By Badmus Sherifdeen Oluwagbenga,
Crude oil is Nigeria’s most important non-renewable energy
source, contributing over 90 percent of the country’s foreign
exchange earnings and about 80 percent of recurrent and capital
expenditure[1]. The oil and gas industry is an
essential building block in the nation’s economic growth. Nigeria
holds about 2.2 percent of global oil reserves which have grown
steadily from about 22 billion barrels in 1999 to 37.5 billion
barrels in 2018[2].
The Nigerian oil industry has served both international and
domestic elites with oil interests, this is highlighted by the
paradoxical reality that Nigeria exports crude oil and imports
refined petroleum products for domestic consumptions. The Nigerian
government have been unable to muster the political will, to reform
the nation’s oil and gas industry, and failed to legislate upon the
proposed law reforms form the year 2000[3].
Plethora of bills have been proposed without been passed into law,
PIGB not an exception.
The major thrust of the Petroleum Industry Governance Bill and
agitations has been the pivot on which the Nigeria economy has
depended for decades. Over the years, the oil sector has been
challenged by poor governance, inadequate management of revenue,
disjointed fiscal and regulatory provisions and gross
inefficiencies in managing the downstream petroleum assets. Thus,
this gave rise to the Petroleum industry Governance Bill which is
designed to hinge on clear separation of roles, distinct
accountability, focus, transparency and good governance, provide
full coverage of the entire oil and gas industry value chain, and
to repeal several laws regulating the oil and gas sector.
INTRODUCTION
The Bill is the first in a series of long-awaited petroleum
industry laws designed to reform the Nigerian oil and gas industry.
The Petroleum Industry Governance Bill (hereinafter refers to as
PIGB), an omnibus law meant to regulate the entire sphere of the
oil and gas industry and repeal all current existing legislation in
the sector[4], had struggled to see the light of
day despite its introduction to the National Assembly over 16 years
ago. How well will it shape the Nigeria economy and the oil and gas
industry? With the reduction of the so called alpha and omega and
one of the powerful ministerial duties in the executives is to be
duly checked by the newly created commission under the bill. The
aim of the bill includes:
- To repeal the laws in the oil and gas sector into a single
document to regulate the industry - The creation of a conducive business environment,
- Enhancement of the exploration and exploitation of petroleum
resources - To optimize domestic gas supply particularly for power
generation and industrial development, - A progressive fiscal framework that encourages further
investment in the industry while optimizing revenue accruing to the
government - To deregulate and liberalize the downstream sector of the
industry - To promote transparency and openness in the administration of
the sector[5]
KEY FEATURES OF THE BILL
- Nigerian Petroleum Regulatory Commission (NPRC) is to serve as
the supervisory body for Nigeria oil and gas industry. The NPRC
will replace the petroleum inspectorate, the Department of
Petroleum Resources (DPR) and the Petroleum Products Price
Regulatory Agency (PPPRA), and carry out their functions[6]. The Petroleum Equalization Fund (hereinafter
refers to as PEF) will continue to exist. However, the PEF Act will
be repealed, and the PIGB will serve as the relevant legislation
for the existence of the PEF[7]. Notably, the
refusal of the President assent hinge on the issues bothering on
the Petroleum Equalization Fund. - The Establishment of 3 commercial entities – The Nigeria
Petroleum Liability Management Company, The Nigeria Petroleum
Assets Management Company Limited and the National Petroleum
Company. Notably, all these will replace the Nigerian National
Petroleum Corporation (NNPC)[8]. - The Management Company will hold and manage assets under
production sharing contracts (PSCs) and back in right assets on
behalf of the government of the federation, while the NPC will be
responsible for all other assets currently held by the NNPC[9].
Notably among others, include the major documents and laws that
will be repealed and affected by the time petroleum industry bill
is passed includes
- Petroleum Profit Tax Act (PPTA) LFN 2004
- Petroleum Act (PA) 1969
- Petroleum (Drilling & Production Regulations) 1969
- Deep Offshore and Inland Basin Production Sharing Contract
Decree 1999 - Memorandum of Understanding (MOU) 1986, 1991,
2000
THE DEEP NATURE OF THE BILL TOWARDS A BETTER ECONOMY IN
NIGERIA
The Nigerian economy is heavily dependent on the oil sector,
which accounts for over 95% of export earnings and about 40% of
government revenues[10]. The PIB has
been fraught with unprecedented delays. As a result, the bill’s
intended goals of tackling issues of overregulation and the
dominant presence of the government in the industry have not been
realized. Evidently, the review of the Bill seeks to ensure that
the petroleum industry is run in an efficient and transparent
manner for the benefit of the country and we can only hope that
this is ultimately achieved.
- NIGERIA PETROLEUM ASSET MANAGEMENT COMPANY
The Nigeria Petroleum Asset Management Company (hereinafter
refers to a NPAMC) will act as an asset manager to the government;
holding and managing the Production Sharing Contracts and Back-in
Right assets currently held by NNPC[11]. The
establishment of the Management Company will serves as a limited
liability company to be wholly owned by government. The ratio flows
from the Ministry of Petroleum to incorporate (40%), Ministry of
Finance Incorporate (40%), and Bureau of Public Enterprises
(20%)
foster transparency and accountability, the NPAMC is required to
publish its annual reports and accounts on its website and at least
three national newspapers. The company will be governed by the Code
of Corporate Governance of the Securities and Exchange Commission.
Succinctly, the transition of the shares among three Ministries on
behalf of the Federal government will enhance the monopolistic of
the sector.
- NATIONAL PETROLEUM COMPANY
The National Petroleum Company (hereinafter refers to as NPC)
will remain as the National Oil Corporation, which will hold and
manage all petroleum assets of the Federal Government excluding
those transferred to the NPAMC. It is to run as a private company
registered under the Companies and Allied Matters Act and governed
by its Articles of Association. Unlike the current practice where
the government’s share of crude sale proceeds is paid into the
federation account[12] and appropriated between
the Federal and State Government without any reserves to meet the
cash call obligations of the Federal Government under its Joint
Venture (JVs), the NPC is, by the law, permitted to retain its
revenue and utilize same to meet its operating costs and external
liabilities such as cash calls.
The National Petroleum Company will only pay dividends to the
government out of its profits. The economy of Nigeria is mainly
dependent on the sales of crude oil; the reformation of the country
oil company, through the management of its assets will duly shape
the economy of the country. Thus, the management and governance of
the company are all based on the provision of the Companies and
Allied Matters Act (CAMA), Memorandum and Articles of the
Association, and Corporate Governance of the Nigeria Stock
Exchange. These guarantee the sustainability of the oil
company.
- NIGERIA PETROLEUM LIABILITY MANAGEMENT
COMPANY
The Nigeria Petroleum Liability Management Company (hereinafter
refers to as NPLMC) will serve as a holding vehicle which will
assume the liabilities of the NNPC and the pension’s liabilities of
the DPR (it is estimated that there exist $5-10 billion funding
shortfall per annum, due to government’s inability to fully fund
its JV investment cash calls[13]). Upon the
discharge of these liabilities, the NPLMC is expected to be wound
up. It appears from all indication that the NPLMC will be funded by
its shareholders (NPRC, NPC and NPAMC) who will hold shares in
NPLMC in proportion to their respective liabilities. The liability
company after been formed after the effective date of the Act shall
be owned by the NNPC successors in the ration of their debt or
liabilities assumed by the new company.
The NPLMC will allow the commercial entities to achieve
financial stability by ring-fencing them from the current
liabilities of the NNPC. This gives guarantee against value erosion
to potential investors in the NPC. The Federal Government
overtime has always reached out to settlement to resolve protracted
dispute with the five International Oil Companies (IOC),[14] due to the shortfall to pay outstanding cash
call. Thus, the set up of the liability company is geared towards
setting a clear plan layout and timeline for the settlement of such
liabilities[15].
- DIVESTMENT OF SHARES IN THE NIGERIAN PETROLEUM COMPANY
TO THE PUBLIC
The formation of the Bill makes provisions for the nation to
follow the precedents of other oil producing countries, such as
Russia (which recently sold a 19.5% stake in its national oil
company Rosneft[16]) and Saudi Arabia (which is
considering divesting a minor stake in Saudi Aramco[17]), by mandating a phased divestment of 40%
stake in the NPC to the public to enable private sector
participation, and enhance institutional efficiency. The offer of
40% of the shares of the NPC to the public trumps similar
divestment efforts of other National Oil Corporations by a huge
margin (Saudi Arabia intends to divest only 5% stake in Saudi
Aramco[18] was divested to the public).
To pave way for the NPC to run as a publicly-listed commercial
entity devoid of bureaucracies and undue government interest, it
has been exempted from complying with the provisions of the Fiscal
Responsibility Act 2007 (FRA) and the Public Procurement Act 2007
(PPA). It will, however, be required to comply with the code of
corporate governance of SEC and will become an entity regulated by
SEC following the proposed divestments, which will be conducted by
way of a public offering of its shares. Many companies use
divestment to sell off peripheral assets that enable their
management teams to regain sharper focus of the core business.
Additionally, companies divest their assets to obtain funds,
Nigeria, as a state in debt can’t avoid to further service the cost
and debt of managing the National oil companies; it suffice to say
that the divestment of shares to the public is in the right
direction towards a good economy in accordance with other developed
countries mechanism in the oil and gas industry.
- INCREASED STAKEHOLDER PARTICIPATION IN PROMULGATION OF
REGULATIONS
The Bill, in a bid to forestall the enforcement and
implementation of unpopular regulations and to fetter the powers of
the Commission, provides that Regulations promulgated by the
Commission pursuant to this Bill shall be subject to public
hearings. Any regulation made without the requisite public hearing
will only be valid for six (6) months. This allows for more active
engagement with stakeholders in the promulgation of regulations. It
is expected that these broad engagements will foster cooperation
between the regulators and industry participants, and also increase
compliance.
The lack for proper public hearing of the regulations made in
the oil and gas industry makes it so ineffective. Notably, the
Nigeria Petroleum Regulatory Commission is compelled to hold public
hearing, with the invitation of the stakeholder in the sector to
the public hearing before the regulation is passed. This will
create a good cordial relationship between parties and develop the
economy.
IMPACT OF THE PIGB ON THE ECONOMY
Several experts in the Oil and Gas sector have indeed asserted
that the enactment and assent of the Petroleum Industry Governance
Bill (PIGB) will transform and shape the oil and gas sector,
ultimately boosting the economy of Nigeria as it remains its
largest source of revenue.
- The restructuring process of NNPC, by dividing it into several
assets and liabilities of the company, by which the power of the
Ministry of petroleum is withheld to the minimal, this is reduced
by the flexibility in granting license will improve the production
of oil in Nigeria, thereby making our budget realizable and
efficient. - As the Petroleum Industry Governance Bill seeks to divest 10
percent of the Shareholder in the Nigeria Petroleum Company in the
very least transparent mode, this directly gives free access to
Nigeria citizens to own a stake in the Nation’s Oil Company as
against the former practice. Evidently, the shift in weight to the
standard practice of several international state oil companies will
stand a huge feat in ensuring the rapid growth of the Nigeria
economy. - Among others, establishment of the NPRC (Nigerian Petroleum
Regulatory Commission) solemnly involved with the full
responsibilities of matters in the petroleum industry; from strict
implementation of environmental policies, laws, regulations,
standards as it pertains to the Oil and Gas industry. This creates
a good remote, efficient, safe, and healthy area for the conduct of
business operations in the oil and gas industry.
CONCLUSION
The proper review of the existing laws that create a lots of
conflicts within the oil and gas sector is been set on the right
path, thus the need for a single document to harmonize laws and
regulations. The delay in passing the bill into law will see
several investments in the country’s oil sector stall due to the
non-passage. There is no gainsaying that the PIGB will not only
shape the oil and gas industry, but will also foster improvements
in the economy of Nigeria. Evidently, the promulgation of this bill
into law requires the assent of the President as this is a
pre-requisite to pass any law in the country and as such is
perceived as a good signal to the market that the Government is
very much concentrated about the oil reform agenda in the Country
as in other sectors of the economy.
RECOMMENDATION
The uncertainty of the assent withheld by the President, which
includes among others, the issue of NPRC funding, PEF issues, and
the proper drafting consideration. All eyes are turned to the
present 9th Assembly[19], to look into
the concern of the president and proposal of the key stakeholders
in the industry for the reality of the Petroleum Industry
Governance Bill. In good motive, we hope the President will find
the bill worth enough to be signed into law. Upon further
delay of the presidential assent[20] will send
a bad signal and will be assumed that the present led
administration lacks the political motive to set a good pace in the
Oil and Gas industry. Alternatively, the provision of the 1999
constitution is clear and unambiguous regarding the overriding of
the clause of the Presidential assent. The requirement of the
Presidential assent to validate and give the force of law to any
bill passed by the National Assembly is beyond any shaow of doubt.
Notably, where a bill is presented to the President for assent, he
shall within thirty days therof signify that he assents of
withholds his assent[21]. It will be
recommended that on the decline of the presidential assent, after
much consideration, the National assembly should summon two-third
majority to pass the bill into law as required under the
constitution[22], to make the proposal of
the Petroleum Industry Governance Bill a reality. Thus, for the
growth and development of the oil and gas industry and the Nigeria
economy at large.
Qualifications
This article is written by Badmus Sherifdeen
Oluwagbenga, a 500 level Student of Lagos State University, Faculty
of Law.
The contents herein are meant for the general
information and do not amount to legal advice. Further enquiries be
made to badmussherifdeen@gmail.com[1].
[1] Tax policy reform in Nigeria (United Nations
Development Programme – Ayodele Odusola)
[2] Former NNPC Boss Dr, Maikanti Kacalla Baru
during his keynote address while opening the 2019 edition of the
Nigeria Oil and Gas Strategic Conference and International
Exhibition in Abuja
[3] Petroleum Industry Bill in Nigeria – Hyginus
Chika Onuegbu
[4] KPMG: The Petroleum Industry Governance Bill
(June 2017)
[5] Ibid
[6] Section 4 – 35 of PIGB 2019
[7] Section 36 – 75 of PIGB 2019
[8] Section 76 of PIGB 2019
[9] Section 77 – 100 of PIGB 2019
[10] The Impact of Oil and Gas Production
om the Nigeria Economy: International Business and Economy
journal
[11] (Section 77(2)(a) PIGB 2019)
[12] Section 105(3) PIGB 2019
[13] Detail Solicitor: Review of the
Petroleum Industry Governance Bill 2018
[14] Shell, Exxon Mobil, Eni, Chevron, and
Total
[15] Section 126(7) PIGB 2019
[16] www.independent.co.uk/news/business/news/[2]
(accessed on 21st of May 2020)
[17] www.theprint.im/economy/[3]
(Reliance and Saudi Aramco accelerate their talks for sale of
minority stake in RIL Feb 2020) accessed on 21st of May 2020
[18] Ibid
[19] National Assembly (National
Legislative arm of Government)
[20] Section 58(4) of the 1999
constitution as altered
[21] Ibid
[22] Section 58(5) of the 1999
constitution as altered
By Badmus Sherifdeen Oluwagbenga,
Crude oil is Nigeria’s most important non-renewable energy
source, contributing over 90 percent of the country’s foreign
exchange earnings and about 80 percent of recurrent and capital
expenditure[1]. The oil and gas industry is an
essential building block in the nation’s economic growth. Nigeria
holds about 2.2 percent of global oil reserves which have grown
steadily from about 22 billion barrels in 1999 to 37.5 billion
barrels in 2018[2].
The Nigerian oil industry has served both international and
domestic elites with oil interests, this is highlighted by the
paradoxical reality that Nigeria exports crude oil and imports
refined petroleum products for domestic consumptions. The Nigerian
government have been unable to muster the political will, to reform
the nation’s oil and gas industry, and failed to legislate upon the
proposed law reforms form the year 2000[3].
Plethora of bills have been proposed without been passed into law,
PIGB not an exception.
The major thrust of the Petroleum Industry Governance Bill and
agitations has been the pivot on which the Nigeria economy has
depended for decades. Over the years, the oil sector has been
challenged by poor governance, inadequate management of revenue,
disjointed fiscal and regulatory provisions and gross
inefficiencies in managing the downstream petroleum assets. Thus,
this gave rise to the Petroleum industry Governance Bill which is
designed to hinge on clear separation of roles, distinct
accountability, focus, transparency and good governance, provide
full coverage of the entire oil and gas industry value chain, and
to repeal several laws regulating the oil and gas sector.
INTRODUCTION
The Bill is the first in a series of long-awaited petroleum
industry laws designed to reform the Nigerian oil and gas industry.
The Petroleum Industry Governance Bill (hereinafter refers to as
PIGB), an omnibus law meant to regulate the entire sphere of the
oil and gas industry and repeal all current existing legislation in
the sector[4], had struggled to see the light
of day despite its introduction to the National Assembly over 16
years ago. How well will it shape the Nigeria economy and the oil
and gas industry? With the reduction of the so called alpha and
omega and one of the powerful ministerial duties in the executives
is to be duly checked by the newly created commission under the
bill. The aim of the bill includes:
- To repeal the laws in the oil and gas sector into a single
document to regulate the industry - The creation of a conducive business environment,
- Enhancement of the exploration and exploitation of petroleum
resources - To optimize domestic gas supply particularly for power
generation and industrial development, - A progressive fiscal framework that encourages further
investment in the industry while optimizing revenue accruing to the
government - To deregulate and liberalize the downstream sector of the
industry - To promote transparency and openness in the administration of
the sector[5]
KEY FEATURES OF THE BILL
- Nigerian Petroleum Regulatory Commission (NPRC) is to serve as
the supervisory body for Nigeria oil and gas industry. The NPRC
will replace the petroleum inspectorate, the Department of
Petroleum Resources (DPR) and the Petroleum Products Price
Regulatory Agency (PPPRA), and carry out their functions[6]. The Petroleum Equalization Fund (hereinafter
refers to as PEF) will continue to exist. However, the PEF Act will
be repealed, and the PIGB will serve as the relevant legislation
for the existence of the PEF[7]. Notably, the
refusal of the President assent hinge on the issues bothering on
the Petroleum Equalization Fund. - The Establishment of 3 commercial entities – The Nigeria
Petroleum Liability Management Company, The Nigeria Petroleum
Assets Management Company Limited and the National Petroleum
Company. Notably, all these will replace the Nigerian National
Petroleum Corporation (NNPC)[8]. - The Management Company will hold and manage assets under
production sharing contracts (PSCs) and back in right assets on
behalf of the government of the federation, while the NPC will be
responsible for all other assets currently held by the NNPC[9].
Notably among others, include the major documents and laws that
will be repealed and affected by the time petroleum industry bill
is passed includes
- Petroleum Profit Tax Act (PPTA) LFN 2004
- Petroleum Act (PA) 1969
- Petroleum (Drilling & Production Regulations) 1969
- Deep Offshore and Inland Basin Production Sharing Contract
Decree 1999 - Memorandum of Understanding (MOU) 1986, 1991,
2000
THE DEEP NATURE OF THE BILL TOWARDS A BETTER ECONOMY IN
NIGERIA
The Nigerian economy is heavily dependent on the oil sector,
which accounts for over 95% of export earnings and about 40% of
government revenues[10]. The PIB has
been fraught with unprecedented delays. As a result, the bill’s
intended goals of tackling issues of overregulation and the
dominant presence of the government in the industry have not been
realized. Evidently, the review of the Bill seeks to ensure that
the petroleum industry is run in an efficient and transparent
manner for the benefit of the country and we can only hope that
this is ultimately achieved.
- NIGERIA PETROLEUM ASSET MANAGEMENT COMPANY
The Nigeria Petroleum Asset Management Company (hereinafter
refers to a NPAMC) will act as an asset manager to the government;
holding and managing the Production Sharing Contracts and Back-in
Right assets currently held by NNPC[11]. The
establishment of the Management Company will serves as a limited
liability company to be wholly owned by government. The ratio flows
from the Ministry of Petroleum to incorporate (40%), Ministry of
Finance Incorporate (40%), and Bureau of Public Enterprises
(20%)
foster transparency and accountability, the NPAMC is required to
publish its annual reports and accounts on its website and at least
three national newspapers. The company will be governed by the Code
of Corporate Governance of the Securities and Exchange Commission.
Succinctly, the transition of the shares among three Ministries on
behalf of the Federal government will enhance the monopolistic of
the sector.
- NATIONAL PETROLEUM COMPANY
The National Petroleum Company (hereinafter refers to as NPC)
will remain as the National Oil Corporation, which will hold and
manage all petroleum assets of the Federal Government excluding
those transferred to the NPAMC. It is to run as a private company
registered under the Companies and Allied Matters Act and governed
by its Articles of Association. Unlike the current practice where
the government’s share of crude sale proceeds is paid into the
federation account[12] and appropriated between
the Federal and State Government without any reserves to meet the
cash call obligations of the Federal Government under its Joint
Venture (JVs), the NPC is, by the law, permitted to retain its
revenue and utilize same to meet its operating costs and external
liabilities such as cash calls.
The National Petroleum Company will only pay dividends to the
government out of its profits. The economy of Nigeria is mainly
dependent on the sales of crude oil; the reformation of the country
oil company, through the management of its assets will duly shape
the economy of the country. Thus, the management and governance of
the company are all based on the provision of the Companies and
Allied Matters Act (CAMA), Memorandum and Articles of the
Association, and Corporate Governance of the Nigeria Stock
Exchange. These guarantee the sustainability of the oil
company.
- NIGERIA PETROLEUM LIABILITY MANAGEMENT
COMPANY
The Nigeria Petroleum Liability Management Company (hereinafter
refers to as NPLMC) will serve as a holding vehicle which will
assume the liabilities of the NNPC and the pension’s liabilities of
the DPR (it is estimated that there exist $5-10 billion funding
shortfall per annum, due to government’s inability to fully fund
its JV investment cash calls[13]). Upon the
discharge of these liabilities, the NPLMC is expected to be wound
up. It appears from all indication that the NPLMC will be funded by
its shareholders (NPRC, NPC and NPAMC) who will hold shares in
NPLMC in proportion to their respective liabilities. The liability
company after been formed after the effective date of the Act shall
be owned by the NNPC successors in the ration of their debt or
liabilities assumed by the new company.
The NPLMC will allow the commercial entities to achieve
financial stability by ring-fencing them from the current
liabilities of the NNPC. This gives guarantee against value erosion
to potential investors in the NPC. The Federal Government
overtime has always reached out to settlement to resolve protracted
dispute with the five International Oil Companies (IOC),[14] due to the shortfall to pay outstanding cash
call. Thus, the set up of the liability company is geared towards
setting a clear plan layout and timeline for the settlement of such
liabilities[15].
- DIVESTMENT OF SHARES IN THE NIGERIAN PETROLEUM COMPANY
TO THE PUBLIC
The formation of the Bill makes provisions for the nation to
follow the precedents of other oil producing countries, such as
Russia (which recently sold a 19.5% stake in its national oil
company Rosneft[16]) and Saudi Arabia (which is
considering divesting a minor stake in Saudi Aramco[17]), by mandating a phased divestment of 40% stake
in the NPC to the public to enable private sector participation,
and enhance institutional efficiency. The offer of 40% of the
shares of the NPC to the public trumps similar divestment efforts
of other National Oil Corporations by a huge margin (Saudi Arabia
intends to divest only 5% stake in Saudi Aramco[18] was divested to the public).
To pave way for the NPC to run as a publicly-listed commercial
entity devoid of bureaucracies and undue government interest, it
has been exempted from complying with the provisions of the Fiscal
Responsibility Act 2007 (FRA) and the Public Procurement Act 2007
(PPA). It will, however, be required to comply with the code of
corporate governance of SEC and will become an entity regulated by
SEC following the proposed divestments, which will be conducted by
way of a public offering of its shares. Many companies use
divestment to sell off peripheral assets that enable their
management teams to regain sharper focus of the core business.
Additionally, companies divest their assets to obtain funds,
Nigeria, as a state in debt can’t avoid to further service the cost
and debt of managing the National oil companies; it suffice to say
that the divestment of shares to the public is in the right
direction towards a good economy in accordance with other developed
countries mechanism in the oil and gas industry.
- INCREASED STAKEHOLDER PARTICIPATION IN PROMULGATION OF
REGULATIONS
The Bill, in a bid to forestall the enforcement and
implementation of unpopular regulations and to fetter the powers of
the Commission, provides that Regulations promulgated by the
Commission pursuant to this Bill shall be subject to public
hearings. Any regulation made without the requisite public hearing
will only be valid for six (6) months. This allows for more active
engagement with stakeholders in the promulgation of regulations. It
is expected that these broad engagements will foster cooperation
between the regulators and industry participants, and also increase
compliance.
The lack for proper public hearing of the regulations made in
the oil and gas industry makes it so ineffective. Notably, the
Nigeria Petroleum Regulatory Commission is compelled to hold public
hearing, with the invitation of the stakeholder in the sector to
the public hearing before the regulation is passed. This will
create a good cordial relationship between parties and develop the
economy.
IMPACT OF THE PIGB ON THE ECONOMY
Several experts in the Oil and Gas sector have indeed asserted
that the enactment and assent of the Petroleum Industry Governance
Bill (PIGB) will transform and shape the oil and gas sector,
ultimately boosting the economy of Nigeria as it remains its
largest source of revenue.
- The restructuring process of NNPC, by dividing it into several
assets and liabilities of the company, by which the power of the
Ministry of petroleum is withheld to the minimal, this is reduced
by the flexibility in granting license will improve the production
of oil in Nigeria, thereby making our budget realizable and
efficient. - As the Petroleum Industry Governance Bill seeks to divest 10
percent of the Shareholder in the Nigeria Petroleum Company in the
very least transparent mode, this directly gives free access to
Nigeria citizens to own a stake in the Nation’s Oil Company as
against the former practice. Evidently, the shift in weight to the
standard practice of several international state oil companies will
stand a huge feat in ensuring the rapid growth of the Nigeria
economy. - Among others, establishment of the NPRC (Nigerian Petroleum
Regulatory Commission) solemnly involved with the full
responsibilities of matters in the petroleum industry; from strict
implementation of environmental policies, laws, regulations,
standards as it pertains to the Oil and Gas industry. This creates
a good remote, efficient, safe, and healthy area for the conduct of
business operations in the oil and gas industry.
CONCLUSION
The proper review of the existing laws that create a lots of
conflicts within the oil and gas sector is been set on the right
path, thus the need for a single document to harmonize laws and
regulations. The delay in passing the bill into law will see
several investments in the country’s oil sector stall due to the
non-passage. There is no gainsaying that the PIGB will not only
shape the oil and gas industry, but will also foster improvements
in the economy of Nigeria. Evidently, the promulgation of this bill
into law requires the assent of the President as this is a
pre-requisite to pass any law in the country and as such is
perceived as a good signal to the market that the Government is
very much concentrated about the oil reform agenda in the Country
as in other sectors of the economy.
RECOMMENDATION
The uncertainty of the assent withheld by the President, which
includes among others, the issue of NPRC funding, PEF issues, and
the proper drafting consideration. All eyes are turned to the
present 9th Assembly[19], to look into
the concern of the president and proposal of the key stakeholders
in the industry for the reality of the Petroleum Industry
Governance Bill. In good motive, we hope the President will find
the bill worth enough to be signed into law. Upon further
delay of the presidential assent[20] will send
a bad signal and will be assumed that the present led
administration lacks the political motive to set a good pace in the
Oil and Gas industry. Alternatively, the provision of the 1999
constitution is clear and unambiguous regarding the overriding of
the clause of the Presidential assent. The requirement of the
Presidential assent to validate and give the force of law to any
bill passed by the National Assembly is beyond any shaow of doubt.
Notably, where a bill is presented to the President for assent, he
shall within thirty days therof signify that he assents of
withholds his assent[21]. It will be
recommended that on the decline of the presidential assent, after
much consideration, the National assembly should summon two-third
majority to pass the bill into law as required under the
constitution[22], to make the proposal of the
Petroleum Industry Governance Bill a reality. Thus, for the growth
and development of the oil and gas industry and the Nigeria economy
at large.
Qualifications
This article is written by Badmus Sherifdeen
Oluwagbenga, a 500 level Student of Lagos State University, Faculty
of Law.
The contents herein are meant for the general
information and do not amount to legal advice. Further enquiries be
made to badmussherifdeen@gmail.com[1].
[1] Tax policy reform in Nigeria (United
Nations Development Programme – Ayodele Odusola)
[2] Former NNPC Boss Dr, Maikanti Kacalla Baru
during his keynote address while opening the 2019 edition of the
Nigeria Oil and Gas Strategic Conference and International
Exhibition in Abuja
[3] Petroleum Industry Bill in Nigeria –
Hyginus Chika Onuegbu
[4] KPMG: The Petroleum Industry Governance
Bill (June 2017)
[5] Ibid
[6] Section 4 – 35 of PIGB 2019
[7] Section 36 – 75 of PIGB 2019
[8] Section 76 of PIGB 2019
[9] Section 77 – 100 of PIGB 2019
[10] The Impact of Oil and Gas Production om
the Nigeria Economy: International Business and Economy journal
[11] (Section 77(2)(a) PIGB 2019)
[12] Section 105(3) PIGB 2019
[13] Detail Solicitor: Review of the Petroleum
Industry Governance Bill 2018
[14] Shell, Exxon Mobil, Eni, Chevron, and
Total
[15] Section 126(7) PIGB 2019
[16] www.independent.co.uk/news/business/news/[2] (accessed on 21st of May
2020)
[17] www.theprint.im/economy/[3]
(Reliance and Saudi Aramco accelerate their talks for sale of
minority stake in RIL Feb 2020) accessed on 21st of May 2020
[18] Ibid
[19] National Assembly (National Legislative
arm of Government)
[20] Section 58(4) of the 1999 constitution as
altered
[21] Ibid
[22] Section 58(5) of the 1999 constitution as
altered