The much-awaited Petroleum Industry Bill (PIB) soon to be passed into law by the House of Representatives has recommended that the discretionary power of the president to grant petroleum licences and leases be ‘completely’ removed.
In the place of this, the lawmakers provided for a competitive bidding process by industry players.
Also, the petroleum minister is denied the power to either serve as chairman or recommend to the president the appointment of chairmen of boards of some agencies under the new law.
These recommendations are contained in the executive summary of the report on the new PIB presented to the House yesterday at plenary by the Ad-hoc Committee on PIB ahead of its consideration and approval by the Committee of the Whole when the House reconvenes on March 31, 2015.
Addressing journalists later in the day, chairman of the 23-member Ad-Hoc Committee on the PIB, Hon. Ishaka Bawa, said the latest recommendation on power to grant oil blocks, which was contrary to the earlier provision of Section 191 of the original Bill, was to avoid the practice whereby the power for the award of oil blocks becomes discretionary.
According to him, the committee had scrutinized all the 363 sections and annexures in the original PIB and consequently made 11 far-reaching amendments and recommendations on salient industry issues.
He said: “Discretionary power of the president to grant petroleum licences and lease as contained in section 191 of the original Bill is completely removed. Instead, the committee recommended competitive biddings for the award of such licences and leases.
“Whereas the committee has retained the conventional powers of the minister under Section 6 of the Bill, the powers conferred on the minister over the control of newly established agencies in the petroleum industry appear to be enormous and capable of undermining the independence of the regulatory agencies.”
Bawa listed the affected agencies as the National Oil Company, Upstream Petroleum Inspectorate Agency, Downstream Petroleum Regulatory Agency, Asset Management Corporation and any other corporate entity established by the Act.
“The rationale behind the removal of ministerial powers is to ensure the smooth running of the agencies without undue influence, and guarantee independence of the same, which is in line with current global practice,” he said.
Other recommendations include the extension of the benefit of Petroleum Host Community Fund, under Section 116 of the original Bill, to include any community where oil facilities and installations are located, and the creation of Frontier Oil Services in order to step up exploration activities in Anambra, Sokoto, Benin, Chad, Bida and Benue Basins.
It also recommended that 30% of NNPC shares be sold through public offerings at the Nigerian Stock Exchange while 49% of Nigerian Gas Company shares be sold same way.
“The committee has retained, with some amendments, provisions in the Bill which uphold the sanctity of existing petroleum contracts. This is to allay the fears of the investors, both foreign and local, who feel threatened that a new petroleum law will terminate existing contracts for oil exploration and production.
“Thus, any licence, lease, permit, or other rights in respect of the petroleum industry in Nigeria shall continue to be valid for the remainder of its duration as it if is issued under this Act,” he said, among others.
LEADERSHIP recalls that the House had on November 15, 2012 constituted the Ad-hoc Committee on PIB with the mandate to look into the Bill and make recommendations to the Lower Chamber on how, or in what form, to pass the Bill into an Act that will provide for the legal, fiscal and regulatory framework for the Nigerian oil and gas industry.
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