Before signing PIGB into law
History has been made by the 8th National Assembly with the harmonisation of the Petroleum Industry Governance Bill (PIGB) and making it ready for transmission to President Muhammadu Buhari for assent.
Report from the National Assembly recently confirmed that the harmonisation was concluded and that any moment from the bill will be passed to Mr President.
The commitment in passing the bill by both chambers of the current National Assembly is no doubt a feat when compare to the previous administrations. The omnibus Petroleum Industry Bill failed to scale through the 6th and 7th assemblies.
The 8th Assembly, in an effort to reduce the tension and carry along all interested parties, split the bill into four parts namely: Petroleum Industry Governance Bill, Petroleum Industry Administration Bill, Petroleum Industry Fiscal Bill and Petroleum Host Community Bill.
Senate President Bukola Saraki said recently that the PIGB established clear rules, regulations, procedures and institutions for the efficient administration of the petroleum industry.
He said: “This bill establishes the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry. It also stipulates deadline for operations in the upstream, midstream and downstream sectors.”
The PIGB was first to be considered of the four sections. The idea of separating the bill is to simplify and fast tract the passage in order to establish a new governance structure of the petroleum industry before the three other bills of Fiscal, Host communities and Administration aspects are ready.
Many analysts consider the governance bill as one of the most important among the bills. This is because no progress will be made without sound regulations in any structure. However they raise concern on the structure and cumbersome provision of regulations on a single entity.
A look at the PIGB shows that the office of the minister was restructured to be responsible for the determination, formulation and monitoring of government policy for the petroleum industry; exercise general supervision over the affairs and operations of the petroleum industry subject to the provisions of this Act; advise government on all matters pertaining to the petroleum industry; promote the development of local content in the Nigerian petroleum industry; and represent Nigeria at international organisations that are primarily concerned with the petroleum industry among others.
The bill also creates the Nigeria Petroleum Regulatory Commission which will combine the power and responsibilities of the Petroleum Inspectorate, the Department of Petroleum Resources and the Petroleum Products Pricing Regulatory Agency.
This commission is to administer and enforce policies, laws and regulations relating to all aspects of petroleum operations which are assigned to it under the provisions of the Act or any regulations made in pursuance of the Act or under any other enactment.
The draft bill also empowers the commission to monitor and enforce compliance with the terms and conditions of all leases, licences, permits and authorisations issued in respect of any petroleum operations; define and enforce approved standards for design, construction, fabrication, operation and maintenance for all plants, installations and facilities utilized or to be utilized in petroleum operations.
Its clout does not stop in the petroleum sector alone as it will, in consultation with the Ministry of Environment or any other agency in charge of environmental issues, ensure adherence to applicable national and international environmental and other technical standards by all persons involved in petroleum operations; establish, monitor, regulate and enforce health and safety measures relating to all aspects of petroleum operations; as well as keep public registers of all leases, licences, permits and other authorizations issued by the commission or the minister and any renewals, amendments, extensions, suspensions and revocations.
The above powers and many others that are contained in the bill are however seen as inimical to the yearning and aspiration fort the creation of sound and efficient regulators in the industry.
Going by the current laws, the DPR and the PPPRA are the key regulators of the petroleum sector for downstream, midstream and upstream, but it was evident that even with the complementary regulation role by the NNPC in handling some aspects of the industry, the two major regulators are lagging behind in successfully enforcing law and order.
As it is, DPR has failed to cover the entire country especially in the midstream and downstream sector. Many abnormalities are taking place such as wrong location of petrol stations, bad metering, and adulteration of petroleum products and diversion.
The story is the same in the upstream sector where complaints of poor monitoring and evaluations are making the country to lose billions of dollars in oil transactions.
In his May Day address, the President of Trade Union Congress of Nigeria (TUC), Comrade Bobboi Bala Kaigama, commended the 8th National Assembly for passing the first part of the Petroleum Industry Bill (PIB) known as the Petroleum Industry Governance Bill (PIGB).He insisted, though that there must be two separate regulators for the upstream and the downstream sectors of the industry for the benefit of Nigerians.
“In particular, we reiterate that government should ensure that the Oil and Gas Industry operates in line with international best practices in the interest of the nation, more particularly on the technical and commercial regulations thus, the need for two independent regulators as obtained prior the proposed Petroleum Industry Governance Bill (PIGB) one for the Upstream and one for the Downstream Sectors be maintained.
“Downstream: The Petroleum Products Pricing Regulatory Agency (PPPRA) which has been saddled with the responsibility as commercial regulator since 2003 and has the relevant experience, critical stakeholders on the Governing Board, structure and personnel, to superintend the downstream sector should be strengthened to form the nucleus of the new regulatory body.
“Upstream: The Department of Petroleum Resources (DPR) should be strengthened to oversee the upstream sector.”
An oil and gas policy analyst, Mr Silas Garba, also expressed concern over the concentration of powers in one hand in the bill. According to him, there the situation will create more bureaucracy in handling issues of the industry.
According to him, it is not possible to regulate the upstream and downstream sectors under one regulator, because although the two sectors are all in the same industry but they have different types of operators.
He said the 2011 petroleum subsidy scandals and other complicities in the handling of fuel subsidy cannot be mixed with other regulatory activities of the upstream.
“Don’t forget now the upstream is becoming more complicated looking at the deep sea operations where most of the bigger oil companies are now moving to and the commercialisation of gas and development of more complicated Floating Production Storage and Offloading (FPSO) technology, one regulator will never be enough,” he noted.
Mr Garba said with the arrival of Dangote refinery and coming up of other modular refineries in the Niger Delta, the need to have a well-equipped and professional regulator of the downstream is necessary.
He highlighted that even the proposed reform is striping the NNPC of all its regulatory powers and that means the new regulator has additional responsibility of checking both the new national oil company and its unbundled subsidiaries.
He urged the assembly to consider separating the regulators in order to avoid unnecessary delays from the executive, saying “I am sure the executive will consider this omnibus regulator as another huge bureaucracy in the making.
He said looking at the electricity sector, despite the number of regulators, there are still many areas that are not well monitored and regulated as it should be and the petroleum sector which is more strategic and complicated can’t do better with only one regulator.
But the acting chairman of the Revenue Mobilisation and Fiscal Allocation Commission, Alhaji Umar Abba-Gana said the number of regulators will not matter much provided they can be wellequipped and empowered. He said at the moment many of the regulators in the industry are incapacitated and don’t have the needed equipment to carry out their responsibilities as stated in the laws.
He urged the government to make sure the regulators are well taking care of in terms of manpower, and equipment and constant training of staff in order to take care of the challenges in the industry.