The passage of the long-awaited Petroleum Industry Governance Bill came into fruition after a period of 17 (Seventeen) years of rigorous consultations and reviews, appear to have come to a halt yesterday, August 28, 2018, as news filtered from the Office of the President of the Federal Republic of Nigeria that it would appear the President has withheld Assent to the PIGB. According to media reports, the PIGB was returned to the National Assembly on three grounds:
- The PIGB will whittle down the President’s control and power of arguably the most profitable industry in Nigeria
- All the Ministers consulted by the President over PIGB refused to support the grant of Assent to the bill
- Lack of “fiscal content” in the bill.
It is impossible to overstate what a significant setback this development is to the ongoing reform of the petroleum industry in Nigeria as well as the attraction of both foreign and local investors to Nigeria. The PIGB is a product of a reform process which has passed through several aspersions, consultations and revisions and is about to culminate into what will birth a stable Energy Institution in Nigeria which stakeholders have always yearned for.
With the benefit of hindsight, it will be recalled that the ‘famous’ Petroleum Industry Bill (PIB) was fragmented into different bills namely the: the PIGB, the Petroleum Industry Administration Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Host Community Bill (PHCB) to surmount many of the challenges posed to the successful passage of the Bill.
It is therefore a mystery why, having been through years of legislative lobbying, His Excellency, President Buhari would withhold assent to making this a law; one which we all yearn for. This short paper will therefore attempt to examine each of the reasons allegedly adduced by the President for not giving his assent to the bill and the consequences attaching to such decision.
In prefacing this opinion, it is important to remind ourselves that one of the reasons for withholding presidential assent is the alleged whittle-down of the ‘President’s control’; as a President OR as a Minister of Petroleum Resources?
Is the President/Minister’s Powers diluted?
Section 2(1) of the PIGB provides the following powers for the Minister:
a) determination, formulation and monitoring of Government policy for the petroleum industry;
b) general supervision over the affairs and operations of the petroleum industry subject to the provisions of this Act;
c) advise the Government on all matters pertaining to the petroleum industry;
d) promotion of the development of local content in the Nigerian petroleum industry;
e) representation of Nigeria at international organisations that are primarily concerned with the petroleum industry;
f) negotiation and execution of international petroleum treaties and agreements with other countries, international organizations and other similar bodies on behalf of the Government;
g) and to do all such other things as are incidental to and necessary for the performance of the functions of the Minister under this Act.
Section 3 of the Bill (which is similar to Section 7 of the Petroleum Act), similarly grants the Minister the power of pre-emption of all petroleum and petroleum products obtained, marketed or otherwise dealt with under any license or lease granted under the Act, in the state of national emergency.
The new Regulator, the Nigeria Petroleum Regulatory Commission (NPRC), pursuant to Sections 5(e) and 15(1) of the PIGB would now be required to submit detailed mid-year and annual reports of its operations and finances to the Minister. This will be in addition to the Minister’s powers to issue directives to guide The Equalisation Fund (TEF).
The Minister, by the provisions of Sections 77, 88, 126 of the Bill, is also responsible for incorporating and capitalising the Nigerian Petroleum Assets Management Company, National Petroleum Company, and the Nigeria Petroleum Liability Management Company in which assets and labilities of the NNPC, DPR and NAPIMS are to be transferred and warehoused. The above, as is evidence, are some of the sweeping powers retained by the Minister under the proposed law. To some critics, these are powers which should still be re-considered and diluted.
What may appear to be the ‘offending provision’ could be found at Section 127(4) of the Bill. This provides that all regulatory functions conferred on the Minister pursuant to the Petroleum Act and the Oil Pipelines Act or on the chief executive of the Inspectorate pursuant to the Nigerian National Petroleum Corporation Act, shall be deemed to have been transferred to the NPRC. This at best, could be interpreted to be the usurpation of Ministerial powers/control.
On closer and more technical scrutiny of these concerns (and on account of the fusion of both the offices of the President and Minister of Petroleum Resources), these are unfounded concerns as Section 13 of the Bill provides that the President shall appoint members of the NPRC’s Governing Board, subject of course to the Senate’s confirmation, for a renewable period of four years.
Evidently, from a combined reading of the foregoing provisions, the President and the Minister (given that the President is currently the Minister) retain substantive control over the composition and direction of the NPRC and would therefore be technically wrong to withhold assent to the Bill for the reasons it had set out before now.
The other reason(s) adduced for not giving his assent; being the absence of a ‘fiscal content’ advanced, must have been made in error or misguided as to the relevance of such a reason. This is because, the Petroleum Industry Fiscal Bill (PIFB) is currently under legislative scrutiny and would ordinarily not have formed part of the PIGB, as this (the PIGB) is a proposed law mainly to reform the governance structure of the Nigerian Oil & Gas Industry. If this were to be relevant, then the Host Community Funds Bill must also be a reason why Assent must be withheld. These are unjustified and untenable reasons to withhold assent, with respect.
At any rate, should the merit of the need to re-consider this position not find favour with Mr. President (as dangerous as that may be for investment purposes for the Sector), the National Assembly may have no choice but to invoke the provisions of Section 58 (5) of the Constitution of the Federal Republic of Nigeria (CFRN), override the President’s decision and pass the Bill into law. We would rather the former.
By Tolu Aderemi, Partner, Perchstone & Graeys LP