Under the draft legislation, the federal government is also proposing to split the Nigerian National Petroleum Corporation (NNPC), into two companies, the Nigeria Petroleum Assets Management Company (NPAM) and a National Oil Company (NOC) that would be run on commercial lines and partly privatised.
According to the report, the NOC will be an “integrated oil and gas company operating as a fully commercial entity and will run like a private company.” It would also be expected to keep its revenues, deduct costs directly and pay dividends to the government.
The report stated that NOC will receive about $5 billion, or at least the five-year average of the amount of money NNPC had to put into joint venture operations to start off, while it would be partially privatised with the federal government divesting a minimum of 30 per cent of its shares in the company within six years of its incorporation.
On the other hand, NPAM is expected to manage assets where the government is not obligated to provide any upfront funding. “These include oil licences run under production-sharing agreements in which independent oil companies cover operating costs and pay tax and royalties on output,” the report stated.
The report noted that if the draft legislation is passed, the law would also create a Nigeria Petroleum Regulatory Commission (NPRC) to oversee everything from oil licence bid rounds to fuel prices, while a Special Investigation Unit would also be set up under the NPRC with the powers to seize items and make arrests without a warrant.
The first new bill, drafted by the Senate and overseen by the oil ministry is reportedly entitled, “Petroleum Industry Governance and Institutional Framework Bill 2015” and aims to create “commercially oriented and profit driven petroleum entities”.
Aaron Sayne, a U.S. lawyer who focuses on the Nigerian energy sector gave his opinion on the new bill which according to him raises lots of questions as to what roles the new national oil companies will play in the sector, and how they will receive and manage money.
“But one can sense more strategic thinking behind it than in past drafts, and the bill does a better job than its predecessors of saying who will take key decisions after it becomes law,” he added.
Recall that on November 23, Bukola Saraki, the Senate president said the legislature has adopted the PIB as one of their legislative agenda. He said the 8th Senate was already working closely with the executive towards getting the bill passed quickly.
The PIB was first introduced in 2008 following the submission of the report of the Rilwanu Lukman-led Oil and Gas Sector Reform Committee. It is intended to combine 16 different petroleum laws into a single document and provide a legal, fiscal and regulatory framework for the Nigerian petroleum industry, in such a way that increases the revenue from the sector to the country.
Credit: Information Nigeria
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