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PIB Suffers Setback, Rejected By North

By on December 19, 2012

Petroleum Minister, Diezani Madueke

The oil sector is not safe yet, as the only hope forwarded as the saviour expected to clean up the oil sector has suffered immense setback.

The Petroleum Industry Bill (PIB) referred to many as the magic pill has been rejected by the North because the bill contains clauses that are not favourable to the interest of the northerners.

According to the Northern Governors Forum, senators and members of the House of Representatives from the region the bill is against everything they believe in as well as the establishment of the Host Community Fund.

They also called on their leaders in the assembly to use their majority in the house to work things out and get the best for their region.

The planned debate on the bill suffered a setback at the Senate yesterday.

All the complaints posit by the North were forwarded in a single document put together by the Northern Governors Forum, Northern Caucus in the House of Representatives and the Northern Senators Forum.

The document showed that the North rejected the bill following fear that they could be locked out of the region of benefiting from oil and gas income.

The North also alleged that establishment of the Host Community Fund is planned to give oil producing states dominance especially the south-south states over the Northern states.

The document reads in part, “On top of the 13.5 per cent statutory derivation from the Federation Account, the mandatory Federal budgetary allocation to the Ministry of Niger Delta, the Niger Delta Development Commission (NDDC) levy of 3 per cent of oil operations and the massive amount of Federal funds being spent on the Niger Delta Amnesty programme, the new PIB is adding 10 per cent of the profit of all oil and gas companies to the Niger Delta States and Communities.

“Currently, without this new addition, four states (Akwa Ibom, Bayelsa, Delta, and Rivers) earn more than the 19 Northern states combined. One wonders what kind of federation we would end up with, if this situation is escalated by the new PIB. In any case, what really is the constitutional standing of this particular provision in the Bill?

“These and many other issues in the Petroleum Industry Bill need very close scrutiny by the Northern Governors Forum. Without this exercise, it is very possible for the states in the region to be legally short-changed through the process of legislation despite having the majority membership in the two chambers of the National Assembly.

On plans to divest equity in the proposed new National Oil Company and the National Gas Company, the Northern leaders said there is no provision for safety net to protect the interest of the region.”

The North queried that the PIB is supposed to protect the rights of the Northerners to invest in those companies because they have the same right to.

The document said, “The plan to divest equity in the new National Oil Company and the National Gas Company is not in itself an issue, the problem is to implement this provision of the law without any safeguards for equity and national spread.

“The communities and businesses in the Northern States are not very active players on the Nigerian Stock Exchange. In this regard, simply off loading the equity of these national assets on the stock market could lock the people of the region out of ownership of these critical resources.

“The region must, therefore, insist on legislating guarantees for equity and national spread on whatever divestment plans there are for oil and gas assets.

“The new institutional structure being proposed for country’s oil and gas industry does not create a framework for any serious or effective exploration for hydrocarbons in the frontier acreages of the country’s six sedimentary basins, four of which are in the Northern sections of the nation.

“The New Petroleum Technical Bureau to be located in office of the Minister of Petroleum, which takes over the responsibilities of NNPC’s Frontier Exploration Services, cannot really be a substitute for the National Frontier Exploration Services (NFES) that was earlier proposed in the version of the Bill sent to the National Assembly by the late President Umaru Musa Yar’Adua.

“While the need to attract the required investment into the sector through the fiscal device must be recognised, it should not be at the expense of an appropriate and legitimate Government take of the total petroleum income.

“The scaling down of the Hydrocarbon Tax and the reinstatement of many incentives and allowances, among other things, would certainly impact negatively on the inflow into the Federation Account and further stress the already overburdened treasuries of the State Governments.”

The North furthermore criticized the PIB for abandoning the subject of royalty to the judgment of the Minister of Petroleum Resources.

Adding, they said such an unrestricted power will rear corruption.

The document said, “Of great concern, however, is the issue of royalty or lack of it in the Bill. Leaving the question of the determination of royalties to the regulatory discretion of the Minister of Petroleum is not only dangerous for the nation, but also an open invitation for phenomenal corruption in the future.

“One of key challenges in the management of the Petroleum Industry in Nigeria is the consistent inability to prioritize gas supply to the North. While many of the other sections of the region enjoy the benefits of cheap, clean, and effective energy source, the North continues to wallow in extreme energy poverty.

“For instance, out of the sixteen thermal power stations in the country only one (Geregu) is located in the region. The Ajaokuta – Kano gas pipeline has consistently remained in the back burner of all gas utilisation plans in the country.

“The only way to ensure that gas supply to the North is prioritized over more export oriented gas projects by operators in the industry is ensure that the terms of the Domestic Supply Obligations and Pricing Regulations signed by the late President Umaru Yar’Adua administration are incorporated in the new Petroleum Industry legislation.”

Again, they faulted the government for not requesting for the input of all states before drafting the bill.

“More specifically, there are many provisions and issues in the document that should be of serious concern for the Northern States in particular.”

The document said, “The new Petroleum Industry Bill (PIB) that was recently forwarded to the National Assembly by the Presidency is one piece of legislation that would impact on the constituents’part of the federation in a very profound manner. It is, in fact, truly remarkable that a key legislation that only affects assets of the whole federation, but would also seriously impact on the inflow of revenue into the Federation Account could be drafted and forwarded to the National Assembly without the input of, or due consultations with, the federating states.