The attempt by the Ministry of Petroleum Resources to assume control over the proposed Incorporated Joint Ventures (IJVs) and the Asset Management Company to be created by the new Petroleum Industry Bill (PIB) may set the ministry on a collision course with the Nigerian National Petroleum Corporation (NNPC), THISDAY investigations have revealed.
The original PIB submitted to the National Assembly by the Umaru Musa Yar’Adua administration had provided for the corporatisation of the oil joint venture (JVs) assets held by NNPC and the international oil companies (IOCs) into IJVs.
But the IOCs had opposed the establishment of the IJVs following concerns that the NNPC, which controls majority stake in the existing joint venture oil assets, might insist on operating the incorporated entities.
As a result, the IJVs were removed from the revised reform bill resubmitted by the administration of former President Goodluck Jonathan in 2012 to the National Assembly.
However, the current administration of President Muhammadu Buhari has unbundled the PIB into three legislations for easy passage and also reintroduced the IJVs in the revised bill to resolve the cash call challenged hampering the existing JVs, which have accumulated to unpaid arrears of over $6 billion.
It was also gathered that splitting the PIB was done to ensure that regulatory and fiscal issues are dealt with separately.
The Ministry of Petroleum, it was learnt from a top NNPC source, is in the final stages of completing the comprehensive executive drafts of the split PIB.
It was also gathered that the first of the three pieces of legislation under the revised PIB being prepared by the executive arm of government is called the “Governance PIB”, while the version drafted by the Senate is called the “Petroleum Industry Governance Bill, 2016”.
Investigations have, however, revealed that the NNPC is not happy with the attempt by the Ministry of Petroleum to take over direct control of the proposed IJVs, Production Sharing Contracts (PSCs) and the Asset Management Company.
Sources at the NNPC, who spoke to THISDAY at the weekend, said the direct supervision of the IJVs by the petroleum ministry would render the proposed national oil company (NOC), which would emerge after the passage of the legislation, “rudderless”.
“NNPC is unhappy with the attempt by the ministry to take out the proposed IJVs and the Asset Management Company which will be created from NAPIMs, and the PSCs and place them under the direct supervision/control of the Ministry of Petroleum.
“If this happens, this would effectively render the proposed NOC rudderless and with no oil assets under its control. It also deviates from the acceptable model of NOCs in other parts of the world that have always retained control of their countries’ oil assets operated in conjunction with the IOCs,” one of the sources explained.
Efforts to get the Group Managing Director of NNPC, Dr. Maikanti Baru, to speak on the matter were not successful.
But Baru’s Technical Assistant on Communications, Mr. Aliyu Abubakar, had written in a recent article published in THISDAY that Baru expected action from the committee that was negotiating with the JV partners to “put in place a process where the JVs will not be cash calling government and eventually transit to the Incorporated Joint Venture (IJV) model as is the case with the Nigerian Liquefied Natural Gas (NLNG), where the IJVs would be autonomous under the direction of its board and management”.
“It can fund its operations, pay royalty and taxes to government as well as dividends to its shareholders as a limited liability company,” Abubakar had said.
Also citing Egypt, Oman and the Nigeria LNG Limited, which operates under the IJV model, the former Special Adviser to the late President Umary Yar’Adua and former President Olusegun Obasanjo, Petroleum Matters, Dr. Emmanuel Egbogah, had in a recent letter to President Muhammadu Buhari insisted that a long-term solution to the cash call challenge should involve conversion of all JVs to IJVs, which can obtain loans and go to the capital market for funding.
“The IJV will be an entity incorporated under the laws of the Federal Republic of Nigeria, registered with the Corporate Affairs Commission (CAC) of Nigeria and the incorporation process, including capitalisation and restructuring, will be carried out through negotiations with the respective international oil companies during the reform transition period,” Egbogah had argued.
He urged the president to ensure that all existing JVs are converted to IJVs so that they would become operational not later than the 2018 budget cycle.
While awaiting the executive version of the revised PIB from the Ministry of Petroleum, Section 37(1) of Petroleum Industry Governance Bill, 2016, currently before the Senate provides for the incorporation of the Nigeria Petroleum Assets Management Company and the National Petroleum Company.
The bill proposes that: “Upon incorporation and the transfer of assets pursuant to this Act; (a) the Nigeria Petroleum Assets Management Company (hereinafter called the ‘Management Company’ in this Act) shall be responsible for the management of the assets detailed in the Fourth Schedule to this Act”.
Section 4(b) provides that “the entities shall be governed and managed on the basis of the provisions of the Companies and Allied Matters Act and Securities and Exchange Commission’s Codes of Corporate Governance.
“(c) The annual reports and annual accounts submitted to the Annual General Meeting shall be published on the entity’s website and at least three widely circulating national newspapers”.
Efforts to get the Minister of Petroleum Resources, Dr. Ibe Kachikwu, to speak on the concerns raised by NNPC officials proved abortive yesterday, as calls and a text to his phone were not answered.