With the passage by the Senate, Thursday, of the Petroleum Industry Governance Bill, Nigeria now comes close to having five new commercial and governance organizations to replace existing ones, such as the Nigerian National Petroleum Corporation and the Department of Petroleum Resources.
The Petroleum Industry Governance Bill is the first part of the jinxed Petroleum Industry Bill, PIB, to be passed by the Senate.
The PIB was first introduced in the National Assembly in 2008, and was passed at least once by the House of Representatives, but never by the two houses of parliament. The Senate passed it for the first time on Thursday, and now expects concurrence by the House.
The bill seeks to provide governance and institutional framework for Nigeria’s petroleum industry.
Breaking NNPC into commercial entities
Among other key objectives, the bill promises to repeal the NNPC Act, and replace it with “commercially oriented and profit-driven” petroleum companies to be incorporated by the government.
In effect, the assets and liabilities of the NNPC will be split between two new companies, namely National Petroleum Company, NPC, and the National Petroleum Assets Management Company.
Both companies are to be incorporated by the Minister of Petroleum Resources within six months of presidential assent – that is if it gets that approval.
The management company will run all assets currently held by the NNPC, including OPLs under production sharing contracts, while other assets will be transferred to the NPC.
In both companies, the Bureau of Public Enterprises, Ministry of Finance and the Ministry of Petroleum are to hold shares in ratio of 20:40:40 respectively.
The bill also proposes a third commercial entity, the National Petroleum Liability Company, to be vested with “certain liabilities” of the NNPC and pension liabilities of the DPR in order not to financially encumber the Asset Management Company as well as the NPC.
The bill further seeks to repeal the Acts establishing the Petroleum Inspectorate, Department of Petroleum Resources and the Petroleum Products Pricing Regulatory Agency, and to transfer their functions, assets, funds and all resources to a new body, to be named Nigeria Petroleum Regulatory Commission.
According to the bill, this commission will have responsibility to regulate all aspects of the nation’s petroleum industry, including health, safety, environment, technical standards, infrastructural development, compliance with terms and conditions of contracts and leases, and enabling business environment.
It will also have power to grant licenses for downstream gas, petroleum products, retail outlets and transportation and distribution facilities.
The fifth body proposed by the bill is the Petroleum Equalisation Fund, which is to ensure “efficient distribution of petroleum products through the country” and “enhance development of all regions of the federation by ensuring economic balance in the price of petroleum products”; and “collect and provide funding for infrastructural development throughout the federation”.