingly, the adopted Clause 53 mandates the Minister of Petroleum Resources at the incorporation of NNPC Limited, to consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted, which would form the initial paid-up share capital of NNPC Limited.

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Consequently, the Senate approved ownership of all shares in NNPC Limited to be vested in the Government at incorporation and held by the Ministry of Finance Incorporated on behalf of the Government.

Senators in the majority voted for 3 percent contribution to the host communities, following an amendment to Clause 240(2) by Senator Ahmad Babba Kaita (APC, Katsina North), which was seconded by Ibrahim Gobir (APC, Sokoto East).

The approval of 3 percent for host communities represents an upward review of 0.5 percent from the previous 2.5 percent contribution to the host community development fund.

The Senate President, Ahmad Lawan, in his remarks after the eventual passage of the PIB, congratulated the Ninth Assembly and Joint Committee on Downstream Petroleum Sector; Petroleum Resources (Upstream); and Gas for the “tremendous and historical achievement of passing the long awaited Petroleum Industry Bill.”

According to him, the passage of the PIB was an indication that the “demon” behind its non-passage in the past had been finally defeated.

He added, “I must commend the leadership of the House of Representatives, too, for providing leadership to ensure that our Joint Committees in the Senate and the House work together to produce the report that we have just passed.

“Let me say that the Ninth Senate and, indeed, the Ninth National Assembly has achieved one of its fundamental items on the legislative agenda.

“We promised Nigerians that we will do our best to pass the PIB that has defied passage or defied assent. At least, the demons are being defeated in this chamber.”

Lawan appealed to President Buhari to give expeditious assent to the bill when it is eventually forwarded to him by the National Assembly.

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