PIGB public hearing and the burden of indecision

A public hearing was organised by Nigeria’s upper chamber the Senate between December 7 – 9 on the petroleum industry governance bill, a document purported to provide a legal framework for the oil and gas industry.

While Ghana successfully passed its petroleum sector governance law in August this year, two years after work on the bill started, Nigeria’s petroleum sector bill has been stuck in the national assembly for close to a decade.

The quality of ideas presented at the public hearing once again highlighted the yawning gap between ideation and implementation, the parallel lines the country seem to have unwittingly drawn between intention and resolve. What is lacking has never been a paucity of ideas but the poverty of will.

Some titbits from the public hearing compiled below illustrate this point:

Breaking up the behemoth called NNPC

The top recommendation made, is unbundling NNPC into two entities – Nigeria Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC) as well creating the Nigeria Petroleum Regulatory Commission (NPRC) as a regulator.

The bill proposes that the NPRC will act as the regulatory entity for the entire petroleum industry (upstream, midstream and downstream), while the NPAMC will serve as counterpart and administrator of production sharing agreements and NPC as a vertically integrated oil and gas company operating as a fully commercial entity across the value chain.

Review of agency saddled with crude oil sales

Another key recommendation is that sale of oil should be done in a way to create competition and efficiency in the sector by having two agencies selling crude oil. However, NNPC’s top boss opposed the idea on the grounds it would muddle responsibilities.

He also advocated the need to delete a provision which empowers NPAMC to sell crude oil and petroleum derivatives, saying assigning NPAMC the role of selling crude oil, which he said should be the responsibility of a department in NPC, would create two competing national oil companies that would both be involved in the sale of crude oil.

Baring the President acting as petroleum minister

This was another recommendation made at the public hearing as it has become necessary to streamline the functions of the petroleum minister. The current situation where the president with his packed to-do list pretends to superintend the petroleum ministry fosters slow decision making process and has seen Ibe Kachikwu the junior minister speaks out of tune with the president.

On promoting transparency

The NNPC boss also said that there is need to enhance transparency and suggested that a way to ensure this is for NPC to be be required to publish annually a detailed report on all petroleum revenue payments made to government.

This, he said, should include all royalties, rentals, fees corporate income tax, bonuses, profit oil/gas shares from each of the licences, leases and contracts.

Reducing over regulation

Operators in the sector say the multiplicity of regulators often giving contradictory and confusing regulation is a major factor. These regulators exercise overlapping functions making the sector the most regulated and deliver less value than it has the capacity.

It is this situation that informed Baru’s call for distinction of roles between the Minister of Environment, Petroleum Minister and NPRC including how it will be funded.

“There is need for specific revenue stream to be clarified in the bill under ‘Funding of NPRC’ as it is unclear as to what constitutes the revenue generated by the Commission.

The NNPC boss also said the Federal Inland Revenue Service (FIRS) should retain its roles as the collector and administrator of petroleum profit tax (PPT), corporate income tax and other taxes.

Already the sector is heavily regulated and with the creation of another regulator, it has become necessary to review the laws on which some of these regulators are based.

Senator Tayo Alasoadura, the chairman of the senate upstream committee said “The PIBG when passed becomes a property of all of us, so we must not shy away from our responsibilities”

But will they?

ISAAC ANYAOGU