Tag: Petroleum Industry Act

In what seems like a big support to the clamour by host communities that oil and gas companies operating in the country should site their headquarters in their host communities, the senate has given its three committees on Petroleum Resources Upstream, Downstream Petroleum Sector and Gas the mandate to liaise with the Ministry of Petroleum Resources and the Presidential Implementation Committee on the Petroleum Industry Act (PIA), to facilitate the relocation of oil and gas companies operating in Nigeria to their various operational bases in host communities to ensure unhindered operations.

Sponsored by Senator Albert Bassey Akpan and 23 other Senators, the motion seeks to compel oil and gas companies operating in Nigeria to relocate to their host communities and operational bases in order to reduce the high cost of production militating against maximum revenue from crude oil and gas sales to the federation account. The senators noted that the issue of insecurity and militancy brandished as excuses has been addressed by the Petroleum Industry Act, 2021, which placed certain responsibilities on the security, peace and safety of oil and gas infrastructure on the host communities to safeguard and ensure peaceful coexistence between oil and gas companies and their host communities.

With the relocation to these areas, the workers will also relocate to these areas and as such the government of these areas will benefit from the revenue, that is payment of tax, within the localities that they are exploiting this oil and gas, because the workers will no longer claim that they are not resident in these areas.

Members of the Senate this Wednesday confirmed the appointments of the board members of the Nigerian Upstream Regulatory Commission (NURC), in line with the provisions of Sections 11 and 18 (1-5) of the Petroleum Industry Act, 2021. The Senate Committee on Petroleum Resources had submitted a report, which showed that the nominees demonstrated sufficient knowledge of the workings of the petroleum industry, especially the upstream petroleum sector, as well as the economics of petroleum exploration and production. This formed the basis for the confirmation.

By the approval of the board members for the commission, the Department of Petroleum Resources and its leadership led by Engr. Sarki Auwalu has ceased to exist. The NURC has automatically replaced the Department of Petroleum Resources and assumes its responsibilities. The Petroleum Industry Act, 2021 gives NURC enormous and huge responsibility to set and establish the Commission. All activities in the upstream subsector of the oil and gas industry will hence forth revolve around this new board.

The members of the board are Isa Modibbo – Chairman; Gbenga Komolafe – Chief Executive; Hassan Gambo – Executive Commissioner, Finance and Accounts; and Rose Ndong – Executive Commissioner, Exploration and Acreage Management. The new board has a responsibility to provide a solid and stable foundation for Commission.

In line with the provisions of the Petroleum Industry Act (PIA), 2021, signed into law recently by the president Mahammadu Buhari, the NNPC Limited has been incorporated as a limited liability company by the Corporate Affairs Commission (CAC). The Act requires the Minister of Petroleum Resources under section 53(1) to cause for the incorporation of the NNPC Limited within six months of the enactment of the PIA in consultation with the Minister of Finance on the nominal shares of the Company.

Since the passing into law of the PIA, 2021, the president had in September ordered the Group Managing Director of the NNPC, Mr Mele Kolo Kyari, to take necessary steps to ensure that the incorporation of the NNPC Limited in accordance with the provisions of the PIA 2021. Consequently, the preside had also approved the appointment of the Board and Management of the NNPC Limited, whose tenure are to commence from the date of incorporation of the company with Senator Ifeanyi Ararume named as the Chairman of the Board.

With the incorporation of NNPC limited, all assets and liabilities of the NNPC will be transferred to NNPC Limited, government has also indicated interest to fulfill relevant sections of the Act, one of which is the intention to set in motion the process of immediate commercialization and privatization of not only the operation of, but also a possible future private ownership of shares in the NNPC Limited. NNPC limited also retains all Guarantees against government and NNPC as well as their employees and Conditions of Service.

So far, the government has shown readiness to implement that Act. It is expected that this swiftness will subsist. The PIA Act especially as concerned with the NNPC limited holds a lot of promises which can only come through if well implemented. The NNPC Limited is expected to compete with the best of other national oil companies globally, and take its pride of place among corporate giants of repute not only in Nigeria but also in the global oil and gas industry.

The Nigerian government has launched the Opening Extractives Programme (OEP). OEP is a global five-year scheme meant to accelerate progress of beneficial ownership transparency in selected resource-rich countries. The programme is a global initiative to support national governments to deepen implementation of beneficial ownership (BO) transparency.  As one of the countries selected for the pilot countries for beneficial ownership, OEP will help Nigeria dismantle the several roadblocks erected by companies operating in the sector in the past, and unveil the beneficial owners (BO) or real owners of assets in the Nigeria's oil, gas and mining sectors. It will accelerate open disclosure of future oil and gas assets' ownership in the country. It is part of the ongoing reforms in the extractive industries meant to stem corruption and money laundering in the sectors.  The implementation of OEP will strengthen natural resource governance in the country, and also help resource-dependent nations, like Nigeria to earn more money from their resources as information is made easily accessible.

One of the dangers to the collective development aspirations of developing nations, especially Nigeria was secrecy in corporate ownership of assets in the extractive industries. Anonymous companies remained a major obstacle to fighting money laundering and corruption as they enable political actors carry out their criminal acts thereby preventing Nigeria from getting the full benefits of its natural resources. Anonymous companies have tentacles across the globe. Opacity in any part of the globe is a threat to openness all over the world and regardless of the location, the world is at risk of the dangers posed by this anonymity. Therefore, lifting the veil of secrecy over the ownership of extractive assets is very vital. This is even more important, given the country's history of Nigeria in the fight against corruption, insecurity, terrorism financing, money laundering and illicit financial flows which have become the bane of the society. The new Petroleum Industry Act (PIA) now mandates the upstream industry regulator to disclose beneficial owners of licences, leases and others. The PIA has therefore brought about the much-desired assurances and trust for investors in the Nigerian oil and gas industry.

Although Nigeria has in the past committed to opening a register of all beneficial owners of oil companies operating in Nigeria, signing of open government partnership and deployment of open data instruments, the launch of OEP has institutionalized beneficial ownership reporting, thereby moving away from the experimental stage and providing for sanctions for defaulters. OEP has helped the Nigerian Extractive Industries Transparency Initiative (NEITI) develop the first set of templates for gathering information and data on who the real owners of Nigeria's extractive assets are. This completely new area of work for NEITI described as a “game changer” has helped to push the boundaries of transparency and accountability in the extractive industries. Part of the challenges encountered so far in the use OEP include outright refusal of some companies to fill the NEITI audit templates specifically designed for BO reporting, discrepancies between beneficial owners' data and the one provided by the Corporate Affairs Commission (CAC), etc.

In order ensure that the menace of secrecy in ownership of oil and gas nstitutions is halted, NEITI has signed a Memoranda of Association (MoUs) with the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Nigerian Financial Intelligence Unit (NFIU). It has also fully automated its data collection process. The implementation of this global standards for the promotion of an open and accountable system in the management of extractive resources will make a significant impact on Nigeria.

On its part, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has fully committed to working with NEITI to deepen Nigeria's implementation of contract transparency and beneficial ownership disclosures in the country in a bid to ensure that the revenues from natural resource assets support national development and help reduce poverty. NURC has implemented beneficial ownership reporting system, it is a statutory requirement which demands full disclosure of beneficial ownership information. It has developed the Nigerian Oil and Gas Asset Beneficial Ownership Register (NOGABOR) portal by the commission's ICT team and is live. The commission is also engaging the oil and companies to ensure their mandatory compliance. It has also committed to collaborating on maintaining information on beneficial ownership, maintain data on companies that own extractive licences as well as create a better and healthy business climate. This is to grant citizens the opportunity to be aware of who they are doing business with or competing against and also to encourage appropriate stakeholder engagement as part of Nigeria's open government action plan.

OEP will be jointly implemented by the Extractive Industries Transparency Initiative (EITI) and Open Ownership. So far, the Oil Producers Trade Section (OPTS), and a body of 29 major oil companies, have pledged commitment to the OEP.