The House of Representatives last week passed the Petroleum Industry Bill through second reading. KAUTHAR ANUMBA-KHALEEL reviews the bill and controversies that trails the long awaited bill.
For the umpteenth time, the House of Representatives last week passed through second reading the new Petroleum Industry Bill (PIB). It is a fact that the PIB had been passed at this stage severally by previous Assemblies of the 4th Republic, but has unfortunately never seen the light of day.
The journey of the Nigerian Petroleum Industry Bill to the National Assembly began in the early days of the former President Olusegun Obasanjo administration with the inauguration of the Oil and Gas Reform Committee (OGRC) in 2000 given the mandate to review and streamline all existing petroleum laws and establishing a regulatory framework for the sector to reflect and serve the interests of consumers, the environment and operators. Subsequently, the Oil and Gas Implementation Committee was set up in 2005 to develop strategies for the implementation of the content of the policy document developed by the National Committee on Oil and Gas. Some of these recommendations which include: deregulation of the sector, restructuring of the NNPC and harmonization of existing petroleum laws were to be integrated into a document and presented to the legislature as a draft law but that was never to be.
The first draft of the bill was however, presented to the 6thNational Assembly by late president Yar’adua in 2008 but the process of passage was marred by factors relating to profit sharing between stakeholders. Years later, a new draft by the Goodluck Jonathan Administration presented yet a new draft to the 7th Assembly but this bill was to suffer an even fatal fate than the first given the confusion generated by the emergence of various versions of the bill which ultimately led to its withdrawal from the parliament. Two years later, another version was again sent to the National Assembly.
Although passed at the twilight of the 7th Assembly, one of the issues that forestalled the early passage of the bill into law was the question of host communities. The host communities generated a lot of controversy amongst members and it was not resolved because of regional interests. Different forces particularly from the north, vehemently kicked against the issue of host communities contained in the bill as it sought to provide a special fund for oil producing communities under the guise of host communities whereas the Niger Delta Development Commission (NDDC) Act has already provided for thirteen percent derivation fund for such communities. Hence, for lawmakers outside the Niger delta, this would amount to double allocation to the oil producing areas.
This time around, the new Bill before the 8th House of Representatives has expanded the concept of host communities to include some states outside non-oil producing areas. It provides that states where there are refineries, petroleum depot or where pipelines pass through will benefit from the host communities’ funds but added that benefits to be derived by non-oil communities will be less than communities where oil exploration and production occurs. This may also be another knotty issue to determine because arriving at an acceptable percentage for both oil producing areas and those not producing but with oil facilities domiciled in their domains would surely open up another round of controversy. However, with the experience of the past, where disagreement over which community qualifies as a host community forestall the passage of the PIB, particularly in the 7th Assembly, the lawmakers may have learnt some lessons and are therefore expected to thread with more caution this time around.
The recent passage through second reading by both chambers of the National Assembly though lauded, was without its fair share of controversy following the senate’s initial attempt to take out the provision for the host communities from the bill which was greeted with public outcry. But even as the House passed it and constituted an ad hoc committee, headed by the chief whip, Hon. Alhassan Ado Doguwa that will soon organize a public hearing to aggregate the views of stakeholders and other Nigerians on the bill, the problem of host communities is likely to rear its ugly head again. The House is however ahead of the senate despite the fact that the upper chamber passed the bill earlier; the senate has treated just an aspect of the entire bill, which is the PIGB, the other two segments have not been touched by it. The House on the other hand has taken a step further by passing all the three related bills and this looks more promising.
The bill which is titled: “A Bill for an Act to provide for a framework relating to Petroleum Host Community’s participation, cost and benefit sharing amongst the government, petroleum exploration companies and petroleum host communities and for related matters”, seeks to promote host communities participation; create a conducive business environment; protect health, safety and the environment/promote local content and proposes the establishment of Petroleum Communities Trust Fund as a corporate body for each local government hosting upstream facilities to manage the funds received as payment for hosting petroleum activities; a board for the fund while 0.5% of the fund would be allocated to local government councils in the affected communities.
By this provision, states like Imo, Abia, Niger, Kwara, Abuja, Kaduna, Kano, Lagos and Gombe will draw from the fund given that the country’s five thousand kilometer pipelines are reticulated across these states; 21 petrol storage depots and 9 liquefied petroleum depots. It is also likely that the FCT will also be a beneficiary of the fund if the NNPC’ plans for the construction of 650 kilometers northern gas line network comes to fruition.
It would be recalled that the corporation in March, announced that it had tendered the construction of the 650 kilometers northern gas line network which is expected to be concluded by the end of the second quarter of 2017. Co-sponsor of the bill, Hon. Joseph Akinlaja while speaking, noted the need to address the issue and concerns of host communities stressing that some percentage of revenue must go to them.
Akinlaja stated that the bill provides that the federal government shall pay to each fund the following, 10 % of the total amount payable to a state government from its derivation revenue, 50% of government receipts from levies for pipelines payable to communities hosting the pipelines while the local government while will be the general custodian of the monies. Also, payable is 20 % of the total royalties accruing to the federal government to be evenly distributed by all concerned local governments.
According to him, “Host communities include where oil is produced, where pipeline pass as well as where there are oil installations that can pose danger to human beings. Nobody knew 10 years ago that oil would be produced in Lagos.
“Communities where oil is produced should benefit first because they suffer different degrees of deprivation and degradation associated with gas flaring, destruction of their ecosystem. The core place where crude oil is mined has different percentage from where flow station is. Where the pipelines pass, they’re also part of the communities, but they’re graded in the bill. There are areas we call impacted communities,” he said.
Similarly, Hon. Victor Nwokolo, himself a co-sponsor, in his debate said the objective of the bill in its entirety is to make all host communities stakeholders in petroleum operations taking place in their domain as is obtainable in other parts of the world where petroleum was a natural resource.
“When you are talking about mineral resources today, it is not only petroleum we are talking about and by the grace of God, the government is trying to give a drive towards other mineral resources, like coal that you find in Plateau and Kogi states as wwll as other areas. So, when you talk about host communities, it is going to be applicable to all parts of the country, so that it will not be seen as a means of empowering only the Niger Delta region or oil producing communities again”, he said.
In spite of all these efforts, it is not yet uhuru for the long awaited PIB, believed to have the magic wand to solve the myriad of problems associated with the petroleum sector. The House and indeed the National Assembly would do the nation a whole lot of good by expediting action on this bill to ensure that President Muhammadu Buhari appends his assent to the bill before the expiration of his tenure in May 2019. This is the best legacy the 8th Assembly could bequeath to the expectant Nigerian electorates.