N’assembly wants gas flare penalties invested in host communities
He penalties paid by oil and gas companies for flaring gas in the country will be invested to build midstream gas infrastructure in host communities, according to a new provision introduced into the Petroleum Industry Bill by the National Assembly.
The PIB provides for the establishment of two regulators for the country’s oil and gas industry, namely the
Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
“Moneys received from gas flaring penalties by the commission pursuant to this subsection, shall be transferred to the Midstream Gas Infrastructure Fund for investment in midstream gas infrastructure within the host communities of the settlor on which the penalties are levied,” the Senate and House of Representatives said in subsection (4) of section 104 of the bill.
According to the Senate, considering the current drive of growing domestic refining, there is expected growth in gas flaring from refining operations.
“Hence, the need to provide legal basis for the Authority to enact a regulation on the penalty payable by applicable midstream operators,” it said.
The upper chamber said the penalties should not be perceived as attractive government revenues and thereby implicitly condone the continuation of flaring.
“Instead, the penalties should be used in the MGIF in order to expand the use of natural gas, so flaring can be reduced,” it added.
According to a new provision (subsection (2) of Section 105) inserted by the National Assembly into the bill, the commission shall have the right to take free of charge natural gas that is destined for flaring at the flare stack.
“It is important for the commission to be able to take gas to be flared for free at the flare stack in order to provide such gas to parties that may have an economic use for the gas.”
The Federal Government had assured operators in the industry and other stakeholders that the PIB would soon be signed into law by the President, Major General Muhammadu Buhari (retd.).
The Minister of State for Petroleum Resources, Chief Timipre Sylva, who gave the assurance in Abuja, said the bill would be signed into law because it would ensure openness in the industry.
Sylva disclosed this when the Board of Trustees of Corruption Reporters led by Yunusa Tanko gave him an award for championing anticorruption fight by promoting transparency in the industry.
The non-passage of the PIB, which dragged for about 15 years, was halted two weeks ago after both chambers of the National Assembly passed the bill.
Commenting on the bill after receiving the award, Sylva said, “The PIB, which has been passed by the National Assembly, would soon be signed into law.
“And it will change the narrative and fast-track transparency and openness in the petroleum industry for the development of the nation.”
The minister said the government had also adopted other measures to enhance transparency in governance and address corruption.
He explained that corruption in Nigeria was often pronounced at three levels, namely point of revenue collection, the treasury and contract execution.
He said, “But with introduction of the Treasury Single Account, the practice has been significantly curtailed at the revenue collection and treasury levels but still striving at the level of contract implementation.
“Now, eliminating it at the third level is the responsibility of everyone by reporting sharp practices.”
Sylva commended the group for honouring him with the anti-corruption champion award and pledged to continue in the fight against acts that would put the Nigerian oil industry in bad light.
On why the minister was honoured by the group, Tanko said the recipient of the award had instituted transparency and accountability in the oil sector.