Port Harcourt Refinery: Senate Halts Talks between FG, Agip/ENI, Oando

  • PIB: Host communities, fiscal framework bills pass second reading

Damilola Oyedele in Abuja

The Senate has ordered the discontinuance of talks between the Federal Ministry of Petroleum Resources, Agip/ENI and Oando Plc on the rehabilitation of the Port Harcourt Refinery.

It condemned what it described as the non-transparent process that is seemingly being adopted by the ministry and the Nigerian National Petroleum Corporation (NNPC) to engage the companies to rehabilitate and improve the performance of the refinery.

The Senate further stated that it is ‘highly unlikely’ that the proposed agreement to handover the rehabilitation of the refinery to ENI/Oando, following a separate deal of $6 billion contracts for Crude -for- Products swaps of Direct Sale-Direct Purchase (DSDP) by the ministry to 10 groups or consortia which included ENI/Oando Plc.

Adopting the report of its adhoc committee on the planned concession of the Port Harcourt Refinery to Agip/ENI and Oando, the lawmakers directed that the process must be open and competitive, to allow participation of all relevant stakeholders.

They argued that if it was not done, it would be misconstrued as backdoor transfer of the asset to the preferred investor, the Senate said, and added that the public invitation for bids under clearly spelt out terms and conditions should be re-advertised.

The committee chaired by Senator Abba Kyari (Borno Central), noted that the parties involved denied that there were plans for concession of the refinery.

It, however, cited several pointers indicating that the plans existed, to include reported comments by the minister, Dr. Ibe Kachikwu, and the Chief Executive Officer of Oando, Mr. Wale Tinubu.

“There have been various contradictions in the Minister of State for Petroleum Resources public statements and media briefings on the true position of the subject matter culminating in his statement at the public hearing that there is no planned concession on the refinery, no concession has been embarked upon and none is in the pipeline,” it read.

The statement did not correspond with the alleged earlier press briefings including one at Vienna, Austria by Kachikwu, the committee observed.

It also stated that there had been advertisements for Expression of Interest in April 2016 seeking financiers to fund, rehabilitate and jointly operate NNPC refineries, whose tender process was truncated in May 2016 following concerns raised by other relevant stakeholders.

“That competent independent technical consultant should be engaged to review the diagnostic report (under preparation) on the refinery, and recommend a suitable strategy for attracting private sector investment, taking into consideration re-appraised rehabilitation cost estimates, environmental concerns of host communities and labour issues,” the report read.

“Based on international best practice, it is more likely that a credible financier will cause an independent diagnostic review to be undertaken that would be the basis for determining cost estimates for rehabilitation,” it added.

In another development, the Senate passed through second reading two Petroleum Industry Bills regarding fiscal framework and host communities.

The bills are a “bill for an Act to Provide for Framework relating to Petroleum Producing Host Community’s participation, cost and benefit sharing among the Government, Petroleum Exploration Companies and Petroleum Host Communities and for related matters,” sponsored by Senator Kabir Marafa (Zamfara Central) and “a bill for an Act to Establish a Fiscal Framework that encourages further investment in the Petroleum Industry whilst increasing accruable revenues to the Federal Government of Nigeria and for connected matters” sponsored by Senator Tayo Alasoadura (Ondo Central).

The upper legislative chamber also passed through second reading a bill to provide for administrative framework for the petroleum industry, sponsored by Senator Albert Bassey Akpan ( Akwa Ibom North East).

The Host Community Bill is intended to assuage the fears of the communities by providing a regime of compensation directly to the communities to enable them develop local infrastructure.

The sponsor, Marafa, who is Chairman of the Senate Committee on Petroleum Resources (Downstream), in his lead debate, said the bill provides that host community development be funded through a direct contribution from petroleum companies.

It also defines the ratios of distribution of benefits among different categories of the communities, Marafa added.
He was however silent on recommended compensation.

The contentious issue of direct compensation of host communities had led to the defeat of PIB, in past assemblies.

Presiding, Senate, President Bukola Saraki, noted that the passage of the bBills was in fulfillment of the commitment of the Senate to ensure the swift passage of all PIB related bills following the passage of the Petroleum Industry Governance Bill by the Senate recently.

He stated that the passage of the Fiscal Framework Bill, is a principle to ensure a ‘Win-Win’ for Government and stakeholders.

“Nigeria’s Petroleum Industry cannot operate in isolation. This is a Bill that will bring in more investments into the country,” the Senate President said.

Saraki refered the bills to the relevant committees of the Senate for further legislative work.