Friday, 2 February 2018

Social Action Opposes National Assembly’s Enactment of PIGB Says Bill Capable of Fuelling Corruption By Akanimo Sampson

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The legislative Arm of Nigeria government does seem not to be on the same page with the executive in its fight against every form of corruption essentially in the way the enactment of Petroleum Governance industrial Bill was moulded before it was passed to law, Social Development integrated centre (Social Action) has said

In a statement, its  Executive Director of Social Action, Isaac Osuoka said: ''It is our view that the Nigerian government should ensure fair pricing of petroleum products to protect national energy security, including the guarantying access to energy services. The provisions of the PIGB as passed by the lawmakers do not demonstrate an understanding of the need to guarantee energy access as a right of citizens''.   

In a seemingly dissatisfied way, the group pointed out that the provision of the PIGB for a Petroleum Equalization Fund does not provide a mechanism for dealing with the massive corruption that has attended the management of such funds in the past.

However, the Petroleum Equalization Fund is to be funded primarily by way of a fuel levy in respect of all fuel sold and distributed within the federation. This is to be charged subject to the approval of the Minister. It takes over assets and liabilities of the existing Petroleum Equalization Fund. Monies in the Fund are to be given to petroleum marketers for any losses in maintaining uniform price for petroleum products across Nigeria as par Sections 36, 37 and 56 of the enacted bill.


The Social Action representative mr osuoka says going by Section 76(3), the Ministry of Petroleum shall hold on behalf of the government shares in the successor commercial entities incorporated pursuant to the provisions of the legislation.

''The relationship between this and the Federal Ministry of Petroleum Resources are not clearly provided for. Section 76(2) where the Ministry of Petroleum Resources is mentioned does not explain the relationship'', it said.  

Continuing, Osuoka said the Nigeria Petroleum Assets Management Company to be incorporated as a limited liability company under the Companies and Allied Matters Act is to be “responsible for the management of assets currently held by the Nigeria National Petroleum Corporation (NNPC) under the Production Sharing Contracts and Back-in Right assets going by Section 77(1) and (2)(a).  The shareholding is not provided for.

''The National Petroleum Company to be incorporated as a limited liability company under the Companies and Allied Matters Act is to “be responsible for the management of all other assets held by NNPC except the Production Sharing Contract and Back-in Right assets currently held by the NNPC by the provisions of Section 77(1) and (2)(b).

“At the time of its incorporation, the initial shares of the National Petroleum Assets Management Company shall be held in the ratio of 20% by the Bureau for Public Enterprises, 40% by the Ministry of Finance Incorporated and 40% by the Ministry of Petroleum Incorporated on behalf of the government as par Sections 78 and 101''.

According to the group, ''the institutions created by the PIGB is authorized to accept gifts. For instance, under Section 27(1), the Nigeria Petroleum Regulatory Commission is encouraged to be funded through acceptance of gifts of money and other property upon such terms and conditions to be determined and specified by the donor person or organization provided such gifts are not inconsistent with the objectives and functions of the Commission under the Act.

''It is widely known that he who pays the piper dictates the tune. It is a disaster for the petroleum industry if the regulators of the industry seek for and get gifts from individuals and organizations. Whether such persons or organization is not doing business with the particular institution is immaterial as such individual or organization can offer the gift on behalf of someone else or company doing business with the regulator. 

''The provisions under Section 27(2) which bars members from receiving gifts for their personal use is neither here nor there. A similar provision of power to accept grants/gifts in relation to the Petroleum Equalization Fund is found in Section 57.

''The types of assets to be transferred to the various regulatory institutions created under the bill are not clearly stated. See for example Section 81(1) which provides that 'the Minister shall, within twelve months of incorporation of the Management Company, by an order as provided in subsection (2) of section 38, require the NNPC to transfer SOME employees, assets, liabilities, rights and obligations of the NNPC to the Management Company, as specified in the order.' 

''The problem is how to identify what is covered by 'some' at this stage of the passage of the bill. Should the National Assembly pass a bill of this nature when the actual implications are not made clear?

''Section 106 of the Bill passed by the Senate is on divestment of shares of the National Petroleum Company and its subsidiaries. It provides that (1) 'Notwithstanding the provisions of section 61 of this Act, the Government shall within five years from the date of incorporation of the National Petroleum Company, divest, in a transparent manner not less than 10 percent of the shares of the National Petroleum Company and within ten years from the date of incorporation divest not less than an additional 30 percent of the shares of the National Petroleum Company to the public in a transparent manner'.

''Unfortunately, what process would amount to 'a transparent manner' is not provided for. Moreover, the implication is that in five years they can divest 70 percent and in ten years divest additional 30 percent to make it 100 percent privately owned. This is because the bill provides for only the minimum percentage of divestment without putting a ceiling on it. The manner of privatization and divestment is unfair to host communities and oil-producing states.

''The participation of citizens groups in the processes is not clearly stated throughout the PIGB.  However, under Section 8(2) the Commission in making regulations is mandated to conduct public hearings as a condition precedent to having a valid regulation. Ordinarily, this will be an avenue for civil society organizations (CSOs) to engage the Commission. Unfortunately, the Commission may still make regulations without a public hearing where it deems it necessary to do so. See section 8(5) which provides:
'Notwithstanding the provision of subsection (2) of this section, the Commission may, due to the exigency of the circumstances, make any regulation without conducting a public hearing, where it deems it necessary to do so.'

''This creates an opening for abuse of the process meant to encourage transparency. Section 8(7) creates a technical route to enable the Commission bypass the public as and when they so wish. It provides that for the purpose of Section 8 'a public hearing may take the form of an electronic consultation'. Though Section 10 of the bill passed creates an opportunity for public participation, the wordings of the section is not mandatory and firm enough to guarantee compliance''.  

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