New dawn for Nigerian petroleum industry as governance bill, after 18 years, now awaits President Buhari’s signature

A new structure and governance framework is the new dawn that is expected to be ushered into an offer a magic wand for an uplift to a Nigerian petroleum industry that has punched below its weight in terms of its deliverables to Nigerian citizens.

For more about 18 years, a legislative bill crafted and seen to offer a window to revolutionise the way and manner the industry operates has passed through acrimony, rancour and several delays in parliament. Even now, what was passed Wednesday by the lawmakers represents a fraction of the huge unwieldy legislation, now broken into bits for easy digestion and passage.

It is the bit that relates to the structure and governance of the industry that has now been passed and many see this as a positive first step towards dealing with about six other legs of what became infamously known at some point as the Petroleum Industry Bill or PIB.

The lawmakers approved the bill with a five percent fuel tax that is likely to see the price of petrol go up across the country when it is signed into law by the President.

Tayo Alasoadura, the chairman, Senate Committee on Petroleum (Upstream), had presented a report on the deliberations of his committee on the bill to the plenary which was unanimously approved for passage.

The bill, a culmination of several years of efforts at reforming the oil and gas industry, got started under the tenure of a former president, Olusegun Obasanjo in 2000, with the establishment of the Oil and Gas Implementation Committee (“OGIC”).
OGIC issued a report and policy document, which was later approved by the late Musa Yar’ Adua’s administration and resulted in the Petroleum Industry Bill being forwarded to the 6th National Assembly.

The bill went through several redrafts, including a wholesale amendment by the executive arm of government, but it ultimately failed to be passed during the 6th National Assembly.

In the aftermath of the fuel subsidy protests in January 2012, Deziani Alison-Madueke, the then minister of Petroleum announced the establishment of a technical committee to harmonise the various versions of the draft bill.

The PIGB as passed on Wednesday seeks to provide for the governance and institutional framework for the petroleum industry and will unbundle the state owned oil firm, the Nigerian National Petroleum Corporation (NNPC), provide for the establishment of Federal Ministry of Petroleum Incorporated and Nigerian Petroleum Regulatory Commission.

Others are Nigerian Petroleum Assets Management Company and National Petroleum Company and Petroleum Equalisation Fund.
The regulatory bill bulkanises NNPC and creates the National Petroleum Commission while it also scraps the Department of Petroleum Resources (DPR) and the Petroleum Products Pricing Regulatory Agency (PPPRA) and establishes the Nigeria Petroleum Regulatory Commission which will take over the functions of the three agencies.

It also empowers the body to issue licenses, permits or authorisations for downstream gas, petroleum products, storage depots, retail outlets, transportation and distribution facilities for the industry.

The five percent fuel levy will be used to finance the Petroleum Equalisation Fund (PEF) as established in the bill and this followed consideration and adoption of the conference committee report on the PIGB at plenary.
Section 36 (1) (a) of the Bill provides that “there shall be established the Petroleum Equalisation Fund into which shall be paid all monies payable to the Equalisation Fund by way of a five percent fuel levy.

“This is in respect of all fuel sold and distributed within the Federation which shall be charged subject to the approval of the Minister (of Petroleum)”.

Other sources of funding PEF, according to the Bill, include subventions, fees, and charges for services rendered as well as net surplus revenue recovered from petroleum products marketing companies.

The Bill says Equalisation Fund shall collect all revenues and levies charged, determine the net surplus revenue recoverable from any oil marketing company as well as determine the amount of reimbursement due to any oil marketing company for purposes of equalisation of the price of products among others.

Speaking after the bill was passed, Bukola Saraki, Senate president urged President Muhammadu Buhari to sign the bill, saying :“I hope with this, we will get the assent of the President and hopefully open a new page for the petroleum industry.”