Senate Committee on Petroleum Upstream is expected to present a Host Community Development Fund bill in coming weeks following directive by the Senate president, Bukola Saraki, on Wednesday.
Giving the charge at a Senate plenary where the very popular Petroleum Industry Bill (PIB) passed the second reading, Saraki urged the committee to immediately come up with a bill that will address the interests of host oil producing communities, confirming Federal Government’s position on taking out all contentious issues out of the PIB to make for easier passage.
Ibe Kachikwu, minister of petroleum resources, had told BusinessDay that most of the contentious issues in the PIB, including host communities’ issues as well as derivation matters had been taken off, maintaining government’s position to enact separate laws to take care of them so as not to encumber the already controversial Bill.
“The issues raised in the communities are what we think have to be taken out of the bill and dealt with as an issue. Just like the derivation policy, it is not in the Petroleum Act. So, they will have to sit down and deal with that issue and pass a law on host community and derivation as a concept, because that is something that is going to be driven from the assembly and not from us,” he had told BusinessDay in an interview.
Saraki’s directive, which equally concurred with Federal Government’s stance, followed the submissions from James Manager, who insisted that passing the PIB without tackling the needs of host oil communities would escalate tension in the oil producing regions in the Niger Delta.
“I want to give a commitment that before we proceed into the finalisation of this part of the bill, the Committee on Petroleum Upstream must come up with the bill regards the issue of the communities for discussion. And I think that can be done within the next four weeks before we come back for consideration or clause-by-clause,” the Senate leader stated.
He thereafter referred the new PIB to the Committee on Petroleum Upstream, Petroleum Downstream and Gas.
The former PIB had proposed some percentage increase for host communities from oil and gas revenues from 10 to 15 percent, which had drawn criticisms from some sections of the public, particularly the northern part, who felt it was giving undue advantage to the South.
The new version of the bill, which is the longest-serving bill in the National Assembly, is titled Petroleum Industry Governance Bill (PIGB). Nigeria reportedly loses up to $15 billion annually due to the non-passage of the bill.
In his lead debate, chairman, Senate Committee on Petroleum Upstream, Tayo Alasoadura, said the objectives of the bill include to: create efficient institutions with clear and separate roles for the petroleum industry, establish a framework for the creation of commercially-oriented and profit-driven petroleum entities that ensures value addition, promote transparency and accountability in the administration of petroleum resources and create a conducive business environment for petroleum industry operations.
The new bill splits the upstream portfolio of the Nigerian National Petroleum Corporation (NNPC) into two commercial entities namely: National Petroleum Company (NPC) and the National Assets Management Company (NAMC).
While the NPC will operate as a commercial entity in order to ensure efficiency across the value chain, the NAMC will ensure maximum value for the Federation’s oil and gas investments in assets where government is relieved of upfront funding obligations otherwise known as cash calls.
According to Alasoadura, the split of NNPC would enhance the commercial focus, transparency and accountability as well as provide the necessary platform for a lasting solution to the perennial funding incapacity of the NNPC.
He listed benefits of the unbundling of the Corporation to include: smaller, manageable entities which will result in reduce cost of running the business; enhance focus on strategic interests and cost management; reduce opportunity for cross subsidisation; enhance revenues to the Federation Account through distinct and disciplined collection process as well as robust liabilities management.
The Petroleum Industry Governance Bill is the first in a series of five bills to reform the Nigerian oil and gas industry. Subsequent bills are expected to deal with: Upstream Fiscal; Upstream; Downstream and Gas Administration Matters as well as Revenue Management.
Similarly, the bill seeks the scrapping of the Department of Petroleum Resources (DPR) and Petroleum Products Pricing Regulatory Agency (PPPRA) and proposes the establishment of the Petroleum Regulatory Commission – a single and one-stop shop regulatory body for the petroleum industry.
The Commission will focus mainly on the preventive phase of environmental management while clean ups and restoration phases will be the responsibility of the National Oil and Spill Detection and Response Agency (NOSDRA).
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