Petroleum Industry Bill: Lawmakers give their nods through second reading

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By Francis Ogwo

The Petroleum Industry Bill (PIB) passed through a second reading on Tuesday at the House of Representatives with huge support from members.

The PIB aims at providing for legal, governance, a regulatory and fiscal framework for the Nigeria petroleum industry, development of host communities and for a related matter.

The bill was overwhelmingly supported by key members of the House which included Minority Leader, Hon. Ndudi Elumelu; Majority Whip, Hon. Mohammed Monguno; Deputy Majority Whip, Hon. Nkiruika Onyejeocha; Hon. Uzoma Nkem-Abonta, Hon. Jide Jimoh, Hon. Abubakar Fulata, Hon. Rotimi Agunsoye, Hon. Babajimi Benson and Hon. Victor Nwokolo.

Majority Leader, Hon. Alhassan Ado-Doguwa, while making his debate explained that Nigeria has a high gas deposit that was not being effectively utilized, expressed hope that the passage of the proposed PIB would open up the sector, create jobs for teeming Nigerian youths, women and men across the country.

Ado-Doguwa added that the bill, when passed, would also address the security challenges in the country as kidnapping, banditry and terrorism would become a thing of the past.

Also speaking was the Minority Leader, Hon. Ndudi Elumelu, who was of the view that the PIB was long overdue and urged the house to speed up its passage towards unlocking the huge economic potentials in the oil and gas industry.

Elumelu also added that Nigeria had about 37 billion crude oil reserves, and underscored the need to fast-track the passage of the PIB without further delay.

He observed that the earlier “we pass this PIB, the better we will be able to have access to our reserves. If you understand what is going on globally, you will understand that we have to pass this bill in order to benefit from the crude oil before it becomes irrelevant.”

In his contribution, Hon. Mohammed Monguno underscored the need for the unbundling of Nigerian National Petroleum Corporation (NNPC) in order to improve on the service delivery and accountability.

While making his input, Hon. Abubakar Fulata who argued that crude oil will become useless and unprofitable in the next 40 years, posited that the proposed PIB, when passed into law, will provide room for transparency, accountability, responsibility, adding that “this is the time utilize it.”

Also speaking, Hon. Rotimi Agunsoye stressed the need to put in place a legislative framework that will encourage those willing to do business with Nigeria, just as he called for the restructuring of PIB.

In his view, Hon. Henry Archibong who recalled that the last reform bill passed in the sector drove some International Oil Companies (IOCs) from the country, called for caution with the discovery of crude oil in many African counties who are luring IOCs to come and invest.

Also speaking, Hon. Henry Nwawuba who observed that the PIB had spent 12 years in the National Assembly, stressed the need for them to put the national interest at the front burner during the consideration of the bill.

While noting that there is an urgent need to pass the bill to enable Nigeria to attract investments and other economic gains, Hon. Nwawuba urged his colleagues to “take advantage of oil and build programmes that would sustain us after the oil is gone.”

While expressing concern over the lackadaisical attitude of the executive in engaging the 8th Assembly during the consideration of the bill, he urged that the executive be carried along to prevent any issue of misunderstanding at the end of the process.

Hon. Victor Nwokolo on his part expressed optimism that the passage of the bill will enable Nigeria to compete favourably with other oil-producing nations. He therefore, urged all the members to support the initiative for the overall benefits of Nigerians.

Following the overwhelming support enjoyed by the bill, Hon. Femi Gbajabiamila who presided over the session referred it to the Ad-hoc Committee on PIB for further legislative action.

According to a report by Deloitte, the PIB was first introduced in December 2008 and has undergone several amendments, including a split which was done during the 8th National Assembly.

At the time, the PIB was split into four namely Petroleum Industry Governance Bill (PIGB), Petroleum Industry Administration Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and Petroleum Host Community Bill (PHCB).

The PIGB was approved by the National Assembly but did not receive presidential assent and was returned to the National Assembly for further consideration.

Details of the 2020 version of the PIB contains provisions that it will:

  • Replace the Nigeria National Petroleum Commission (NNPC) with NNPC Limited
  • Create separate regulatory authorities for upstream, midstream and downstream operations
  • Reduce the royalty rate from 10% to 7.5% for offshore fields producing not more than 15,000 barrels per day
  • Increase the benchmark threshold of crude oil price for charging royalty from $35/barrel to $50/barrel
  • Make gas flaring penalties non-tax deductible in order to disincentivize gas flaring. This objective is in line with the Nigerian Gas Flare Commercialization Program which promotes flare gas capture for commercial purposes

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