Nigeria Senate Passes Petroleum Industry Governance Bill. Objectives of the PIB include fostering a conducive business environment for petroleum industry operations and providing transparency and accountability in the administration of Nigeria’s petroleum resources.
Nigeria Senate President Bukola Saraki congratulated members of the Senate for finally passing the bill after 17 years.
“I congratulate the 8th Senate with the passage of this landmark bill which has not been passed for many years.”
The Petroleum Industry Governance Bill (#PIB) provisions are wide ranging covering Institutions, Upstream Operations and Fiscal Systems, Incorporated Joint Venture, Midstream & Downstream Project Approval and Licensing, Midstream Operations, Downstream Products & Special Provisions with Respect to Natural Gas, Indigenous Oil Companies, Nigerian Content and Host Communities,Health, Safety and Environment and Transparency and Accountability
•Vests Oil & Gas resources in the sovereign State of Nigeria.
•Separates policy, regulation and commercial activities
•Licenses, leases and permits granted only through guided procedures established by the Act.
•Any company shall apply and be granted leases, permits in accordance with the PIB.
•Management and allocation of petroleum resources in accordance with the principles of good governance, transparency, and to promote sustainable development and economic value to Nigeria.
•Guarantees government participation in licenses or leases and in the exploitation of natural gas.
•The institutions and NOC to be guided by the provisions of the NEITI Act of 2007.
•Honors international environmental provisions and obligations.
•Encourages community relations and the development of Nigerian Content.
One of the Fundamental objectives of the Bill is full compliance with the NEITI Act, 2007 by all the institutions and the National Oil company to be established.
•Creates an open framework by eliminating confidentiality of :
•All texts of licenses, leases, contracts and amendments
•Amounts of revenue payments to government by individual companies.
•All geological, geophysical , technical and well data.
•Approved budgets of JVs & PSCs
•Production, lifting/quantities and values lifted.
Indigenous Oil Companies and Nigerian Content and Host Communities:
•Support for Indigenous Upstream Oil Companies:
•No Federal Government participation
•No quota restriction for production below 10,000 bpd.
•FG to set targets for indigenous oil & gas reserves small field Allowances
•Low Royalty rates for small producers •0% NHT under certain conditions
•Ownership leases for Marginal Field Operators
•Measurable indigenous personnel participation.
•Nigerian Content & Local Social Responsibility.
•No approval for FDP without an approved Nigerian content provision plan for projects exceeding $10 million.
•The NC plan to include purchase of Nigerian goods, procurement guidelines, employment of Nigerians, training, education, research & development and reporting.
•Specific provisions for local communities.
•Mandatory provision for infrastructure development, education, employment of indigenes, purchase of goods from indigenes, creation & support of local businesses, training specific to local employment, consultation with communities and requirements for MOU.
•Purchase of goods & services only where Nigerian alternatives are unavailable.
•Nigerian goods and services clearly defined.
•NC plan to include procurement procedures that allows purchase of Nigerian goods.
•Minimum Nigerian employment stipulated.
•Specific training and employment provisions
Further Accountability and transparency Provisions:
•A clear distinction between upstream, midstream and downstream.
•Establishing an open and competitive bid process
•Creating a uniform but flexible royalty and tax terms that apply to all.
•Establishing equal conditions to regulated installations through open access rules
•Clear guidelines for the revocation of licenses and leases.
•All decisions of the Minister and on petroleum administration shall be based on equal rules applicable to all.
The implementation of these reforms is expected to strongly open up the Nigerian Oil and Gas Sector to new local and international investors for competitive growth and sustainable development in line with international best practices. in particular, the PIB will help in:
•The creation of a modern petroleum legal framework
•Alignment of the Nigerian Oil & Gas Sector to international best practice
•Enhancement of transparency and an open framework
•Establishing good governance practices and processes
•Reinforcing linkages between the oil and gas industry and other sectors of the Nigerian economy
•Support the energy objectives of Government enshrined in the seven point agenda.
Nigeria Acting President Yemi Osinbajo is expected to sign the bill into law. Its’s implementation would lead to the restructuring of the Department Of Petroleum resources, DPR, and the Nigerian National Petroleum Corporation, NNPC.