Issues around Nigeria’s petroleum sector topped deliberation in the House of Representatives last week. EDEGBE ODEMWINGIE reports on concluded debates on the Petroleum Industry Bill (PIB) and the probe report on incessant fuel scarcities across the country.
Fuel scarcities recorded across Nigeria will linger beyond the first quarter of 2013, a probe report sanctioned by the House of Representatives disclosed Wednesday.
A copy of the report obtained by LEADERSHIP fingered the finance ministry, Central Bank of Nigeria (CBN) and the Petroleum Products Pricing Regulatory Agency (PPPRA) on the incessant scarcity of petrol.
A report of the Dakuku Peterside led House Committee on Petroleum Resources (Downstream) stated that commercial banks are no longer willing to give credit facilities to petroleum products marketers principally because the federal government presently owes oil marketers N141billion – a situation that has discouraged others from importing products into the country.
Also, System 2B which distributes about 70 per cent of petroleum products starting from Lagos, Mosimi, Ejigbo, Ibadan, Ore and Ilorin has collapsed and has crippled the distribution of petroleum products.
In an executive summary presented at Wednesday’s plenary, the report regretted the inability of all relevant agencies to have accurate data of product consumption need of Nigerians.
“Lack of dependable data on accurate daily consumption of petroleum product is a serious challenge. It made extrapolation and planning almost impossible. This can be seen throughout the allocation, product importation and distribution chain. Nobody is sure of the approximate quantity or volume of products we need as a nation on daily basis.” The report read.
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Other reasons alluded to the fuel scarcities are:
“The PPPRA does not give adequate allocation to importers to cover product consumption need of Nigerians. This is due to limitation in budgetary provision (2012). PPPRA limits itself to the fund provided for PMS in the 2012 budget. We import by far less than our consumption needs.
“Consistent delay in payment to importers of petroleum products due to excessive carefulness on the part of PPPRA, CBN and Ministry of Finance.
“The Ministry of Finance withholds payment of marketers under investigation. Ministry is not a court of law.
“A paltry sum of N306 billion was allocated to PMS in the N888 billion set aside for payment of subsidy. Of the N888 billion for payment of subsidy, N350 billion was allocated to kerosene (DPK) while N232 billion was allocated for payment of 2011 subsidy arrears.
“Thus PPPRA limits itself to the budgetary allocation which has. Reared a serious gap in volume of products available for distribution which has been grossly inadequate.
“That delay in payment to petroleum marketers traceable to the Ministry of Finance is adversely affecting the availability of reduced and credit worthiness of marketers.
“At a point, it took not less than six months to process payment due importers.
“Too many inconclusive investigation is affecting the willingness of banks to give credit and thus importers given allocations by PPPRA can not perform. For instance, out of 37 companies that were given fourth quarter allocation, only 19 performed by bringing the product into the country.
“There is a marked decline in investment in the downstream sector due to very low profit margin that has been gradually building up due to lack of storage facilities and will be observed over time”.
The Committee recommended that, “That the Ministry of Finance should as a matter of urgency, pay every marketer being owed and whose claims has been verified by all relevant authorities and going forward, timely processing of payment to the petroleum products marketers.
“That all necessary measures should be taken by NNPC to immediately, within 14 days fix System 2B.
“That in 2013 budget, the Petroleum Sport Fund (PSF) should be skewed in favour in PMS by the Ministry of Petroleum.”That all investigations carried our by the Presidency in the oil and gas industry should be concluded within a time limit.
“That PPPRA should give allocation to only marketers that had performed.
It would be recalled that the downstream committee was mandated to carry out the investigation following the adoption of a motion by Bashir Baballe (Kano/PDP) on November 7, 2012.
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23-Member Special Panel For PIB
Speaker, House of Representatives, Aminu Waziri Tambuwal Thursday announced a 23-man special Ad-Hoc committee to carry out further legislative action on the Petroleum Industry Bill.
The PIB scaled second reading Thursday after two days extensive and wide-ranging debate by federal lawmakers and was subsequently referred to the Ad-Hoc panel, headed by Chief Whip of the House, Ishaka Bawa for further legislative action. Minority Whip, Samson Osagie was named the Deputy Chairman of the panel.
Members of the special panel include; Chairman of the Committee on Petroleum Resources (Upstream), Muraina Ajibola, and his Deputy,? Moshood Mustapha, Chairman, Petroleum Resources (Downstream), Peterside Dakuku and his Deputy, Yusuf Galambi, Chairman of the Committee on Environment, Uche Ekwunife and her Deputy, Abubakar Musa, Chairman of the Committee on Gas Resources, Basey Ewa, and his Deputy, Gerald Ironna, Chairman of the Committee on Justice, Ali Ahmed and his Deputy, Emeka Nwaogbo, and Chairman of the committee on Local Content, Asita Honourable and his Deputy, Nasir Ali Ahmed.
Others are Yusuf Manu, Hassan Saleh, Daniel Reyenieju, Musa Sarki Adar, Kadija Bukar Ibrahim, Rafeesuat Bamiro, Uzor Azubuike, Peter Akpatason, Rotimi Makinde.
Meanwhile, federal lawmakers mainly of northern extraction chorused their approval for the creation of the National New Frontier Exploration Agency – touted as a largely northern driven bargain as part of ongoing ethnic/political positioning on the Petroleum Industry Bill (PIB).
The northern representatives said the new Bill to establish the exploration agency which was consolidated with the PIB, will effectively pursue exploration and production of oil and gas in the frontier of chad basin, Dahomey basin, Imo basin, Benue trough and Sokoto basin.
According to Kaka Kyari Gujbawu (Borno/PDP), countries like Chad, Niger, Cameroun which share similar basins as that in northern Nigeria have since commenced commercial exploration leaving billions of dollars in accruable fund to the federation fallow.
In the same vein, Emmanuel Jime (Benue/PDP) said the establishment of the exploration agency will silence the age-long conspiracy theory of a deliberate ploy to frustrate discovery of new oil finds in northern Nigeria.
Chairman House Committee on House Rules and Business, Sam Tsokwa (Taraba/PDP) and Farouk Lawan (Kano/PDP) called for a “surgical” review of the PIB in the areas of the enormous powers of the oil minister, the proposed oil exploration agency. The duo faulted the proposed Petroleum Host Communities Fund as lacking transparency and a speltout framework as to were the funds will be warehouse and who will administer the funds.
Abiodun Faleke (Lagos/ACN) raised questions on beneficiaries of the Petroleum Host Communities Fund. According to the Lagos lawmaker, communities were pipelines passed through must be accommodated in view of the environmental impact causes by oil spills typical with the pipeline network.
Going by provisions of the PIB, oil companies will contribute into the fund for Niger Delta communities 10 per cent of net profits – less royalties, deductions and allowances, hydrocarbon tax and income tax. The host fund will cover the cost of repairs to any oil facilities damaged by vandalism, sabotage and civil unrest.
There is little clarity on how the money will be paid or whether the communities will receive it directly or via the government, which opens the possibility of political interference.
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Oil Minister’s Powers Enormous
Federal lawmakers in somewhat unison, faulted the “enormous” powers domiciled with Nigeria’s oil minister by the proposed legislation.
In one of the debates, Chairman House of Representatives Committee on Diaspora, Abike Dabiri-Erewa (Lagos/ACN) stated, “The President might as well vacate his seat and hand it over to the petroleum minister,” largely sounding the views echoed by the lawmakers on the Minister for Petroleum Resources powers.
Dabiri-Erewa scored the PIB low on transparency, specifically on secrecy around disclosure of oil sales and signature bonuses acrueing from sale of Oil Prospective Licences (OPLs) by the federal government. However, confidentiality clauses for licenses, leases, agreements or contracts for upstream petroleum operations in respect of any payments of royalties, fees and bonuses of whatever nature, and taxes, will now be shall void and of no effect going by provision of the PIB.
Going by provisions of the ambitious 223-page PIB, the oil minister will supervise all the oil institutions, including the regulator, which used to be independent. Also, any person or company who fails to comply with an order made by, or on behalf of the minister is liable to a fine or jail sentence – provisions the lawmakers are uncomfortable and say is vulnerable to abuse.
The contentious onshore/offshore dichotomy debate played out during deliberations as lawmakers differed on the PIB stand on beneficiaries of oil revenues – the federal government or host communities. Friday Itulah (Edo/PDP) insisted on greater resource control for host communities/states. Simon Arabo (Kaduna/PDP) stated that oil finds and subsequent revenues belonged to the federal government. The Kaduna lawmaker faulted the establishment of the Petroleum Host Communities Fund.
The PIB stipulates that oil companies will contribute into the fund for Niger Delta communities 10 per cent of net profits – less royalties, deductions and allowances, hydrocarbon tax and income tax. The host fund will cover the cost of repairs to any oil facilities damaged by vandalism, sabotage and civil unrest.
Chairman House Committee on Cooperation and Integration in Africa, Abubakar Momoh said attention on the PIB should not be limited to passage alone but eventual implementation if successful. According to Momoh, Nigeria’s history with the implementation of some good legislation has been shoddy.
Momoh expressed support for the unbundling of the state-run Nigerian National Petroleum Corporation (NNPC) as provided by the PIB but questioned retaining the Petroleum Equalisation Fund which according to him was in conflict with the deregulation drive of the PIB.
He backed the establishment of the Petroleum Host Communities Fund which he said will check oil theft as oil communities will be spurred by ownership and participation in the sector to protect oil installations.
Chairman House Committee on Environment, Uche Ekwunife (Anambra/PDP) faulted the PIB’s provision that Environmental Impact Assessments (EIA) in the oil sector be carried out by the petroleum ministry instead of the Ministry for Environment.
The House Majority Leader, Mulikat Adeola-Akande in lead debates said the general consensus was on the need for reforms in the governance of the petroleum sector.
Adeola-Akande said in her lead debates, “This sector has over time been plagued by secrecy, corruption and inefficiency, leading to poor economic and social returns from the industry for the Nigerian government and people.
“Fifty-six years after the discovery of oil and fifty-two years after independence, we have not quite found the right formula. We now have another opportunity before us and it behoves us not to fail Nigerians.
“As we speak today investment in oil and gas sector has dwindled and our crude reserves are shrinking. This is because most investors are awaiting the enactment of this very important legislation that has potency to affect our quest to become one of the top 20 largest economies by the year 2020.
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