PIB: Why We Must Get Involved

PIB: Why We Must Get Involved 3
On November 17, 2012, Spaces for Change’s (S4C’s) executive director, Victoria Ibezim-Ohaeri was on IgboVilleHOTSEAT where intellectual giants meet to brainstorm and forge ahead in the drive for better enlightenment on issues of the day which affects Ndigbo individually and collectively as stakeholders in national development. In the three-hour online discussion with over 8,000 Nigerians logging in from different parts of the world,  she educated the audience about the Petroleum Industry Bill (PIB), a proposed legislation that aims to introduce sweeping reforms in Nigeria’s oil and gas sector. Here are excerpts from the interview:

IGBOVILLE: What is the PIB all about?

Victoria Ibezim-Ohaeri: The Petroleum Industry Bill (PIB) 2012 was forwarded to the National Assembly on 18 July, 2012 for consideration and passage into law. The PIB provides a legal, fiscal and regulatory framework for the Nigerian petroleum industry. The PIB was originally conceptualized to reform and repeal about 16 pieces of petroleum legislation in Nigeria and then aggregate all the laws into a single piece of comprehensive legislation. Upon enactment, the PIB will repeal the Petroleum Act, Associated Gas re-injection Act, Petroleum Profits Tax (PPT) Act, Deep Offshore and Inland Basin Production Sharing Contracts (PSC) Act and some other current laws governing the Nigerian petroleum industry.

Victoria Ibezim-OhaeriThe PIB was first presented to the sixth assembly in 2009, but efforts to pass it were hampered by vested interests, intense political intrigues, and the dearth of effective stakeholder consultation and citizen engagement. The Senator Udo Udoma-led PIB Technical Committee set up on January 17, 2012 reviewed the 2009 version of the Bill after an unprecedented uprising in January 2012 forced high-level probes and investigations into the administration of fuel subsidies, including massive shake-ups in national oil and gas institutions. The resulting draft is an aggregation of several legislations on the oil and gas industry, with the primary objective of opening up the oil industry to privatization, optimization of domestic gas supplies, including the liberalization of the downstream sector.

Victoria Ibezim-Ohaeri Overall, the PIB introduces some positive developments including moves to unbundle and partly privatize the state-owned Nigerian National Petroleum Corporation (NNPC); address host community concerns; promote local content; optimize domestic gas supplies, particularly for power generation and industrial development; and the deregulation and total liberalization of the downstream sector, to end decades of government monopoly. It seeks to establish a fiscal framework that encourages investment and revenue inflow to the government, through the establishment of commercially oriented and profit-driven oil and gas entities. The passage of the Bill will spark a fundamental restructuring of the industry, and end the uncertainty which has prevented Nigeria from holding an oil licensing round for five years. It will also attract the much-needed investment into natural gas, and bolster energy security. 

IGBOVILLE: The 1st question is from David Benjamin Emenike: Can we trust the NASS to muster the level of commitment and vigilance needed to pass this bill? The KPMG Report of 2010 mentioned deliberate duplicity, self-inflicted inconsistencies and corruption within the NNPC network. In the name of data mismanagement, variable crude oil sales and exchange rate fluctuations, millions of dollars are siphoned daily from the coffers of the NNPC. Since the Federal Government has been indicted as the biggest beneficiary of this fraud, don’t you think that reforming our political system should be the first step?

The attempt by the sixth National Assembly (2007-11) to pass this bill was shuttled by international oil companies. Do you think we can really pass this bill without international lobby/ connections and will power from the ruling class?

Victoria Ibezim-Ohaeri Please remember that the NASS members are ordinary citizens like you and me. Most of them are not experts in oil and gas matters, and depend on independent experts and citizen inputs to guide their deliberations. This means that they have no magic wand that will bring miraculous reforms to the industry. That is why it is important for everyone – from the market women to the oil companies to the artisans by the road side –   to get a copy of the Petroleum Industry Bill, and analyze it from their viewpoints to ensure their interests and priorities are adequately captured and reflected in the Bill.

Victoria Ibezim-Ohaeri Reforming the political system requires the participation of all citizens. The Nigerian oil industry is an ocean of unprecedented corruption. Fresh in Nigerian minds are the mass protests opposing government attempts to abolish the subsidy on local fuel in January. The protests propelled high-powered probes which exposed the unprecedented financial mismanagement and horrendous malfeasance entrenched in the administration of fuel subsidies. The revelations show that politicians, businessmen colluded with oil marketers to rob this country blind. That means that we cannot always sit back and allow the politicians do all the work, without our input and vigilance. The power to change the system belongs to the people.

IGBOVILLE Thank you for the advice above, that is, saying that we should all take our destinies in our hands. The next question is from Chukwuemeka Ezekanobi: The Bill has some clauses that will make the reform a mere paper work without achieving any purpose. It still gives the minister of petroleum too much power. Even the discretionary approval of oil block by the president was subtly inserted. The present bill is different bill from what OBJ started.

Victoria Ibezim-Ohaeri The enormous powers vested on the minister is of concern to many stakeholders. Apart from having supervisory oversights over the UPI and DPRA, the Minister will also be the one to nominate individuals to their boards. The Minister will also serve as the chairman of the boards of the PHC, PTDF and PEF. The current framework arrogates too much responsibility to the person of the minister rather than to independent institutions and this can easily give room to abuse of power, patronage and political interference. Participants at a stakeholders’ forum on the PIB hosted by the Nigeria Extractive Industries Transparency Initiative also submitted that departments and agencies created under the PIB should be independent and autonomous, especially the regulatory agencies.

Victoria Ibezim-Ohaeri Based on the early readings of the PIB at the NASS, the powers of the minister was a subject of concern. At an E-conference on the PIB hosted by Spaces for Change on July 14, 2012, it also emphasized the need for the powers of the minister to be reviewed…

Victoria Ibezim-Ohaeri On the issue of discretionary powers, contrary to s. 190 (3) of the Bill that provides for transparent open bidding processes, S.191 vests absolute powers on the president to grant discretionary licenses in special circumstances. The special circumstances in which such discretionary awards may be made were not stipulated. The absoluteness of this power diminishes the transparency objectives of the Bill, in that it precludes independent or public scrutiny of both the character and beneficiary of such awards, thereby rendering oil and gas licensing to political patronage. That is another provision that the lawmakers will pay serious attention to.

IGBOVILLE: The next statement is from Ona Uchechukwu: “Sorry to say this, but no PIB capable of real reforms will pass in the NASS.

Victoria Ibezim-Ohaeri Please note that the PIB is not a silver bullet that will solve all the oil sector problems.  It also requires political will and seriousness to enforce the new regulations. Our goal is to ensure the Bill contains iron-clad transparency provisions that would allow us know what is going on, and use that information to demand accountability from officials.

IGBOVILLE: John Okiyi Kalu asks:
1. At the heart of PIB is the proposal to give 10% to oil bearing communities. Who is the legitimate person in a community to receive such funds?

2. Some time last year we heard from the grapevine that northern governors have mobilized massive funds to ensure that PIB does not pass. Their principal consideration was that it puts more money in the hands of oil producing states. Is there any move by oil states to counter this given that the north already enjoys numerical advantage in the national assembly?

3. Ndigbo currently has 3 oil producing states. How will PIB benefit us?

4. What’s your view on the Anambra-Enugu-Kogi ownership tussle as regards the location of “Anambra” oil?

Victoria Ibezim-Ohaeri On the first question: The introduction of the Petroleum Host Communities Fund (PHC-Fund) is perceived by the social justice community and among oil industry circles as a positive development, and a new high in addressing the persisting agitations and concerns of oil-bearing communities. Under Section 118 of the bill, every company that is involved in oil and gas exploration and production is required to remit into the fund on a monthly basis, 10 per cent of its net profit, calculated by the adjusted profit minus the Nigerian hydrocarbon tax and minus the companies’ income tax. In addition to the benefits of involving the oil-producing communities in the joint ownership of oil and gas assets, the Fund will be utilized for the development of the economic and social infrastructure in oil-producing communities.

Victoria Ibezim-Ohaeri However, the shine is dimmed by the Bill’s silence on how the fund will be administered. It does not say how and who will collate and manage the monies paid into the Fund for the benefit of the communities. In the absence of an effective administrative framework, the potential divisiveness of the host communities fund, is not in doubt. A very larger proportion of community clashes in the region are linked to funds given to communities by oil companies. Again, this ia snother provision the NASS will seriously look into

Victoria Ibezim-Ohaeri On the second question: It is not grapevine news that northerners have taken a very keen interest in the PIB, and have even set up committees to study it. They are on the right track. Oil is a commodity that affects the life of every Nigerian one way or the other. Like i said earlier, every sector, every region, every stakeholder must strive to read, analyse the Bill to ensure their respective priorities are addressed.

Victoria Ibezim-Ohaeri Igbos have three oil producing states and they, like other Nigerians, stand to benefit a lot. First off, Igbos are astute business men. The PIB’s promise of private participation will open the doors to so many businesses. Apart from that, the Igbo oil producing states will also benefit from the Petroleum Host Communities (PHC) Trust Fund.

Victoria Ibezim-Ohaeri Benefiting from the PHC means that there will be more funds for infrastructural development in the South East (SE). Another good news is that Igbos are not oil-dependent people, and are not crazy about oil wealth. Igbos are exceptionally hardworking people. With the infrastructural benefits, many Igbo men would feel confident to invest in the South East rather than elsewhere. Igbos own state-of-the-art tankfarms and depots across the country. With adequate infrastructural presence in the SE, there would be no need to take all that investment outside the SE, and create jobs for other states.

Victoria Ibezim-Ohaeri On Anambra- Enugu-Kogi tussle, It is reported that President Goodluck Jonathan has started mediating the feud between Enugu, Anambra and Kogi states over the ownership of oil wells. The boundary commission is statutorily required to intervene and provide accurate boundary details.

IGBOVILLE: John Okiyi Kalu asks further: We read very recent reports that America will be self-sufficient in oil by 2017, at most. How will this information affect PIB and the Nigerian oil industry in general?

Victoria Ibezim-Ohaeri That America will be fuel sufficient in 2017 is good news, and attests to their strategic long term planning. However, that sends a signal to Nigeria to begin to diversify its economic base, as its oil would no longer be in hot demand as it currently is. We hope the Nigerian government would take these signs seriously.

IGBOVILLE: And quickly to the next question by  J Duke Anago: 2. As one who is interested in the environment, what approach are we going to adopt to clear South East of dirt and create a healthy environment? What also is your suggestion on how to circumvent oil spillage in Anambra when production of oil begins?
Victoria Ibezim-Ohaeri Your question is very germane, especially to Anambrarians. The best time to start planning for environmental protection is YESTERDAY. However, today is not too late. First off, there must be guidelines/regulations which the PIB represents….Then, the state government must see to it that the laws are STRICTLY enforced. Oil companies are committing atrocities in the Niger Delta because they are taking advantage of weak laws and lax regulatory enforcement. Peter Obi needs to start training the state ministry of environment now. Peter Obi should take steps to ensure that NOSDRA is fully present in the state. They don’t have to wait on the Federal Government to equip regulatory agencies, but must be prepared to invest in facilities for detecting oil spills early and responding effectively

Victoria Ibezim-Ohaeri Secondly, communities must be empowered to understand the PIB provisions related to the environment and use them to demand legal protection. Local people need a lot of information, on the basis of which they can take action against oil companies and their partners that destroy their crops, objects of veneration and economic trees.

Victoria Ibezim-Ohaeri Let me also add that Anambra and other SE states should ensure that youths living in the oil producing communities are productively engaged. That is necessary to minimize risks of militancy and youth restiveness. 

IGBOVILLE: If I recollect correctly, I read that the Nigerian Government either do not have a means of computing the quantity of oil that leaves the county daily or the relevant body who has the responsibility of monitoring this purposely blind themselves to this fact because of personal gratification. Peter Obi should therefor put in a place a mechanism for proper computation to ensure payment for mined oil as well as build a refinery to create employment for the populace.

The next question: Uzoamaka Jennifer wishes to know why NNPC is not captured in the budget of Federal Republic of Nigeria. Onyema Uche would like to know the reasons behind the federal government’s failure to locate any of the 5 refineries in any SE states as well as why the president criticized the Ribadu report

Victoria Ibezim-Ohaeri Well, we are living in a country where everything, including where refineries will be located is politicized. Its difficult to explain why none was sited in the SE, but i would take the liberty to make an excuse for FG…..Warri and PH refineries are sited close to wellheads and areas of oil exploration and that makes economic sense to site refineries closer. The Kaduna refinery cannot fit the same description because there is no oil in Kaduna…But it makes sense to have one there to make storage and distribution of petroleum products to northern states easier.

Victoria Ibezim-Ohaeri In the case of SE, oil discovery happened much later. Anambra has taken a very bold step by taking the initiative to build its own refinery without waiting for FG. When the PIB is passed, Igbo business men should litter the entire SE with refineries without waiting on FG. That is the way to go.

Victoria Ibezim-Ohaeri On NNPC budget, ket me state that NNPC officials are lords unto themselves. Everything about NNPC is very opaque including its budget. NNPC, by the law establishing it designed it to operate like a privately-run commercial enterprise that generates funds and revenue to run its operations. According to Diezani, the Petroleum minister, “NNPC is not subjected to the Consolidated Fund of the Federal Government. It cannot depend on federal budget because it runs very capital intensive operations beyond what government can finance”. So, that means that NNPC budgets are not appropriated, and are viewed as internal instruments. Hope comes with the PIB’s plans to unbundle the establishment. 

Victoria Ibezim-Ohaeri The president’s aide’s earlier condemnation of the Ribadu report is quite unfortunate. And the controversy between Ribadu and Steve Oronsaye was needless. The flip-flops from the presidency is also very disappointing. One thing is clear, Ribadu did exceedingly well and deserves applause. Let me also state that the revelations in Ribadu report make the passage of the PIB very imperative. Spaces for Change is analyzing that report, and using it as an advocacy tool for PIB passage. I enjoin everyone to do same.
Victoria Ibezim-Ohaeri You can find more analytical oil-focused documents on our e-library:http://issuu.com/spaces.for.change/docs

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