The Petroleum Industry Governance Bill (The PIGB) is a proposed Act of the Federal Republic that seeks to restructure Nigeria’s petroleum industry in different respects. At this moment, the bill has passed through all stages of legislative deliberations and awaits the assent of the president of Nigeria, to become fully enacted as an Act of the Federal Republic of Nigeria.
The drafters and initiators of the bill apparently set off with the intention of making vital changes to the structure and mode of administration in the Nigerian Petroleum Industry. However, the delay in its finalisation can barely be overstated. Below is a general overview of the PIGB and what it entails, as well as its effects and implications in the Petroleum Industry, if assented to.
One word that comes to mind upon the mention of the PIGB is restructuring. The bill aims at changing the general structure of the petroleum industry, with a degree of administrative progress as the ultimate objective of such restructuring. The goal is to create a structure which affords the industry to be more commercially driven, sustainable and efficient, with respect to meeting national needs. Thus, the Bill seeks to establish a framework for the creation of commercially-oriented and profit driven petroleum entities, to ensure value addition and internationalisation of the petroleum industry, through the creation of efficient and effective governing institutions with clear and separate roles for the petroleum industry.
The PIGB is an offshoot of the PIB (The Petroleum Industry Bill) and is a part of a series of proposed laws, aimed at repealing all current legislations on Oil and Gas in the country.
The current petroleum Industry institutions/agencies will either be reformed or replaced by the PIGB.
The PIGB also seeks to reform a number of existing functions of certain institutions and personnel. The responsibilities of the institutions are categorised into the following:
I. Policy and General Strategy
III. Commercial Institutions
IV. Ancillary Institutions
The policy and general Strategy is to be handled by the Minister of Petroleum Resources, as he shall be responsible for seeing to the overall policies and strategies within the industry. However, the Minister ceases to hold the power to grant, renew, amend, revoke or extend any lease or license under the provisions of the PIGB. The power to create new entities is also withheld from the minister under this act.
Under the Bill, the National Petroleum Regulatory Commission (NPRC) shall replace the current Department of Petroleum Resources (DPR), Petroleum Inspectorate and the Petroleum Products Pricing Regulatory Agency (PPPRA). The NPRC shall be responsible for the regulation of the entire industry, including the enforcement and administration of applicable laws in every aspect, with regards to the petroleum industry. It shall also perform advisory roles in certain respects, including fiscal issues within the Petroleum industry. Maintaining a fair market in the downstream sector also falls within the purview of the NPRC’s responsibilities. The Commission is to regulate the market value of petroleum products in the retail level. The NPRC shall also be fully independent from the Petroleum Minister, and shall be run by a governing board.
The Nigeria Petroleum Assets Management Company (NAPAMC) is an incorporated company under the PIGB. Its function is to manage all assets currently being held by the Nigerian National Petroleum Corporation (NNPC) under the Production Sharing Contracts (PSCs) and Back-in-right provisions of the Petroleum Act of 1969 as amended. It shell be governed by the Companies and Allied Matters Act a (CAMA) and the Code of Corporate Governance issued by the Securities and Exchange Commission.
Another incorporated company under the PIGB is the Nigerian Petroleum Company (NPC). The NPC shall be responsible for all managing all assets currently being managed by the NNPC other than those under PSCs and the Back-in-right provisions of the Petroleum Act, as those are being managed by the NAPAMC. The NPC is also to be governed by the CAMA and the Code of Corporate Governance.
The ancillary institutions created by the PIGB are tasked with specific support services, depending on the nature of these institutions. They include the Ministry of Petroleum Incorporated (MOPI), The Nigerian Petroleum Liability Management Company (NAPLMC) and The Petroleum Equalisation Fund (PEF or the Equalisation Fund).
From the general overview of the Bill and what it entails, it is apparent that transparency is one major aim of the new structures put in place within the petroleum industry by the PIGB, as well as more stabilized commercial value of petroleum products, and accountability of revenue generated from same. However, the declining of the President to assent to the bill has indeed raised concerns as to the possibility of any progress to be seen in the nearest future. Clamours have been made to the effect that signing of the bill by the President will effect a change in structure, which will in turn highlight a step in national development as has been taken in the past by oil producing countries like Brazil and Norway.
T. T. TIJANI
LEGAL ANALYST, COMERCIALLY AWARE.