Chika Amanze-Nwachuku and Ejiofor Alike of THISDAY, write on the origins of the Petroleum Industry Bill, its objectives, and the tortuous labyrinth it has passed through for over a decade…
Emerging Industry Structure
When enacted, the Petroleum Industry Bill will, in addition to the Ministry of Petroleum Resources, provide for the establishment of nine agencies responsible for the operations of the oil and gas sector. Chika Amanze-Nwachuku and Ejiofor Alike, review the agencies and their functions.
The PTB will be responsible for developing exploration strategies and portfolio management for the exploration of unassigned frontier acreages in Nigeria, and will undertake activities to stimulate the interest of local and international oil and gas companies in exploration of the frontiers basins in Nigeria.
The PIB provides for various types of licences and leases in Nigeria’s oil and gas sector. These are:
• Petroleum Exploration Licence (PEL) to carry out exploration on a non-exclusive basis, which shall be valid for not more than three years;
• Gas Supply Licence to supply gas into the downstream petroleum sector;
• Downstream licensing which shall be carried out by the Downstream Petroleum Regulatory Agency.
Powers of the President
Section 190 of the PIB provides guidelines for the award of the licences, stipulating in Subsection (3) that there shall be no discretionary awards, except as provided under Section 191, which deals with the powers of the president to grant licences and leases in special circumstances.
Section 201 provides for gas flaring penalties, and also provides in Subsection (1) that the lessee shall pay such gas flaring penalties as the minister may determine from time to time. Subsection (2) requires the lessee to “install all such measurement equipment as ordered by the Inspectorate to properly measure the amount of gas being flared.” Section 277, meanwhile, provides for the prohibition of gas flaring.
De-listing NNPC Subsidiaries from Privatisation Act
The bill provides for the delisting of the assets of the Nigerian National Petroleum Corporation from the Public Enterprises Privatisation and Commercialisation Act. Section 152(10), states: “The assets of the subsidiaries of the NNPC listed under the Public Enterprises Privatisation and Commercialisation Act shall be de-listed from the effective date of this Act and the power of attorney earlier assigned to the Bureau of Public Enterprises shall stand vacated.”
Section 221 of the bill provides for the full deregulation of the downstream oil sector and stipulates that the pricing of petroleum products in the downstream product sector shall be deregulated to ensure: a) market related pricings; b) adequate supply of petroleum products; c) removal of economic distortions; and d) the creation of fair market value for petroleum products in the Nigerian economy.