Proposes Unbundling Of NNPC Into Two

The Senate, on Thursday broke a jinx of over 15 years, passing the much awaited Petroleum Industry Governance Bill, the first of the original Petroleum Industry Bill PIB, which has now been unbundled for piecemeal passage.

The bill was passed after being read for the third time at the Senate’s plenary before it was passed in the Committee of the Whole, which considered the Report of the Committee on Petroleum Upstream, Petroleum Downstream and Gas presented by Senator Donald Alasoadura.

The bill seeks a more inclusive development away from crude oil to other product lines and by-products and robust engagement between international oil companies (IOCs) and the government in the area of investment and modifications in the Joint Venture Partnerships (JVPs)/cash call obligations.

According to Senate President Bukola Saraki, “we made a commitment and it’s being fulfilled. This Bill is not only for Nigerians but for our investors. We are proud of what has been done.”

In a series of tweets, Saraki noted that the PIGB “means more jobs for Nigerian local contractors, especially those from the oil producing regions (in line with the Made-in-Nigeria mantra).”

The bill, he continued, “will plug loopholes in the Petroleum Industry, which will lead to countless opportunities for Nigerians.”

Should the President sign it into law, the Act will unbundle the Nigeria National Petroleum Corporation (NNPC) into two companies: Nigeria Petroleum Assets Management Company and the National Petroleum Company.

According to the bill, the two companies shall be created and supervised by the Ministry Of Petroleum Incorporated. It provides that “the Minister shall, within six months after the Effective Date, take such steps as are necessary under the Companies and Allied Matters Act to incorporate two entities – the first may be called the Nigeria Petroleum Assets Management Company, or such other name as may be available and the other may be called the National Petroleum Company, or such other name as may be available, as companies limited by shares, which shall be vested with certain assets and liabilities of the Nigerian National Petroleum Corporation (“NNPC”).

“Upon incorporation and the transfer of assets pursuant to this Act: the Nigeria Petroleum Assets Management Company (hereinafter called the “Management Company” in this Act) shall 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 Provisions under the Petroleum Act 1969 as amended.

The National Petroleum Company shall 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; 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. The PIGB was the first tranche of the PIB.

Other tranches that would soon be presented before the senate are: Upstream Petroleum Licence and Lease Administration, Downstream Oil and Gas Administration and Petroleum Fiscals.

Another tranche to be considered is the Petroleum Revenue Management including Petroleum Host Community Fund. The PIGB would help to create efficient and effective governing institutions with clear and separate roles for the petroleum industry. With the passage of the bill, there will be a slim, focused yet robust framework for effective institutional governance of the petroleum industry. The Nigeria National Petroleum Corporation (NNPC) would be reformed into two liability companies, while all existing regulatory agencies would be absorbed into a new agency called Petroleum Regulatory Commission.

The PIGB would help to establish a framework for the creation of commercially oriented and profit driven petroleum entities that ensure value addition and internalisation of the petroleum industry. It will also help to promote transparency and accountability in the administration of the petroleum resources of Nigeria as well as foster a conducive business environment for petroleum industry operation.

Presidential assent to the bill would also translate to full deregulation of the downstream sector of the Nigerian oil industry, which translates to total removal of petroleum subsidy, just as government revenue from the industry would increase, meaning more revenue to invested in critical sectors of the economy, while maximizing gas infrastructure.