BUSINESS DAY

The new Petroleum Industry Bill 2020 submitted to the National Assembly by President Muhammadu Buhari seeks to protect and hasten the development of host communities.

A copy of the bill sighted by BusinessDay also seeks to scrap the Petroleum Equalisation Fund (PEF) and Petroleum Products Pricing Regulatory Agency (PPPRA) and replace them with a new agency to be known as Nigerian Midstream and Downstream Regulatory Authority (NMDRA).

According to section 29 of the PIB, the authority shall be responsible for the technical and commercial regulation of midstream and upstream petroleum operations in the industry.

It shall ensure the efficient, safe, effective and sustainable infrastructure development of midstream and downstream petroleum operations.

It shall as well promote, establish and develop a positive environment for international and domestic investment in midstream and downstream operations.

It shall also determine appropriate tariff methodology for processing of natural gas, transportation and transmission of natural gas, transportation of crude oil and bulk storage of crude oil and natural gas. The authority shall also set cost benchmarks for the operations and provide pricing and tariff frameworks for natural gas in midstream and downstream gas operations and petroleum products based on the fair market value of the applicable petroleum products.

Money shall be appropriated to the authority on a first-line charge.

The bill also proposes the establishment of Nigerian Upstream Regulatory Commission.

The commission shall be responsible for the technical and commercial regulation of upstream petroleum operations. It shall also ensure that upstream operations are carried out in a minimise waste and achieve optimal government revenues, promote an enabling environment for investment and ensure strict implementation of environmental policies, laws and regulations for upstream.

According to section 11 (2), appointments to the board of the commission shall be made by the president and be subject to the confirmation by the senate, except for the appointment of the ex-officio members under subsection (2) (e), (f) and (g).

On the commercialisation of the Nigerian National Petroleum Corporation (NNPC) to become Nigerian National Petroleum Company Limited, the bill proposes that the NNPC Ltd will be incorporated under the Companies and Allied Matters Act by the minister of petroleum.

It says “the minister shall at the incorporation of NNPC Ltd, consult with the minister of finance to determine the number and nominal value of the shares to be allotted, which shall form the initial paid-up share capital of NNPC Ltd and the government shall subscribe and pay cash for the shares.

“Ownership of all shares in NNPC Ltd shall be vested in the government at incorporation and held by the Ministry of Finance incorporated on behalf of the government.

According to section 53(4), the ministry of finance incorporated in consultation with the government may increase the equity capital of NNPC Ltd.

Section 53(5) says shares held by the government in NNPC Ltd are not transferable, including by way of sale, assignment, mortgage or pledge unless approved by the government.

Subsection 7 says, “NNPC Ltd and its subsidiaries shall conduct their affairs on a commercial basis without recourse to government funds. Section 55(4), however, says the cost of winding down the assets, interests and liabilities of NNPC shall be borne by the government.

Section 234 provides for Host Communities Development in order to foster sustainable prosperity within host communities.

It also provides for direct social and the economic benefits from petroleum operations to host communities. It also seeks to enhance peaceful and harmonious coexistence between licenses or lessees and host communities, and create a framework to support the development of host communities.

Section 235 also provides for the incorporation of the Host Communities Development Trust.

The trust shall finance and execute projects for the benefit and sustainable development of host communities, undertake infrastructural development within the scope of funds available to the board of trustees.

It shall facilitate economic empowerment opportunities, support healthcare, advance and propagate educational development for members of the host communities as well as invest part of the available fund on behalf of the host communities.