PIB: No To 3% Host Community Fund

For about one and half decades, Nigeria has been on a long-drawn-out trip on the Petroleum Industry Bill (PIB), with many assumptions and assurances failing overtime under past National Assembly leadership. However, two years into the Ninth Assembly, the Bill was passed upon adopting all the 318 clauses as put forward by the Committee on PIB following some modifications. With this latest outcome, it seems the Ninth Assembly is set to make history, if the PIB gets President Muhammadu Buhari’s acquiescence.
A presidential committee set up in 2007 to look into the oil and gas sector came up with the concept of the PIB, which intended to advance transparency at the Nigerian National Petroleum Corporation (NNPC) and the Nigeria’s share of oil fund. Later, the Bill was moved to the National Assembly in December, 2008 by the late President Umaru Yar’Adua.
However, the proposed legislation was never passed into law because of criticisms from the International Oil Companies (IOCs) and the NNPC over its compositions. In 2015, the former Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, declared that the PIB was to be amended to facilitate its passage. It was later separated into distinct parts to focus on numerous aspects of the oil enterprise.
Despite the many unsuccessful attempts, the passage of the PIB was one of the preferences specified by the Ninth National Assembly in its legislative calendar. Members of the Senate and the House of Representatives, returning to work after their inauguration on June 11, 2019, pledged to break the ‘jinx’ around the Bill and reform the oil and gas sector.
President Buhari, on September 29, 2020, had passed on the PIB to the federal legislators. The Bill moved through the first and second reading without differing views from the lawmakers, and consequently, an ad-hoc committee was set up by the House for the public hearings, while the Senate Committees on Petroleum Upstream, Downstream and Gas, directed affairs for the Senate.
PIB seeks to get rid of the Petroleum Equalisation Fund (PEF) and Petroleum Products Pricing Regulatory Agency (PPPRA) and supplant them with a new agency to be known as Nigerian Midstream and Downstream Regulatory Authority (NMDRA), which will be responsible for the technical and commercial regulation of midstream and upstream petroleum operations in the industry.
Similarly, the Bill plans the establishment of Nigerian Upstream Regulatory Commission to be liable for the technical and commercial regulation of upstream petroleum activities. It further requests the commercialisation of the NNPC to develop into Nigerian National Petroleum Company to be incorporated under the Companies and Allied Matters Act by the Minister of Petroleum Resources.
The Federal Government had offered 2.5 per cent as royalty for the host communities in the proposed law. But, that was inadequate and consequently turned down by the host people who demanded 10%. But the Senate and the House of Representatives ceded only three and five per cent equity shareholding to the oil and gas producing communities.
While we laud the National Assembly for conducting the PIB through which had been in limbo all these years, we repudiate the preposterous 3% allotted to host communities and maintain that it be re-examined upwards for harmony, justice and equity. The minimum we demand is the 5% limit of the House with a periodic evaluation. The action of the Senate undermines the 65 years of oil discovery and exploration activities in the region and the resultant devastation of the environment.
Of similar concern in the PIB is the 30% share of profit reserved for exploration in the oil basins or frontier states. This is outrageous, fraudulent and provocative and should be expunged immediately. It is unreasonable to set aside that much for the exploration of a product that is shifting away with fading value.
Our stand on the ownership structure of the NNPC is consistent with that of the Southern Governors’ Forum. Although commercialising the Corporation will open it up for competition and make it more profitable, we think that its ownership should be in the trust of the Nigeria Sovereign Investment Authority (NSIA), not the Federal Ministry of Finance, since all tiers of government have interests in it.
It is getting clearer that the beneficiaries of the Nigeria’s flawed federal system are not rushing to shift ground. The governors should impress it on the lawmakers from the South to press home these demands. It is unpardonable to see the unjust laws and policies coming out of the Buhari regime with no serious pushback from Southern and Niger Delta legislators.
These National Assembly representatives, especially from the Niger Delta are disconcerting. How could they observe helplessly their counterparts from other parts of the country appropriate three and five per cent to host communities? Perhaps, they were slumbering and dozing when final considerations on the Bill were on. They have failed their people and are undeserving of a return.
The PIB must be revisited with the views of the host communities and stakeholders in the Niger Delta region considered. It is our opinion that the ongoing constitutional emendation should predate the review and ratification of the PIB, as most of the imbalance and marginalisation discovered in the passage of the Bill are predicated upon the deliberate malignancy in the 1999 Constitution.