*Senate to get first PIB
this week
*To replace DPR, PPPRA
with NPRC
The Federal Government
has broken up the controversial Petroleum Industry Bill into different versions
and is proposing splitting the Nigerian National Petroleum Corporation, NNPC,
into two companies – the Nigeria Petroleum Assets Management Company (NPAM) and
a National Oil Company (NOC) that would be run on commercial lines and partly privatized.
According
to Reuters, yesterday, the Federal Government is breaking up the PIB and is
replacing it first with a law to overhaul the petroleum sector with the aim of
closing loopholes that bred corruption.
Vanguard report continues:
Under
the draft legislation, the report stated that the NOC will be an “integrated
oil and gas company operating as a fully commercial entity and will run like a
private company.”
According
to the report, the onus would be on the board of the company to make profits
and raise its own funding. The NOC would be expected to keep its revenues,
deduct costs directly and pay dividends to the government.
To
start off, the report stated that the NOC will receive about $5 billion, or at
least the five-year average of the amount of money NNPC had to put into joint
venture operations, while it would be partially privatized with the Federal
Government divesting a minimum of 30 per cent of its shares in the company
within six years of its incorporation.
NPAM,
on the other hand, is expected to manage assets where the government is not
obligated to provide any upfront funding. “These include oil licences run under
production-sharing agreements in which independent oil companies cover
operating costs and pay tax and royalties on output,” the report noted.
Compared
with previous PIB drafts, the report stressed that the law curtails ministerial
powers as board appointments are made by the Nigerian president and confirmed
by the Senate.
If
passed, the report further stated that the law would also create a Nigeria
Petroleum Regulatory Commission (NPRC) to oversee everything from oil licence
bid rounds to fuel prices, while a Special Investigation Unit would also be set
up under the NPRC with the powers to seize items and make arrests without a
warrant.
The
first new bill, drafted by the Senate and overseen by the oil ministry,
according to the report, is entitled “Petroleum Industry Governance and
Institutional Framework Bill 2015” and aims to create “commercially oriented
and profit driven petroleum entities”.
The
Bill is expected to be presented to senators this week.
The
report maintained that the Bill repeals the Act that created NNPC that
contained legal grey areas that allowed mismanagement to go unchecked and
billions of dollars in revenues to go seemingly unaccounted for as operating
costs rocketed.
The
institutional changes in the new draft have been greatly simplified from the
2012 PIB that created many new regulators and broke up the oil company into
separate downstream (refining and retail), upstream oil and gas
companies.
Some
noticeably problematic amendments are absent from this bill, such as allowing
the oil minister to decide what to do with any surplus or allowing the Nigerian
president to allocate oil blocks for exploration.
But
it remains to be seen whether further add-ons to the bill or later decisions
will reconcile the conflict between what the new state oil companies need to
run and what they should remit to the treasury.
Commenting
on the new Bill, Aaron Sayne, a U.S. lawyer who focuses on the Nigerian energy
sector, said, “The bill leaves open lots of questions around what roles the new
national oil companies will play in the sector, and how they will receive and manage
money.
“But one can sense more
strategic thinking behind it than in past drafts, and the bill does a better
job than its predecessors of saying who will take key decisions after it
becomes law.”
No comments:
Post a Comment