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PIB: Experts call for upward review of host communities’ fund

By on April 30, 2013

SENATORS were,yesterday, told that passage of the Petroleum Industry Bill, PIB, into law might lead to repeal of laws that established 10 agencies, including Nigerian National Petroleum Corporation, NNPC, and preservation of five others.

Senators were also cautioned to x-ray the aspect of the PIB which gave the President powers of discretion and section that made the Minister of Petroleum an institution.

The experts have also stressed the need for an upward review of the 10 percent petroleum host community development fund which was designed for the development of the economic and social infrastructure of the communities.

These were some of the issues that came to the front burner, yesterday, at a one-day workshop by the Senate Joint Committee on Petroleum Industry Bill, PIB, held at Bolingo Hotel, Abuja.

In his presentation, Professor Dagogo Fubara of Kariala Konsult Nigeria Limited, said the 10 percent of oil companies’ net profit to be set aside for host communities was not easily realizable.

Fubara, who described the figure as inconsequential and capable of defeating the purpose for which it was established, called for full royalties from oil and gas companies to oil producing communities.

He said: “The quantum is inconsequential for the purpose of the fund of the host communities. It is the practice all over the world that rents and royalties from oil and gas are paid to the host communities.

“All royalties and rents from oil and gas should be paid to the state, local government and communities where the oil and gas are extracted at a rate similar to what it was before the 1969 Petroleum Act.”

In his presentation, a member of PIB drafting Committee and Director, Multi Oil and Gas Company Limited, Dr. Francis Adigwe, noted that the oil and gas sector formed the bedrock of the nation’s economy, contributing 80 percent to government’s revenue, 95 percent to the nation’s foreign earnings and 30 percent of Nigeria’s Gross Domestic Product, GDP.

He said passage of PIB into law would bring about the repeal of 10 acts, adding that not all laws relating to oil and gas would be repealed.

Passing of PIB ‘ll repeal 10 agencies

According to him, the laws establishing the Petroleum Technology Development Fund, Petroleum (Special) Trust Fund, Petroleum Equalization Fund, Petroleum Profit Tax, Nigeria National Petroleum Corporation, Deep Offshore and Inland Basin Production sharing contract.

Other agencies are Motor Spirits (Returns), Associated Gas Re-injection and Oil Pipelines, adding that Minerals Oil Safety Regulation 1963, Petroleum (Drilling and Production) Regulations of November 1969 and Crude Oil (Transportation and Shipment) Regulations of December 1984 will also be repealed as a result of the PIB.

Adigwe, however, explained that the existence of PIB law would bring about the creation of 10 new government agencies that would be coordinated by the Minister of Petroleum who is to be treated as an institution and not as a person in the bill.

On the powers of the minister in the PIB, Adigwe said: “The concept of the minister in PIB  is an institution and not a person because provisions in the bill make a sitting Minister of Petroleum Resources to have sweeping powers such as power to coordinate and regulate the critical areas of the oil and gas sector.

“It will advise the President on the appointment of chief executive officers, including upstream petroleum inspectorate and the downstream, which are not available in the current Petroleum Act.

“Also in the bill, power to nominate members of board of agencies as well as serve as the chairman of the board of National Asset Management Company are given to the minister.”

Speaking further on the Petroleum Host Community Fund, Fubara, said: “Having a single fund for all the communities as proposed in the bill will be unwieldy, unmanageable and cumbersome to administer transparently, openly and expeditiously with accountability.

“Having distinct host community fund will be more definitive and enable each of the communities benefit maximally. It will also enhance peace and harmony between the companies and host communities.”

The resource person who disagreed with the power of the President to grant and lease oil blocs in special circumstances as stipulated in the new oil law, said such power was inconsistent with the objectives of the bill and advised that it should be removed.

According to him, “it is inconsistent with the objectives of the bill and leads to continuation of a lot of entrenched corruption and abuse of power, negating all other commercial processes established in the bill.”

Public hearing on PIB to hold in Lagos,Port Harcourt, Kaduna

Declaring open the workshop, Chairman of the Joint Committee, Senator Emmanuel Paulker, PDP, Bayelsa Central, noted that the workshop was designed to give senators an update information on the bill before the planned public hearing.

He said: “We are engaging services of professionals to enlighten us on the bill once more, so that when we go out for public hearing in various locations, we would be versed in everything concerning the bill.”

A member of the committee, Senator Danjuma Goje, PDP, Gombe Central and other committee members who spoke, said they learnt a lot and were now well equipped for the public hearing, especially provisions that had to do with the powers of the President and Minister of Petroleum over award and lease of oil blocs.