NNPC Welcomes Its Unbundling under Proposed PIB

The Nigeria National Petroleum Corporation (NNPC) wednesday gave the thumbs up to the Petroleum Industry Governance Bill (PIGB) being legislated upon by the National Assembly, which splits the state-run corporation into three different entities.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru,
Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru,

At the commencement of a three-day public hearing on the bill at the National Assembly wednesday, NNPC said it welcomed the initiation of the bill.

The corporation said the new bill would serve “as the necessary prelude to the enactment of subsequent legislations for the upstream, midstream and downstream, fiscal, commercial and operational framework for the oil and gas industry”.

NNPC also acknowledged that the initiation of PIGB as a separate bill from the fiscal and commercial framework would hasten the overall consideration of Petroleum Industry Bill (PIB) and also facilitate the “ease of execution when eventually passed into law”.

The PIGB, which focuses mainly on administration and privatisation of the petroleum industry, splits the NNPC into three different entities, viz: The Nigeria Petroleum Regulatory Commission (NPRC), National Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC).

While the NPRC will serve as a regulatory entity for the entire petroleum industry (upstream, midstream and downstream), the NPAMC will serve as the counter-part and administrator of production sharing agreements and such other risk-based agreements as the government may decide to conclude.

The bill also envisages NPC to serve as an integrated oil and gas company operating as a fully commercial entity across the value chain.

NPC’s activities will include joint venture operations, operation of the Nigeria Petroleum Development Company (NPDC), frontier exploration and other upstream/service activities, refineries and petrochemicals, downstream activities and sale and disposal of crude oil and products.

Making a presentation at the public hearing, the Group Managing Director of NNPC, Dr. Maikanti Baru, made certain suggestions which he wanted the National Assembly to incorporate into the bill.

Such suggestions included assigning NPRC the role of administering royalties, rentals, fees and other petroleum revenues. He also said the Federal Inland Revenue Service (FIRS) should retain its roles as the collector and administrator of petroleum profit tax (PPT), company income tax and other taxes.

He also suggested the need for the bill to clarify the mechanism for provision of NPC’s initial funding requirements, observing that NPAMC should be registered as an asset management agency with huge administrative tasks.

Baru also suggested the need for NPAMC to de domiciled in the NPC during the transition period until the public listing of the latter on the Nigerian Stock Exchange (NSE).

He also advocated the need to amend a provision which empowers NPAMC to sell crude oil and petroleum derivatives, saying assigning NPAMC the role of selling crude oil, which he said should be the responsibility of a department in NPC, would create two competing national oil companies that would both be involved in the sale of crude oil.
Baru also pointed out the need for the bill to delineate the roles of administration and collection of petroleum revenues in the bill with a view to improving transparency in the administration and collection of petroleum revenues for the government.

In the same vein, he suggested the need for the bill to empower NPC to publish every year a detailed report on all petroleum revenue payments to the government, including royalties, rentals, PPT and corporate income tax, among others.

However, Pan Niger Delta Forum (PANDEF) whose main concern was to advocate for the host community fund, kicked against some provisions of another bill, the PIB, including stopping the payment of funds to any community where petroleum operations are obstructed by activities of vandals.

Speaking on behalf of PANDEF, a former Governor of Akwa Ibom State, Obong Victor Attah, demanded for the deletion of the provision, describing it as an expression of injustice.

Attah also criticised the provisions for the host community fund in the bill, submitting that the “bill does not state that funds will be allocated to communities based on oil production and/or value of petroleum facilities or assets (such pipelines, flow stations, gas plants, terminals, etc.) located in the communities”.

According to him, the provision stopping the payment of the host community fund on account of vandalism was antithetical to the principles of natural justice which he said would amount “to punishing a whole community for the selfish act or crime of one or a few”.

Attah also expressed grave concern over the structure of the bill, pointing out that it failed to specify the criteria for the allocation of funds and projects to be funded by the host community fund.

In its submission, Petroleum and Natural Gas (PENGASSAN), warned against proceeding with the privatisation of NNPC as provided in the bill without carrying it along. It also demanded that companies in the oil sector must comply with international labour conventions in the process.

Speaking on behalf of the group, Chika Onuegbu, said the privatisation process must “ensure that all workers in the NNPC and all other government agencies to be impacted by the PIB shall transit to the new companies/agencies on terms and conditions no less favourable than their present conditions. This is crucial to the successful take off of these agencies, the NOC and the PIB itself”.

He also said proper arrangements must be made in a way that “the liabilities of the NNPC and other agencies to their staff such as pensions to retired and existing employees are adequately provided for prior to the effective commencement date of the PIB”.

In his opening remarks, Senate Committee Chairman on Upstream Petroleum, Senator Tayo Alasoadura, noted that PIB had been lingering in the National Assembly for almost a decade.
According to him, the Eighth Senate had opted to deviate from the norm by making the PIGB “one of the key landmarks to revamp the economy and make petroleum industry more efficient”.

He added: “If we must get out of the present recession the country is witnessing and get the economy on the steady path of growth, the petroleum industry must be made efficient and more profit oriented.”

While declaring the public hearing open, Senate President Bukola Saraki said the PIGB was conceived to serve as the platform for the reform of a segment of petroleum industry “by introducing international best practices that have led other countries to success in the development of their various oil and gas sectors”.

The hearing continues thursday and friday.

House Probes $17bn Undeclared Crude
Meanwhile, the House of Representatives thursday postponed the debate of the 2017-2019 Medium Term Expenditure Framework and the Fiscal Strategy Paper to next Tuesday at the instance of Majority Leader, Hon. Femi Gbajabiamila.

Instead. the House opted to open its investigation into the $17 billion alleged to have been undeclared from the export of crude oil and liquefied natural gas to overseas markets.

Gbajabiamila said several members were yet to receive details of the document and would therefore be unable to contribute meaningfully to the debate.

The House leader was however earlier observed going round the chambers engaging members, particularly members of the opposition Peoples Democratic Party (PDP) in conversations.

President Muhammadu Buhari is scheduled to present the N7.3 trillion 2017 budget to a joint session of the National Assembly next Wednesday and the MTEF, by law, must be passed by both chambers before a succeeding year’s budget can be laid before the parliament.

Inaugurating the ad hoc committee probing the $17 billion undeclared crude and gas sales yesterday, Deputy Speaker, Hon. Yussuff Sulaimon Lasun, lamented that Nigeria, unlike other oil producing nations, has been shortchanged in its crude oil dealings.

“There is no oil producing country in the world that would not have some of its oil wells returned to it. But not so in Nigeria, and that is why Oloribiri 1, today is dry, it was never given back to Nigeria until it was pumped dry,” he said.

Lasun added that the country urgently needs to diversify its economy not just through agriculture, but into other sectors, as it remains clear that crude oil production alone can no longer sustain the country.
“That is why we have not been able to consider the MTEF because the projection of 2.2 million barrels per day is not realistic due to the militancy and other factors, as we have been producing 1.8 million barrels per day,” Lasun added.

The Chairman of the Committee, Hon. Abdulrazak Namdas said preliminary reports show that over 57 million barrels of Nigerian crude were illegally exported and sold in the United States between January 2011 and December 2014.
“The estimated revenue loss by the government of Nigeria is around $12,722,600,327 at an exchange rate of N196 to the dollar. This translates to over N2 trillion,” Namdas said.

He announced that the Nigerian National Petroleum Corporation (NNPC), Mobil Producing Nigeria Unlimited, Shell Western Supply and Trading, Chevron Nigeria Limited, Total Exploration and Production Nigeria Ltd and Esso Exploration and Production Nigeria, had been summoned to appear before the committee.

Other firms summoned by the committee include China National Offshore Oil Corporation (CNOOC), Addax Petroleum Exploration Nigeria, ExxonMobil Nigeria, Duke Oil Company Ltd, Star Deep Water Petroleum Ltd, Famfa Oil Ltd, Nigeria Agip Oil Company Ltd, Petrochad (Mangara) Ltd, Shell US Trading Company, Brass Oil Service Company Ltd, Glencore Exploration Ltd, Supreme Jute and Knitex Ltd, Televaras Petroleum Trading and Consolidated Oil Ltd.
“If all revenue from crude oil exports lost due to the activities of those engaged in illegal export and sale of Nigeria crude oil are recovered from the identified buyers, it will go a long way to supporting the development goals of the government of Nigeria,” Namdas added.