By Henry Uche, Lagos
Following the signing of the Petroleum Industry Bill into law (Petroleum Industry Act 2021) by President Muhammadu Buhari on Monday, August 16, and the return of same to the national assembly by the president for the amendment of sections 11(2)(g); 34(2)(f) and 34(2)(g), the Institute Of Chartered Secretaries and Administrators of Nigeria (ICSAN) has taken a position and prayed that its recommendations are heeded.
In its Position Paper signed by the Registrar/CEO, Taiwo Ganiyat Olusesi, ICSAN enjoins the Federal Government to ensure that a proper governance structure is built around the new organ: that is, established principles of Corporate Governance should be embedded in the NNPCL system.
It also recommended that the appointment of the directors to its board must be based purely on merit with emphasis on issues of relevance, board requirements, and diversity in the board composition, saying that there must be strict adherence to the notions of Disclosure and Transparency while ethical observances must be ingrained in the template of the company’s operations.
The Institute maintained that there must be an adequate framework of risk management and control system which should incorporate well-articulated whistleblowing policy, while proper checks and balances must be built into the system to ensure that no individual, unit or department can undermine or disapply the control system at his or her whims and caprices.
‘We request that NNPCL should always have a board to oversee and guide the management to achieve the expected objectives. There should be an annual board appraisal with the corporate governance evaluation of NNPCL, which should be published.
‘Without putting in place all these governance mechanisms, the envisaged metamorphosis of the moribund NNPC into a more efficient and dynamic NNPCL will not be realised. The exercise will simply be a mere change of name without a change of anything else, with all its concomitant business-as-usual tendencies,’ the Institute stated.
ICSAN stressed that the same recommendation made earlier in relation to NNPCL should apply to other governance structures created under the Act such as the Nigerian Upstream Regulatory Commission which is responsible for the technical and commercial regulation of the upstream petroleum operations and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, which is responsible for the technical and commercial regulation of the midstream and downstream operations in Nigeria.
‘As a public interest entity, NNPCL must have a qualified and experienced company secretary to oversee its Secretariat and play his / her role as the compliance officer responsible for the entrenchment of good corporate governance in the company. The qualification and experience must not be less than that of a company secretary of a public interest entity and the recruitment process must be competitive. The status of this management staff, duties, functional and administrative roles, responsibilities, reporting lines and mode of determination must be clearly stated in writing by the Board.’
On deregulation of the downstream sector and the need for effective monitoring, it urges thus: “It should be borne in mind that vested interests under the old regime in form of unscrupulous marketers, profiteers, smugglers, etc. will do everything within their might to frustrate a new regime that is threatening their illicit sources of wealth. Therefore, we will enjoin the Federal Government to ensure that there is proper and adequate monitoring of the system to discourage all manner of sharp practices including hoarding of products to create artificial scarcity for price increment. The Federal Government should be proactive in devising ways and measures to counter the unscrupulous elements that may attempt to sabotage the interplay of demand and supply in a deregulated market.
‘We believe that if the free market should determine the prices of these essential commodities, then at least, there should be no extraneous factors taxing the industry to the detriment of the populace, majority of whom are indigent. Deregulation regime would also translate into speedier granting of more licenses to investors in the downstream sector, one of the fallouts of which will be the establishment of more refineries.’
The Institute urged the government to ensure strict enforcement of the provisions of this Act, especially concerning environmental pollution, health and safety so that the greed for short-term profit on the part of some private investors does not compromise the loftier objective of sustainability.
On effective overall implementation, it is trite that many good laws in Nigeria have either not been exploited to achieve optimal gains, or worse still, miserably fail to procure their objectives due to poor implementation.
ICSAN expressed that all the laudable objectives of the PIA 2021 – which include exploiting its fiscal framework to maximising profits, making the nation’s oil and gas industry more transparent and efficient, minimising the pollution of the environment through gas flaring, and eliminating corruption in the system by removing subsidy and its concomitant illegal exportation of oil, etc – would be a mere mirage without effective implementation of the provisions of this Act.
The Institute enjoined the Federal Government to be strictly committed to strict implementation of this law, affirming that the signing into law of the Petroleum Industry Bill was only the beginning of the journey. Therefore, faint-hearted commitment to its full implementation would br an ill wind that will blow nobody any good.
ICSAN called for a conscientious public enlightenment campaign to elucidate the grey areas and provisions, for instance; the provisions on the Thirty per cent (30%) Frontiers Exploration Fund requires more clarification to avoid mistrust and apprehensions among stakeholders.
‘We hereby urge the Federal Government through the Federal Ministry of Petroleum Resources, requisite parastatals and regulators to embark on massive stakeholders’ enlightenment campaign to dispel the confusion by illuminating the provisions of the Act and revealing their implications.
‘Regarding the controversial provisions on issues such as three per cent (3%) Host Community Trust Fund (S. 240 (2) and Frontiers Exploration Fund (Part 111 Clause 9 (4), the Institute enjoins the Federal Government to be responsive to the concerns, reactions, and yearnings of the peoples by construing them as constructive feedback which should be thoroughly investigated and considered as the Act is being amended.
‘There should be wider consultation, all-inclusive discourse and adequate public hearings now that the law has gone back to the NASS to ensure that all shades of public opinions are well-considered and that the resulting amended law will not only be an improvement on the present one but also one that will be more generally acceptable.
‘We believe that if the recommendations offered above are adhered to, the nation will succeed in having an effective legal framework it deserves in the oil and gas sector as is the case with other progressive nations.
‘To consolidate on the gains of this epoch-making legislation, we recommend that this Act should be subject to review at least every five years to accommodate not only the recommendations contained in this paper but the genuine yearnings of the stakeholders as well as other requisite exigencies that might come to light during usage of the law,’ ICSAN added.