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The new PIB may scrap DPR, PPRA, others

The PIB represents the most comprehensive review of the legal framework for the oil and gas sector in Nigeria.

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There is a strong indication that if the Petroleum Industry Governance Bill (PIGB) is finally passed into law by the National Assembly, the existing Department of Petroleum Resources (DPR), the Petroleum Products Pricing Regulatory Agency (PPPRA) and Petroleum Inspectorate (PI) may be scrapped, thereby giving way for the Nigeria Petroleum Regulatory Commission to take over their functions.

The Petroleum Industry Bill (PIB) is currently under legislative consideration and represents the most comprehensive review of the legal framework for the oil and gas sector in Nigeria since the industry began commercial operations in the 1960s. The Petroleum Industry Bill (PIB), an omnibus law is meant to regulate the entire sphere of the industry and repeal most existing oil and gas legislations.

READ: Shell to focus on Nigeria, Gulf of Mexico and others as it seeks to cut 40% of costs

No doubt, it signals the dawn of a new era; an era in which restructuring and transformation could address many of the issues that have dominated the oil and gas industry in Sub-Saharan Africa’s second-biggest economy.

The Petroleum Industry Bill (PIB) seeks to increase government revenue from oil, and as well lay down a strengthened legal and regulatory framework for the Nigerian oil industry, set up structures for the establishment of commercially driven petroleum entities; and promote transparency in the administration of Nigerian petroleum resources. Succinctly put, the bill seeks to address the problem of administering petroleum resources in line with global best practices, and to provide for efficient and independent sector regulation.

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READ: NNPC, partners to invest 53% of COVID-19 N21 billion intervention

The extant regulatory framework of the oil and gas sector which includes the Ministry of Petroleum Resources, NNPC Act 1997, the Petroleum Act 1969, the Oil and Pipelines Act 1990, the Petroleum Profit Tax Act 1959, the Petroleum Products Pricing Regulatory Act 2003 amongst others have had more ruinous effect on the oil and gas sector, as they have not promoted a culture of transparency in the oil and gas sector. They have also not created the right opportunities to tackle gas flaring, oil spillage and Illegal bunkering in Nigeria.

The key provisions of the bill are as follows:

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1. The Minister of Petroleum

The Minister of Petroleum is empowered to formulate, monitor and administer government policy in the petroleum industry; exercise general supervision over the affairs and operations of the petroleum industry in accordance with the provisions of this Act; report developments in the petroleum industry to the government; represent Nigeria at international organizations on petroleum matters; promote an enabling environment for investment in the Nigerian petroleum industry; negotiate treaties or other international agreements on matters pertaining to petroleum on behalf of the Government, shall have rights of pre-emption of petroleum and petroleum products marketed under any license or lease, in the event of a national emergency.

READ: Buhari announces $200m intervention funds for local oil firms, disbursements for mortgages

2. Establishment of the Nigerian Upstream Petroleum Regulatory Commission

This commission is to administer and enforce policies and regulations relating to all aspects of upstream petroleum operations and also to issue, administer and enforce compliance on the issuance of licenses and leases in the upstream sector. It is also to establish, monitor, regulate, and enforce health and safety measures relating to all aspects of upstream petroleum operations, publish reports and statistics on the upstream sector, validate and certify the evaluation of national hydrocarbon reserve, manage and administer all upstream petroleum data for all unallocated acreage. This Commission on the approval of the minister, is to allocate petroleum production quotas, and develop cost benchmarks for upstream petroleum operations performance amongst other functions, as laid out in the bill.

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3. Establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority

This authority is to administer and enforce policies, laws and regulations relating to all aspects of midstream and downstream petroleum operations, and to issue and administer licenses in the midstream and downstream sectors. The agency is also to ensure and enforce compliance with the terms and conditions of all licenses, permits, and authorizations issued in respect of the midstream and downstream petroleum operations; set and enforce approved standards for designs, procurement, construction, and maintenance for all plant; installation and facilities pertaining to midstream and downstream operations.

This authority is also laden with the responsibility of inspecting measurement equipment, and other facilities for midstream and downstream petroleum operations. It is also to facilitate the supply of gas to the strategic sectors, in accordance with the approved national gas pricing framework, implement customer protection measures in accordance with the provisions of this Act, regulate and ensure the supply, distribution marketing, and retail of petroleum products as may be prescribed by regulations, and shall also do other things that are necessary and expedient for the effective and full discharge of any of its functions under this Act, amongst other functions as stipulated in the bill.

4. Incorporation of the Nigerian National Petroleum Company Limited

The Minister of Petroleum shall within 6 months from the commencement of this Act, cause to be incorporated under the Companies and Allied Matters Act, a limited liability company, which shall be called Nigerian National Petroleum Company Limited (NNPC Limited).

The Minister shall at the incorporation of NNPC Limited, consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted, which shall form the initial paid-up share capital of NNPC Limited, and the Government shall subscribe and pay cash for the shares.

READ: Petrol supply drops by over 23% due to decline in consumption

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Ownership of all shares in NNPC Limited shall be vested in the Government at incorporation, and held by the Ministry of Finance Incorporated on behalf of the Government.

The Minister of Petroleum and the Minister of Finance shall determine the assets, interests, and liabilities of NNPC to be transferred to NNPC Limited or its subsidiaries, and upon the identification; the Minister shall cause such assets, interests, and liabilities to be transferred to NNPC Limited.

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Assets, interests, and liabilities of NNPC not transferred to NNPC Limited or its subsidiary, shall remain the assets, interests, and liabilities of NNPC, until they become extinguished or transferred to the Government.

NNPC shall cease to exist, after its remaining assets, interests, and liabilities other than its assets, interests, and liabilities transferred to NNPC Limited or its subsidiaries under subsection (1) of this section, shall have been extinguished or transferred to the Government.

READ: PIB; Will the jinx be broken this time around?

5. Granting of Licenses and Leases

Petroleum exploration license may be granted to qualified applicants, to explore petroleum on a speculative and non-exclusive basis.

Petroleum Prospecting License may be granted to qualified applicants, to carry out petroleum exploration operations on an exclusive basis. A Petroleum Prospecting License for onshore and shallow water acreages, shall be for duration of not more than 6 years, comprising of an initial exploration period of 3 years, and an optional extension period of 3 years. A petroleum prospecting license for deep offshore and frontier acreages, shall be for duration of not more than 10 years, comprising of an initial exploration period of 5 years, and an optional extension period of 5 years.

Petroleum mining lease may be granted to qualified applicants to search for win, work, carry away and dispose of crude oil, condensates, and natural gas. A petroleum mining lease may be granted for a maximum period of 20 years, which terms shall include the development period.

READ: New PIB amends royalties by oil firms as Sylva clarifies position on scrapping of NNPC

6. Abolition of Gas Flaring

Gas flaring has been said to be a major destroyer of the ozone layer, and this has a very detrimental effect on climate all over the world, as is presently occurring. The United Nations Framework Convention on Climate Change (UNFCCC), has called on countries to put an end to greenhouse effect. Despite not having any binding emission target under the UNFCC, Nigeria in its own way, has responded under the proposed bill to illegalize and abolish gas flaring.

Accordingly, the new bill demands strict adherence to a gas flaring plan, along with gas utilization plans, to be submitted by all oil and gas operators within six months of the coming into effect of the law, indicating data on their daily flare quantity, reserve, location, composition. Statistics posit that Nigeria losses a lump sum of money every year to gas flaring, such that its abolition is a wise way of saving this money, and making it available for the usage of the economy and its development.

READ: President Buhari to scrap NNPC, PPPRA as he submits new PIB to National Assembly

7. Domestic Gas Obligations

The PIB provides that the Nigerian Upstream Regulatory Commission shall, having regard to the needs of the domestic gas market and in accordance with the National Gas Master Plan, impose Domestic Gas Supply Obligations (DGSO) on lessees. As proposed, a lessee who fails to comply with its DGSO, shall not be permitted to make supplies to gas export operations, and where the lessee only supplies gas to export operations, the lessee shall be directed to suspend operations. This section will oust the existing Department of Gas in its functions and responsibilities.

8. Deregulation of the Downstream Sector

The PIB provides that the pricing of petroleum products in the downstream product sector, shall be deregulated to ensure market related pricing, adequate supply and removal of economic distortions, and creation of a fair market value for petroleum products in Nigeria’s economy. However, although pricing is to be left to market forces, the Bill proposes to safe- guard the interests of consumers, by providing that the Nigerian Midstream and Downstream Petroleum Regulatory Authority shall oversee tariffs for transportation by pipelines, bulk storage for petroleum products, and regulated open access facilities. The Nigerian Midstream and Downstream Petroleum Regulatory Authority will also be responsible for market monitoring and promotion of competition. This will oust the present Petroleum Pricing Products Regulatory Agency (PPPRA), which is charged with the same responsibilities, but has largely been inefficient till date.

9. Petroleum Host Communities Fund

The objective of the Bill is to provide direct social and economic benefits from petroleum operations to host and impacted communities. Also, the Bill seeks to enhance peaceful and harmonious coexistence between E & P companies on one hand, and host and impacted communities on the other – with an objective to foster sustainable and shared prosperity amongst the oil and gas companies and host communities.

The bill stipulates that an annual contribution of 2.5% of the actual operating expenditure (OPEX) of the E&P Company, will be placed into a fund. The funds available in the Endowment Fund are to be allocated in the following manner; 70% of the Endowment Fund shall be allocated to the Capital Fund, out of which the Board of Trustees shall make disbursements for projects in each Host Community, as may be determined by the Management. Any sum not utilized will be rolled over and utilized in subsequent years; 20% of the Endowment Fund shall be allocated to the Reserve Fund. The money is to be invested in the Trust when there is a cessation in the endowment payable by the settlor; 10% of the Endowment Fund shall be allocated to the settlor’s Special Project Fund to be utilized solely by the settlor for special projects, aimed to assist and support the host and impacted communities, provided that at the end of each financial year, the settlor shall render a full account of the utilization of the Special Project Fund to the Board of Trustees, and where any portion of the Fund is not utilized in a given year, it shall be returned to the Capital Fund.

If the PIB is eventually passed into law, it will contribute to lowering the oil theft rates and regular rifts, if host communities are satisfied.

READ: Has petroleum product deregulation finally come to roost?

10. Fiscal Regime under the PIB

The Bill proposes to replace the existing petroleum profits tax with a Nigerian Hydrocarbon Tax (NHT), at the rate of 50 per cent for petroleum operations onshore, and in shallow water fields; and 25 per cent for petroleum operations in deep-water, bituminous and frontier acreages. In addition to NHT, the Bill also proposes companies income tax at the rate of 30 per cent on upstream petroleum operations (which under the existing regime are not subject to companies income tax). Where petroleum operations fall in geographical areas that are subject to different tax rates, NHT shall be levied on the proportionate parts of the profits arising from such operations.

1 Comment

1 Comment

  1. Jumbo George

    October 5, 2020 at 12:23 pm

    Please the NNPC, should be run the way LNG has been run for years now, secondly License should be given to others multi national company, like chevron and others to build more refineries in the country, in order to create more jobs, thanks.

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#EndSARS: Three people killed in Ondo state – Commissioner of Police

The Ondo State Police Command has confirmed the death of three persons believed to be two policemen and a civilian.

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#EndSARS: Three people killed in Ondo state- Commissioner of Police

Following the aftermath of the #EndSARS protest, which morphed into a series of violent demonstrations, killings, and lootings nationwide, the Ondo State Police Command has confirmed the death of three persons believed to be two policemen and a civilian.

According to a report on Vanguard, the Commissioner of Police (CP) in the state, Mr. Bolaji Salami, revealed this fact while parading 18 suspected looters and arsonists before newsmen in Akure on Tuesday.

What you should know

At the peak of the demonstrations, Nairametrics reported how some suspected hoodlums attacked a correctional centre and set a police station ablaze in Ondo state.

What they are saying

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Explaining how the civilian casualty was recorded, Mr Salami said, “The civilian casualty was one of the three-man gang that attempted to rob a new generation bank in Ondo town.”

He noted that criminal elements in the society used the EndSARS protest as a cover-up to execute their sinister motives which range from arson, looting, stealing, armed robbery amongst others.

(READ MORE:#EndSARS: UK ready to support genuine reform of police in Nigeria – British High Commissioner )

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Expatiating further, he said, “A total of 18 suspects were apprehended in connection with the crimes by the police at different locations of the state.

“Out of the figures, 9 suspects were nabbed for alleged arson, looting, murder, and aiding of detainees’ escape.

“For those who looted our property, burnt our homes, killed our colleagues, denied us the right to decent living, I am glad to say that the law is not sleeping and will take its course on you,” he said.

Lastly, Mr Salami explained that two policemen paid the supreme price while discharging their duties in Ore, Odigbo Local Government Area (LGA); and Ondo town, in Ondo East LGA respectively.

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Buhari approves free business name registration for 250,000 SMEs

President Buhari has approved free business name registration with the CAC for 250,000 businesses across the nation.

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Buhari approves free business name registration for 250,000 SMEs, IMF, tax, rate, Buhari’s Budget of Sustaining Growth & Job Creation (Full text), Nigeria generates N1.36 trillion from corporate tax, others as oil revenue drops , Nigeria-Algeria highway gets Buhari's approval , Earnings from rich petroleum resources not enough to cater for Nigeria – Buhari , Tax: Buhari appoints Muhammad Nami as FIRS boss, Subsidy economics

President Muhamadu Buhari has approved free business name registration with the Corporate Affairs Commission (CAC) for 250,000 businesses across the nation.

This was announced on Tuesday evening by the Media aide to the President, Bashir Ahmad.

READ: Nigerian firms risk delisting over failure to file annual returns – CAC

READ: CAC may reduce Business registration fee

READ: #EndSARS: Lagos State Judicial Panel has my full support – Buhari

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READ: SMEDAN to move 40 million informal businesses to formal sector, registers MSMEs

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READ: Healthplus: NASSI asks FG to intervene

“President Buhari has approved free business names’ registration for 250k MSMEs nationwide; according to the CAC, 6,606 names in each of the 34 states, Abuja will have 7,906, Lagos 9,084 & Kano 8,406,” he tweeted.

“The free registration commences today, visit cac.gov.ng for details” he added.

READ: #EndSARS: Access Bank announces N50 billion interest-free facility for businesses

READ: FIRS gives tax defaulters a 30-day ultimatum

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What you should know

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This comes after Nairametrics reported earlier this month that the CAC had announced it would begin registering companies within 48 hours, approve names the same day, and ensure 5-day completion for other post-incorporation services not available electronically.

READ: Where to invest your N5m to N500m safely and securely

READ: CAC delists over 40,000 dormant companies

Bottomline

Since the end of the #EndSARS protests, the Federal Government has been working on packages that are perceived as necessary for addressing the issues of large youth unemployment, which is viewed as a catalyst for the massive turnout during the protests.

READ: CAC to reduce business registration period to 6 hours

READ: Nigerians indifferent to lower CAC registration fee

The National Economic Council (NEC) has set up a committee to meet the needs and demands of Nigerian youths behind the #EndSARS protests. The head of the Committee is Vice President Yemi Osinbajo, with one of the frameworks being “A social security framework for the youths and Nigerians to deal with the problem of unemployment and poverty in the country.”

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The free business registration coming this period will help businesses that can’t afford the registration fee to get their business registered and timely.

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Sanwo-Olu reads riot act to hoodlums over ethnic clash, promises compensation

Sanwo-Olu has assured residents of Fagba who were affected by the ethnic clashes that the state government would assist to alleviate their pains.

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#EndSARS: Judicial Panel of Inquiry and Restitution to include Lekki toll gate incident – Sanwo-Olu, Lagos approves resumption of all classes in public, private schools, Lagos takes major step towards delivery of Fourth Mainland Bridge, Lagos to construct rail line to airport terminal for international passengers, COVID-19: Lagos State to begin curfew on Sunday to disinfect metropolis, Lagos state government discharges 7 more coronavirus patients, Lagos state will reverse to full lockdown, Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office, Lekki regional road: Sanwo-Olu revokes land titles of Elegushi Royal family

Lagos State Governor, Mr. Babajide Sanwo-Olu, has read the riot act to miscreants and hoodlums in Lagos, warning them to be law-abiding and peaceful or face the full wrath of the law.

The Governor issued this warning during a visit to Fagba in Ifako-Ijaiye Local Government Area of Lagos State, to assess the level of destruction of properties caused by last week’s ethnic clash between the Yoruba and Hausa communities in the area.

READ: #EndSARS: A day by day timeline of the protest that has brought Nigeria to its knees.

READ: Tribal clash: Sanwo-Olu visits Fagba, calls for peaceful co-existence

READ: What led to the Ogba tanker explosion- Lagos

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Sanwo-Olu was accompanied by his deputy, Dr. Obafemi Hamzat; Secretary to the State Government (SSG), Mrs. Folasade Jaji; Special Adviser to the Governor on Education, Mr. Tokunbo Wahab; and Head of Service, Mr. Hakeem Muri-Okunola.

He assured residents of Fagba who were affected by the ethnic clashes that the state government would assist to alleviate their pains.

READ: #EndSARS: Lagos State needs N1 trillion to rebuild losses – Gbajabiamila

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READ: Kano State presents N147.9 billion budget for 2021 fiscal year

Sanwo-Olu said, “The level of destruction that I have seen here is colossal, it is unfortunate. Enumeration would start immediately by the two local governments. The Council Chairmen and all the community leaders will come together and come up with a list of those whose properties have been destroyed.

“The security operatives are here, they can hear everything. We are using this opportunity to give notices to all the miscreants in the neighborhood and that is why I am looking at you.

“If you know that you are not doing any work and that you are one of the people that have caused this trouble, we are giving you the final notice because we are coming to clear this whole place.”

READ: Buhari approves free business name registration for 250,000 SMEs

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READ: #EndSARS: Kwara State sets up N500 million recovery fund for businesses destroyed by hoodlums 

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Stressing the need for miscreants to vacate Fagba, Governor Sanwo-Olu said, “We are coming to clear this whole place and we will make sure that you do not disturb or harass the peace-loving people that we have in this neighborhood. We have the Hausa community, Igbo community, and Yoruba community, and they are living well.

“You need to look for what to do, we will not allow you to come and tarnish the image and the peace that we have in Fagba and in Lagos State as a whole.

READ: FG set to create at least 5 million jobs for youths in the power sector – Minister of Power

READ: #EndSARS: FG creates new N25 billion Youth Fund, to increase to N75 billion in 3 years

“We will make sure that we also come and see what we can do to help the youth. And once we do that, we are giving you an opportunity to remain law-abiding and be peaceful. If not, we will be hard and be very decisive on all of you.”

Sanwo-Olu said the state government would not leave the people to bear their pains alone, following the destruction of properties worth billions of naira in Ifako-Ijaiye Local Government Area and Ojokoro Local Council Development Area (LCDA).

He said, “We will do the compensation as soon as we get the breakdown of the enumeration. We might not be able to give you all the full benefits, but we will ensure that we do not leave you alone. 

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READ: #EndSARS: LCCI asks FG to assist Lagos in rebuilding process

READ: #EndSARS: Fashola discovers strange camera at Lekki Tollgate, Nigerians react

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“Please let’s be sincere about it. If you don’t have more than two shops in this place, don’t say you have eight. If you don’t have more than two rooms, don’t say you have nine rooms. That is the only way the government can assist well and we can help.

“I have come here to see things myself and I can assure you that we will not leave you to bear the pains alone. The government will try and help out,” Sanwo-Olu concluded.

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