From Uche Usim, Abuja
The passage of the Petroleum Industry Bill (PIB) 2020, a document that seeks to establish a framework to create profit-driven petroleum entities, boost the economy and align Nigeria with global best practices, is probably the biggest conversation in the petroleum sector today.
The bill advocates for efficient and effective governing institutions with distinct roles within the petroleum industry. It aims at securing national oil and gas assets by lowering the temperature and agitation of oil producing communities. The PIB equally promises to promote transparency and accountability in the administration of petroleum resources of Nigeria; just as it further seeks to foster a more conducive business environment for petroleum industry operations.
One of its principal targets is increased oil revenue and improved fiscal terms, which will ultimately bring about increased royalties and a prosperous nation.
In the long term, the industry will experience increased crude oil capacity and gas production targets while establishing sustainable growth and development in host and impacted communities. Furthermore, the bill makes provisions for environmental protection and sustainability, hence making Nigeria more eco-friendly in the face of harsh climate changes. Inevitably, the expansion of the Nigerian petroleum industry will create more job opportunities, especially in sensitive hotspots like the South-South part of the country.
Interestingly, this conversation began 14 years ago.
Many Nigerians had high hopes that the all-important PIB would be passed during the Goodluck Jonathan presidency, but it ended a scorched dream.
As the first President from the Niger Delta, there was nothing to infer that PIB would not have been passed on his watch. But hopes evaporated when Jonathan’s Minister of Petroleum Resources, Allison Madueke, a Niger Delta indigene was on the saddle for four years but could not successfully lobby the National Assembly to pass the bill.
It kept oscillating between the executive and legislative arms of government.
However, between 2015-2019, a partial breakthrough was recorded, when Bukola Saraki-led National Assembly passed a component of the bill tagged Petroleum Industry Governance Bill. In the document, the National Assembly unbundled the Nigerian National Petroleum Corporation (NNPC) and created a regulatory agency. NNPC would have been fully commercialised and operated as a business venture.
President Muhammadu Buhari, citing some inadequacies, vetoed the bill. In the end, it wasn’t signed into law. Ironically, throughout the first term of President Buhari, no bill on the oil and gas sector was sent to the National Assembly for consideration. Instead, an initiative of the National Assembly, despite its many imperfections, was thrown into the waste bin.
With the fresh submission of the bill to the two chambers of the National Assembly by Buhari, there is a glimpse of hope that it may be passed before the end of the second quarter of 2021. Fears are rife that strong opposition to some aspects of the bill by host communities and International Oil Companies (IOCs), may derail the process.
Key stakeholders have rejected its key provisions on host communities’ equity shareholding and investment prospects. The percentage to be allocated to host communities has been largely responsible for the delay in the passage of PIB since 2007.
Late President Umar Musa Yar’Adua proposed 10 percent, but was rejected by lawmakers predominantly from the North in the 7th National Assembly. Goodluck Jonathan retained the same 10 per cent, but was again rejected by the National Assembly. In the 8th Senate led by Saraki, it was brought down to 5 per cent, but couldn’t be passed into law.
Turning down the 2.5 per cent provided in the current PIB, the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) at a public hearing at the Senate on the reviewed PIB, made it clear that nothing short of 10 per cent would be acceptable to them.
In a presentation by its national president, Benjamin Style Tams, the HOSTCOM declared: “As it concerns the Host Communities of Nigeria Producing Oil and Gas in Chapter 3, the Host Communities stand on 10 per cent equity shareholding after 60years of marginalisation and bearing the brunt of the negative impacts of exploration and exploitation. Today, some states have started discovering and enjoying their natural resources but the producing states and HostCom are not envious of them, therefore our position is sacrosanct.”
Experts have advocated the full inclusion of the host communities in the document to address long-standing issues like oil theft, bombing of oil assets, kidnapping for ransom, pollution and other challenges.
Oil theft, according to petroleum industry analysts, is largely an outcome of dearth of alternative sources of livelihoods.
To avert resurgent hostilities in the Niger Delta and safeguard multi-billion dollar national assets located in the region, experts say that the Federal Government must domesticate and distil locally, relevant laws, while the security structure should be reassessed and security forces marked at each distributary.
They also seek the sensitisation and employment of youth within the communities so that it will help take their focus away from oil and understand the effects of their actions on the land.
Again, marginalisation has been fingered as a major cause of oil theft. Therefore, host community members need to be satisfactorily compensated, so they can take charge of securing the communities/pipelines with the knowledge that any insecurity might adversely affect them.
The host communities’ objectives of PIB include, foster sustainable prosperity within host communities; provide direct social and economic benefits from petroleum operations to host
communities; enhance peaceful and harmonious co-existence between licensees or
lessees and host communities; and create a framework to support the development of host communities.
In the extractive industries, experts reckon that business impact on host communities has been more negative than positive. This is especially true for the local
communities where they operate and where their impacts are mostly felt.
Mrs Bekeme Masade of CSR-In-Action in a recent presentation called for deeper community relations and engagement.
She emphasised that the two strategies are combined to achieve a lasting and mutually beneficial community relationship.
A United Nations study shows that where communities and stakeholders are poorly engaged, marginalised or excluded from the dialogue in the development process, they are almost certain to begin to oppose the development. This is particularly the case where they have not been consulted on whether a development should proceed at all, especially if there is the risk that they will bear the impacts and fail to benefit.
Experts have also harped on the need to provide a cohesive, collaborative and operational guideline for community engagement and sustainable development of host, impact and access communities.
They also want a standardised approach to community engagement, to reduce instances of conflict (leading to reduction in damage to private and national infrastructure yielding greater returns for the national economy.
A study to determine the impact of 13pr cent derivation funds on development in the Niger Delta has listed several factors responsible for the near-zero impact of the monthly subvention on the oil-rich region over the years.
At a validation workshop for the study held virtually recently, discretionary transfers, local Dutch disease effects, lack of consultation and poor governance were listed as major factors dwarfing the growth of the Niger-Delta region despite the 13 per cent derivation allocation.
As solutions to these issues, the report recommended the legislation of fiscal rules that guide the expenditure and management of natural resource revenue in the Niger Delta, the institution of transparency structures, and the implementation of memorandums between the state governments and the oil-producing communities to ensure that the needs of the host communities are properly understood and met – while promoting open governance in the states.
The presentation of the study report was made by Mrs. Funmi Adesanya, Project Lead – ACIOE Associates, who highlighted the impact of derivation funds in eight states of the Niger-Delta region, excluding Cross River State which is no longer deemed oil-producing. It was also stated by the Project Lead that whilst the Federal Government has consistently made allocations to the oil-producing states as enshrined in Section 162 (2) of the Constitution, the state governments have full reign over the management of the 13 per cent derivation funds received from the Federation Accounts Allocation Committee (FAAC). It was observed that the states adopt either a Pooled Revenue Structure or Revenue Management via a Development Commission for the benefit of oil-producing communities, like with Ondo State Oil-Producing Areas Development Commission (OSOPADEC). It was also mentioned that states that have revenue management commissions are enacted by laws and these laws amongst other things prescribe the funding percentages of these commissions.
However, there is no fixed percentage to these Commissions across these states, with states applying varied percentages based on state laws.
In his remarks, the Managing Director of ACIOE, Mr. Ekenem Isichei stated that the findings of the report were corroborated by data obtained from the Office of the Accountant-General, NEITI, State Government financial statements where possible and interviews with host community members.
Regarding the impact of derivation funds in the Niger Delta, particularly in host communities, it was noted that Social Capital Development in these communities have remained deplorable over the review period, as poor education, healthcare
infrastructure and standard of living continue to be a resonating issue. The presentation was followed by remarks from key public officials and stakeholders. Mr. Edobor Iyamu, the Senior Special Assistant to the President on Niger Delta Affairs, acknowledged the efforts of the organizers of the workshop and commended the team for a job well done. He also stated that from his experience working in the Niger-Delta region, the locals’ interest have always been premised on what the Federal Government is doing to bring development to the Niger Delta. He noted that most
Niger Delta indigenes are oblivious to the fact that monies are allocated for development in those communities to the state governments. He stated that a lot more could be done in terms of development in the region. In his view, he suggested that more discussions should be around the quantum and utilization of the derivation fund in the Niger-Delta region. He noted that the Federal Government has embarked on some initiatives to bring development and positive benefits to host communities. He highlighted the Petroleum Industry Bill (PIB) before the National assembly, adding that implementing the bill would help bring tangible benefits to the Niger-Delta.
Additionally, comments were made by Mr Charles Achodo, Special Assistant to the Ministry of Niger Delta Affairs.
He observed that the issues within the Niger-Delta are around the need for more resources or delivery modalities to bring development across the Niger Delta. He noted that more emphasis should be given to the relationship between the percentage of derivation allocated and projects carried out in host communities – noting the need for a comparative study across the region. Further comments were made by Mr Dekor Dumnamene, National Assembly Chairman, Host Communities Committee who stated the cruciality of the subject of derivation funds. He noted that there exists a big issue around defining the concept of “host communities”, and managing the 13 per cent derivation funds in the Niger-Delta region. He stated that the Committee on Host Communities would pay visits to the host communities in the Niger-Delta region to ensure that they benefit from the Federal Government initiatives to bring development in those regions. The workshop ended with the team stating that copies of the report and recommendations made would be shared with the National
Assembly, with the hopes that the recommendations would be considered and implemented.
Participants from various sectors including high-level public officials, Civil Society Organizations (CSOs), natural resource management experts and the media reviewed and validated findings from the impact assessment study.
The Host Communities of Nigeria (Hoscon) has repeatedly called for the government to do more to help out the people in oil and gas producing areas, warning that it has stopped supporting a ceasefire agreement.
Hoscon’s Chairman, Prince Mike Emuh, insists that the amnesty and ceasefire had provided no results.
Niger Delta militants have pushed Hoscon for benefits from the amnesty but have seen no benefits.