Senate President, Senator David Mark
• Shell declares force majeure on Bonny Light
Omololu Ogunmade and Ejiofor Alike
Tempers flared on the floor of the Senate Tuesday when the Petroleum Industry Bill (PIB) was re-presented at the chamber after several weeks of being kept at bay, with some Northern senators vehemently rejecting three sections of the bill, while others opposed its passage.
The ruckus in the Senate coincided with the force majeure declared by Shell Petroleum Development Company (SPDC) on exports of its Bonny Light crude oil grade, following its decision to shut down its Nembe Creek Trunkline (NCTL) in Bayelsa State at the weekend.
The contentious sections in the PIB dwelt on the remittance of 10 per cent of net profits of oil companies to host communities, establishment of the petroleum technical bureau in the office of the Minister of Petroleum Resources, as well as the perceived excess powers of the minister.
The Northern senators said with the existing 13 per cent derivation fund accruable to oil producing states, making a further provision for oil producing communities was misplaced.
They further criticised the proposal for the establishment of the technical bureau, also known as Frontiers' Agency, in the minister's office, adding that the bill gives excess powers to the minister.
The bureau, according to Section 9 of the bill, is saddled with the responsibility of undertaking exploration for oil across the country.
The contention is that the bureau should exist as an independent body and not as a unit in the minister's office.
While opening a debate at the second reading of the bill, Senate Leader, Victor Ndoma-Egba, said if passed into law, the bill would “fundamentally alter the legal, fiscal and proprietary dynamics and regime of our oil sector.”
He also said the bill would harmonise and consolidate no fewer than 16 other diverse and disparate laws by which the petroleum sector is currently regulated.
He further described the PIB as one of the most important bills to be considered in the chamber.
Ndoma-Egba listed the objectives of the bill to include enhancing exploration and production of petroleum resources, increasing domestic gas supply for power industry, creating a competitive business environment, establishing a flexible, stable and fiscal framework that is competitively attractive and creating a two-tier royalty and tax regime that captures the upside of crude oil and gas prices.
He added that the bill would create a commercially viable national oil company through the incorporation of the Nigerian National Petroleum Corporation (NNPC); create efficient regulatory institutions; engender transparency and accountability through the Companies and Allied Matters Act; and promote Nigerian content through indigenous participation in the oil sector, among others.
He observed that whereas the previous bill considered by the sixth National Assembly contained a provision for the funding of the Petroleum Equalisation Fund (PEF), it is missing in the new bill.
Tension, however, rose when Senator Ahmed Lawan (Yobe North) along with Senators Abdukadir Jajere (Yobe South) and Ali Ndume (Borno South) opposed the 10 per cent provision in the bill for the Host Community Development Fund.
Lawan, a member of the All Nigeria Peoples Party (ANPP), said the oil producing states do not deserve additional funds, having received N11 trillion from derivation and other funds since 1999.
He alleged that the different oil producing state governments, which have been getting the 13 per cent derivation, have nothing to show for it and that it would be unacceptable to put another burden on the people for their sake.
To buttress his allegation of mismanagement of funds by oil producing states, Lawan said in the last 13 years, they had secured N7.3 trillion in derivation funds; N2.7 trillion as appropriation for the Niger Delta Development Commission (NDDC) for over 10 years; N50 billion for the Ministry of Niger Delta between 2007 and 2012; N250 billion for the Amnesty Programme from 2009 till date; and N72 billion from the Special Presidential Initiative Fund.
Lawan argued that people from the oil producing communities had been denied benefits from all the funds by their leaders.
“The Host Community Development Fund has no place; we have to go back to the constitution and rework the 13 per cent derivation. Injustice to some is injustice to all.
“We are tired of seeing money go to private hands. The oil belongs to all Nigerians but you give concessions to the people whose areas produce the oil, but not this host community fund. This is a wake-up call to develop other alternative sources of revenue.
“I will support any legislation that will make life better for Nigerians, but l will support this bill with massive reservations. It is so bad that we don't know how much oil Nigeria sells, how many accounts the NNPC has, and there is a general lack of transparency in the oil and gas sector.
“I take exception to the bill where the Public Procurement Act appears in four sections where it ought not to appear. Section 9 of the bill does not address the concerns of many Nigerians and makes a national exploration agency just a department, which in other way does not make it effective,” Lawan said.
On the technical bureau, he explained that it should be an independent organisation and should not be mixed with the abolishment of the PEF. While Lawan was speaking, Senators James Manager (Delta South) and Heineken Lokpobiri (Bayelsa West) respectively raised points of order to object to Lawan's references to reports in some national dailies, saying the action violated Senate rules.
But Senate President David Mark, who presided over the sitting, ruled both senators out of order, in a bid to douse tension, stating that Lawan's reference to newspaper reports did not contravene Senates rule.
In his submission, Ndume kicked against the host community fund, adding that the provision be introduced as host community equity partnership, which he said would give host communities the opportunity to benefit from oil production.
He said: “The bill has a lot of inconsistencies. NNPC is supposed to be split into three, but adequate funding is not being made available for the three companies. The National Frontier Agency is supposed to stand alone.”
Also, Jajere kicked against the host community development fund and argued that the PIB would give the Minister of Petroleum Resources excess power, noting that if the bill is passed in its current form, the minister would be too powerful and uncontrollable.
On the other hand, Isa Galaudu (Kebbi North) and Ibrahim Gobir (Sokoto East) opposed the bill, saying it should not be passed at all.
But trying to make a case for the bill, Senator Ifeanyi Okowa (Delta North) said if the PIB had some imperfections, “it is our duty to correct these when the bill goes for public hearing,” adding that the input of stakeholders are taken to guide the National Assembly to arrive at a conclusion.
In his own contribution, Senator Bukola Saraki (Kwara Central) called for caution, saying: “It seems we are all concerned only with the derivation fund, but we have forgotten that the industry is bedevilled by total lack of transparency, then there is the need for us to review the bill.
"We have spent 14 years trying to put together a petroleum law; we need to address the fundamental issues. I therefore want to call for caution; we need to focus on the major issues and not the host community fund as we seem to be driving at here now.”
Meanwhile, barely 24 hours after Shell threatened to shut down its operations in the Niger Delta due to the rising incidence of crude oil theft, the company said it had declared force majeure on exports of its Bonny Light crude oil grade.
Shell spokesman, Mr. Precious Okolobo, said in a statement yesterday that the declaration of the force majeure followed the shutdown of the Nembe pipeline in Bayelsa State, after a leak was discovered.
Okolobo did not disclose the volume of crude oil affected but a source close to the company said production of 60,000 barrels per day might have been deferred.
Okolobo said the company was mobilising a team to repair the line after investigation, adding that the line would reopen for operations at a later date.
There has been a recent upsurge in crude theft on the NCTL, resulting in frequent production shutdowns and massive oil spills blighting the environment.
The pipeline was shut down for one month in December 2011, following a spill caused by two failed bunkering connections.
However, oil thieves used the one-month pipeline depressurisation as a window to vandalise the trunkline.
The same pipeline was also shut down in May last year because of incessant crude theft.