Gender gap, federal character loopholes threaten implementation of the Petroleum Industry Act

• NNPC to eliminate loss-making subsidiaries under new legislation
• Niger Delta Ministry seeks control of 3% for host communities
• PIA has shortchanged Cross River, Ayade cries out
• Host communities deserve 5% – Obi
• Govs will work with PIA implementation committee – Fayemi

Gendwe gap and federal character loopholes may bog down implementation of the Petroleum Industry Act (PIA) as the Federal Government yesterday inaugurated the implementation steering committee to oversee roll out of the new law.

Following the inauguration of an implementation steering committee by President Muhammadu Buhari on Wednesday, backlash had followed the development before the committee’s first sitting over federal character-related issues as well as exclusion of women. The Minister of State for Petroleum Resources, Timipre Sylva, yesterday, inaugurated the committee made up of over 80 per cent members from the north and without a single woman.

President Buhari, who doubles as the Minister of Petroleum Resources, approved the committee, which has Sylva as chairman, and included Permanent Secretary, Ministry of Petroleum Resources, Dr. Sani Gwarzo; Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mele Kyari; Executive Chairman of the Federal Inland Revenue Service (FIRS), Mohammed Nami; Senior Special Adviser to the President on Natural Resources, Dr. Nuhu Habib; Permanent Secretary of the Ministry of Finance, Aliyu Ahmed; and Executive Secretary, PTDF, Dr. Bello Gusau. Olufemi Lijadu is expected to serve as the external legal adviser.

Buhari yesterday faced backlash from a section of the country over the composition of the PIA implementation committee, as some stakeholders believe the committee ought to reflect federal character, with involvement of critical stakeholders such as the Vice President, Prof Yemi Osibajo, and other top members of the administration’s cabinet that constitutes the National Privatisation Council.

Buhari had assented to the bill after 20 years of waiting not minding the backlash over the three per cent allocation to oil producing communities and 30 per cent allocation to the development of frontier inland basins, which are mainly in the north.
While inaugurating the committee, Sylva said: “Given the timeline set by Mr President and the urgency of the implementation requirement, there is no gainsaying the fact that total commitment to this assignment is a critical success factor.”

Sylva urged the committee members to live up to their responsibility, saying a lot was expected of them from Nigerians and foreign stakeholders.

Providing further clarification on the bill yesterday, Sylva said he was hopeful that some of the stranded oil and gas projects in the country are on the verge of taking off with the PIA.

Without the PIA, many projects initiated in the oil sector have remained at the planning stage or bogged down by legal hurdles years after initiation.

Some of the projects include Shell’s Bonga South-West and Aparo, which is expected to add about 225,000 barrel per day (bpd); Bonga North (100,000bpd); Eni’s Zabazaba-Etan (120,000bpd); Chevron’s Nsiko (100,000bpd); ExxonMobil’s Bosi (140,000bpd); Satellite Field Development Phase Two (80,000bpd) and Ude (110,000bpd).

These projects are estimated to cost around $100 billion, with the capacity to boost the nation’s production by as high as 875,000 bpd and revenue by about $1.5 billion.

Also mired in obscurity are the $20 billion Brass LNG project in Bayelsa State; $9.8 billion Olokola LNG in Ogun; 5000km Nigeria-Morocco offshore gas pipeline, which in the current market price would cost an estimated $20 billion.

Sylva said discussions are being finalised already on Shell’s Bonga Southwest and Aparo, and Eni’s Zabazaba. With the new legislation, Sylva said: “We expect to see a sizable increase in foreign direct investment, among other benefits.”

Amid the push away from fossil, Nigeria has faced declining flow of investment into the oil and gas sector. Reportedly, losses to the 20-year delay in passage of the bill would have cost the country a whopping $200 billion worth of investment.

The Minister said the country would begin some sort of road show to canvass for investment, “starting from investors already in the country, especially the International Oil Companies (IOCs).”

While there are fears that passage of the PIA may lead to unrest, a development that may undermine oil and gas operations, the Minister insisted that the Niger Delta region has been well represented through the PIA, stressing that those raising concerns in the region have political interests.

Also, the Federal Government was criticised in 2019 due to its hasty renewal of oil blocs ahead of their dates in an attempt to raise fund to finance the budget.

Stakeholders had argued that the Buhari-led administration only shortchanged the country by renewing the licences without the PIA. Sylvia said despite the new law, there won’t be need to revisit the leases.

Known for loss making, the Group Managing Director of NNPC, Kyari, similarly said loss-making entities may be scrapped if they post negative for about five years.

Kyari said this while inaugurating members of the Board of the NNPC Greenfield Refinery Limited (NGRL), noting that there is need for the company to explore all available options to bring an end to the current challenge of petroleum products importation.

The GMD, who is also the Chairman of the NGRL Board, said: “As a business, this is a big opportunity for us and this company’s balance sheet must change positively. Going forward, with the PIA, I can tell you that if you continue to post negative for three years, you are out. So, there is really no excuse.”

Losses of the NNPC in 2018 stood at N803 billion, while it was N1.7 billion in 2019. This is due to Nigeria’s subsidy regime, salary and other operating cost as the corporation paid a whopping N492.05 billion in the month of April this year as its operating cost.

Determined to ensure that the ordinary people in the oil bearing communities benefit from the three per cent allocated to them in the PIA, the Niger Delta Affairs Ministry yesterday said it has an important role to play in the disbursement of the fund.

The Minister, Senator Godswill Akpabio, who addressed newsmen at a briefing organised by the Presidential Media Team in the State House, Abuja, assured that the Ministry would ensure that the funds are used on executing tangible projects for the host communities, rather than disbursing among the elite class from such communities.

He said notwithstanding the controversy that has continued to trail the three per cent allocation, the move by the President is a good starting point.

“I think the major problem is not about the disbursement but how it will impact the communities. These funds will be managed by the host communities themselves and the three per cent will go into a trust fund for the various communities, who are the original indigenes. We are excited about the PIA. Our job is to help facilitate the effective participation of the host communities. The trustees of the fund will come from the actual communities.”

The Minister disclosed that the IOCs were owing the Niger Delta Development Commission (NDDC) over $4 billion dollars in unremitted funds. “The IOCs are expected to pay to the NDDC three per cent of their annual budgets. All of them have failed to do so at different times,” he said.

Governor Ben Ayade of Cross River State has said the PIA as signed by the President seeks to perpetuate injustices that Cross River State has suffered over the years.

Ayade said the law failed to address the concerns of the state in spite of the presentation he made to the relevant Senate committees on the legislation. He stated this while receiving in audience some members of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) led by the state’s representative, Ntufam Eyo Nsa Whiley.

Recalling how the Senate Committee on PIB that toured the state failed to mirror the grievances of Cross River in the bill bef
ore it was finally signed into law by the President, the governor said the experience was enough “for us to express our deep and sincere distrust in the entire exercise and processes of RMAFC.”

With particular reference to the PIA, Ayade lamented that “as far as we are concerned as a state, we have been reduced to nothing in body, in spirit and in soul. When the PIB committee visited, I took my time and articulated in the best of professional grammar to explain to them that producing communities are not as delicate and sensitive as impacted communities. Cross River State bears the brunt of production, but today the PIB is signed into law, and is insensitive to the oil impacted communities to which Cross River State belongs.

“In the same PIA, 30 per cent of revenue is set aside for frontier exploration. Luckily, the Calabar basin, which they refused to recognise in that category that stretches from all the mountain basins, is heavily laden with hydrocarbon. The geo-coordinates have been issued by myself since 2016 to the Federal Government. Today, we watch and see how the 30 per cent set aside for the frontier exploration will be managed. And we will see what will happen to the Calabar basin.”

Also, former governor of Anambra State, Peter Obi, has decried the non-granting of the five per cent demand of host communities in the assented PIA.

Speaking with journalists after paying a courtesy call on Governor Seyi Makinde in Ibadan, yesterday, Obi argued that the host communities, from which Nigeria generated a major part of her revenue, deserved more than the three per cent assented to.

Further, Obi explained that the communities needed adequate funds to prepare for the future when oil would no longer have as much value as at present. He, however, noted that the PIA had become imperative in the nation’s oil sector.

Obi said: “The PIA is needed but I thought we could have considered the five per cent being demanded by host communities. We must learn to care for those generating resources for us whether it is petroleum or VAT. We should consider supporting communities that are generating resources that we are sharing.”

However, Chairman of the Nigerian Governors’ Forum (NGF), Dr. Kayode Fayemi, said the forum would work with the PIA implementation committee.

Speaking in an interview with Arise TV, the Governor of Ekiti State said while the governors were prepared to work with the committee, concerns regarding adherence to the constitution raised by the governors must be looked into. He said Sylva had reached out to the forum to say that concerns raised by the forum would be addressed by way of amendment.

The rising anger over the PIA deepened yesterday with the Ijaw Youths from the six states of the Niger Delta region declaring that President Buhari and Sylva are no longer welcome in the region over their roles.

The Ijaw youths said despite the fact that the duo have the constitutional rights to move to any part of the country, their movement in the six states of the Niger Delta will be welcome with boos and jeers due to their show of disregard to the plights of the people of the region over the years.

But in swift reaction, a coalition of nine militant groups, under the aegis of Reformed Niger Delta Avengers (RNDA), described the position of the Ijaw Youths, under the Ijaw Youths Council (IYC), as reckless and parochial.

(Text, amended headline courtesy The Guardian)

•File: Members of the Steering Committee on the implementation of the Petroleum Industry Act, Dr Nuhu Habib (left); Prof Mohammad Ahmadu, Permanent Secretary Ministry of Petroleum Resources Dr Sani Gwarzo, Minister of State Petroleum Resources Chief Timipre Sylva chairman of the Committee, PS Finance Dr Aliyu, Executive Secretary Petroleum Technology Development Fund (PTDF) Dr Bello Gusau and Mr. Olufemi Lijadu who is representing minister of Finance in the Committee, at their inauguration, at the Nigeria National Petroleum Corporation (NNPC) Towers, Abuja