OrderPaperToday – For the past 10 years, revenue targets from the oil and gas sector have not been achieved and this has had a big impact on implementation of budgets in Nigeria.

Only recently, President Muhammadu Buhari noted in his Budget speech that the 2019 budget underperformed because revenue derived from crude oil did not meet projected figures; up to 49 percent as at June 2019.

To address this and other problems bedevilling the petroleum sector and boost productivity in general, the executive and the legislature began processes that will ensure accountability,  enshrine transparency,  improve productivity and make it more attractive to investors.

This is where the Petroleum Industry Bill (PIB) came into the picture. Sadly, the National Assembly failed, for varied reasons, to pass the bill; and when it eventually scaled legislative approval in the broken down Petroleum Industry Governance Bill (PIGB), it was denied presidential assent.

For all it is worth, Senate president, Ahmed Lawan, has promised the PIB would be passed in 2020.

However, the 9th Assembly succeeded in passing the Production Sharing Contract (PSC) bill. It received speedy approval of the president who signed it into law in the United Kingdom while on a private visit last month.

This piece takes a look at this and other legislative interventions that have been made (or in process) by the 9th Assembly to improve governance and performance in the sector.





Deep offshore and inland basin production sharing contract sharing (PSC) bill

The PSC (amendment) bill is perhaps the biggest legislation to have been passed since the inauguration of the 9th Assembly.

The two chambers of the National Assembly – the Senate and House of Representatives – speedily passed the executive bill which according to estimates, would add $1.4billion annually to the coffers of the federal government.

Simply put, the Act upgrades a contract sharing framework between Nigeria and oil companies operating in the offshore oil fields. It determines how much Nigeria gets from oil drilled offshore at a particular depth at a prevailing rate of oil in the international market.

Petroleum profit tax amendment bill

The Bill repeals section 60 of the present Act and introduces withholding tax of 10% on dividends paid out of the profits of companies engaged in petroleum operations in Nigeria. 

What this means is that when passed into law, tax exemption granted under the PPTA in respect of such income or dividends will be removed. 


Investigative motions:

Status of refineries  

The Senate has mandated its committee on Petroleum (downstream) to investigate the status of refineries in Kaduna, Warri and Port Harcourt.

The Group Managing Director (GMD) of the Nigeria National Petroleum Corporation (NNPC), Mele Kolo Kyari, was invited to brief the committee, not just on the existing refineries,  but also about recently licenced modular refineries.

The essence of the intervention, according to the mover of the motion,  Sen. Rose Oko (PDP, Cross River), is to ensure self-sufficiency in refined petroleum and to eliminate  fuel subsidy payment.


Probe of $396.33 spent on turn around maintenance of refineries in 4 years


The House of Representatives has resolved to launch an investigation into the nation’s refineries but with focus on how $396.33 was spent on Turn Around Maintenance (TAM) between 2014 and 2017 without commensurate results. The resolution followed a motion moved by Ifeanyi Momah.

According to the motion, NNPC allegedly spent a whopping $396.33 million between 2013 and 2017 to carry out repair works under the TAM scheme on its three under-performing refineries at Port-Harcourt, Warri and Kaduna.


Refund of N382m for fire fighting  

The Senate has ordered the Nigerian National Petroleum Corporation (NNPC) to refund the sum of N382 million it claimed to have used in fire fighting operation during a pipeline explosion in Kom-kom, Rivers State.

The lawmakers asked the NNPC to urgently pay the cash into the national treasury and provide evidence of compliance to its Committee on Petroleum (Downstream).

These resolutions followed the adoption of the recommendations of the report of the Senate Ad-hoc Committee that investigated the Pipeline Explosion in Komkom, Rivers State.


International oil companies summoned over breach of labours laws

The House of Representative has asked its Committees on Labour, Employment and Productivity; Local (Nigeria) Content; Gas Resources; and Petroleum Resources (Downstream) to conduct an investigation into allegations that international oil and gas companies breach labour laws of the land. The spokesperson of the House, Benjamin Kalu (APC, Abia) moved the motion.


Computerisation of oil fields

The Senate has urged President Muhammadu Buhari to set up a consortium of experts to appraise the possibilities of installing computerised oil facilities management gadgets to curb multifaceted problems associated with oil and gas production, transportation, and sales business in Nigeria.

The call followed the consideration of a motion titled “the need to install computerised oil facilities gadgets for Nigerian crude oil businesses”.

The motion was moved by Sen. George Sekibo and the Committees on Petroleum Upstream, Downstream and Gas Resources were mandated to hold a public hearing on the matter.


Review of all other oil related contracts

The Senate on the 27th of November mandated its Committee on Petroleum Resources (Upstream) to investigate the degree of compliance by oil companies operating in Nigeria to oil and gas exploration contracts.

This is after a comprehensive review of the Product Sharing Contracts (PSC), Joint Venture Contracts and arrangements governing Abandonment, Decommissioning, Remediation have been conducted.

This resolution was taken following a motion moved by Senator Gershom Bassey on the degree of enforcement of abandonment and decommissioning obligations in Oil and Gas Exploration Contracts.


Last line

While these interventions continue, the most important piece of legislation remains the Petroleum Industry Bill (PIB) which has encompassing provisions with far reaching effects on the oil and gas sector. 

It is left to be seen if the 2020 dateline set for the passage of the bill by Senate President Ahmed Lawan would be met.


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