Oil experts list benefits as National Assembly breaks 12-year jinx, passes PIB


The Senate on Thursday passed the Petroleum Industry Bill and approved that three per cent of profit made by oil firms should be shared to host communities.

The upper chamber passed the PIB, 2021 after the clause by clause consideration of the report of its joint committee on Petroleum (Upstream, Downstream and Gas) on PIB.

Lawmakers from the South-South geopolitical zone however protested against the three per cent approved for the host communities and called for five per cent.

The Senate had before then held a closed session with the Minister of State for Petroleum, Timipre Sylva, and the Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari.

The Senate also approved that 30 per cent of profits accruing from oil and gas operations by the Nigeria National Petroleum Corporation would be set aside for exploration of oil in the frontier basin.

The proposed law stipulated that all exploration of frontier basins would fall under the purview of the Upstream Regulatory Commission.

It also clarified that the three per cent from the oil firm’s profits would be reserved for the development of host communities.

However, before the Senate approved the clauses, the plenary was thrown into a rowdy session following the disagreements over the right percentage of oil revenue that should accrue to the host community.

This was because the report of the Senate Joint Committee on Petroleum which processed the bill had proposed five per cent for host communities.

However, when the Senate carried out the clause by clause consideration of the bill, it was reduced to three per cent.

The development led to a stalemate as senators from the Niger Delta region vehemently opposed the decision.

For instance, the Senator representing Delta South, Senator James Manager, proposed an amendment to retain the provision of five per cent in the report but he was defeated.

Also, another attempt by the Senator representing Rivers State, George Sekibo, to call for a division was overruled by the Senate President, Ahmad Lawan, who hit the gavel to re-confirm the three per cent host community provision.

The development led to a serious tension.

The Senate leadership swiftly moved to pacify the southern senators who were insisting on division to resolve the impasse.

The Leader of the Senate, Yahaya Abdullahi, said the Senate would be ‘heading for a state of Armageddon’ if it allowed that division to happen.

Lawan also supported the Senate Leader and urged his colleagues to exhibit patriotism and Sekibo later agreed to withdraw his motion.

Similarly, the House of Representatives, on Thursday, passed the controversial bill, following the consideration and adoption of the report on the controversial legislation.

Speaker of the House, Femi Gbajabiamila, hailed the lawmakers for the record passage of the controversial bill, describing it as significant in the history of the parliament.

The Majority Whip and Chairman of the Ad Hoc Committee on PIB, Mohammed Monguno, had laid the report at the plenary on Wednesday.

He prayed the House to consider the report on the ‘Bill for an Act to Provide Legal, Governance, Regulatory and Fiscal Framework for the Nigerian Petroleum Industry, the Development of Host Communities; and for Related Matters, 2021 (HB. 1061) and Approve the Recommendations Therein’.

The report, as passed, provided five per cent for the development of the host communities and the establishment of a Host Communities Development Fund, which Monguno put at $895m annually.

The chairman noted that the committee recommended five per cent in order not to scare away investors from the nation’s oil and gas sector, in view of the availability of oil in several countries at the moment.

The House included in the bill, a Frontier Exploration Fund, which is to conserve funds for the exploration of oil in the various River Basins across the country which was not initially part of the bill.

However, the bill passed with an amendment only to Section 240(2) of the bill by increasing the host community funding from 2.5 per cent of actual operating expenditure of oil companies as presented to five per cent.

The section provides that “each settlor, where applicable through the operator, shall make an annual contribution to the applicable host community development trust fund of an amount equal to 2.5 per cent of its actual operating expenditure in the immediately preceding calendar year in respect of all petroleum operations affecting the host communities for which the applicable host community development trust was established.”

Gbajabiamila said, “I want to underscore how big, what this committee has just done because this has been going on for 20 years. I want to commend the 74 wise men whose work product has now become the work product of 360 men. I want to commend these men and women for their commitment, industry and scholarship in producing this 318-section law. This 9th Assembly will be recorded on the right side of history.

Our correspondents report that going by standard legislative procedure, the conference committee of the National Assembly would meet to reconcile the differing positions of the Senate and the House.

Experts and marketers who spoke to our correspondents on telephone expressed delight at the passage of the bill.

The Managing Director of Vhelbherg, an indigenous oil firm, Mr Bank-Anthony Okoroafor, said the passage of the PIB and the expected assent by the President would help to bring the country’s oil and gas industry back on track.

Okoroafor, who is a former chairman of Petroleum Technology Association of Nigeria, said the passage of the bill would improve investor confidence as there would be clarity on the fiscal terms of the industry.

“It brings confidence and stability; so, it is a move in the right direction. I say well done to the Senate and House of Representatives for this giant step,” he added.

The National Operations Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, said the passage of the PIB into law would mark the beginning of the repositioning of the oil and gas industry.

“If the President assents to it, then that is the beginning of the reform that we have been expecting in the oil and gas industry. It is the beginning of deregulation in the downstream sector,” he said.

He said the passage of the PIB would allow market forces to determine of petrol prices and curb smuggling of the product.

The outgoing Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, described the PIB as a major instrument of reform in the oil and gas sector, with a number of significant implications for the sector and the economy as a whole.

National President, Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, described the passage of the bill as a big blessing for Nigeria.

He told one of our correspondents that through the bill, a deregulated downstream oil sector would be achieved, adding that this would boost the fortunes of the country and improve the Nigerian economy.

However, the Pan Niger Delta Forum said it was not time for the oil bearing region to celebrate.

PANDEF’s spokesman, Ken Robinson, told one of our correspondents that the forum would like to take a look at the version of the PIB that was endorsed before responding to it.

Robinson added that it would be unnecessary to begin to celebrate when the President, Major General Muhammadu Buhari (retd.), had yet to give his assent to the bill.

He said, “We like to reserve our comment and see the version they passed, whether they accommodated the input made by host communities – those suffering the impact of oil exploration in the Niger Delta and not benefitting from the system.

“We will see whether the input made by the people is accommodated. It is not time to celebrate; if the National Assembly has passed it and Mr President does not assent to it, then it remains with them.”

The forum’s spokesman said he was not sure that the current National Assembly would have the drive to override the President if he (Buhari) refused to assent to the bill.


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