The Federal Government is tightening all the loose ends to ensure a hitch-free implementation of wide-ranging reforms in the oil sector.Under the proposed new Petroleum Industry Bill (PIB), the government has retrieved the controversial Oil Processing License (OPL) 245, also known as Malabu Oil Block, from its owners and transferred it to a new company. The new company will be registered once the National Assembly passes the PIB and other oil sector reform-related bills. In three of the new bills, the Federal Government conferred the ownership of the oil block on the proposed Nigerian Petroleum Assets Management Company.
Indeed, the government listed OPL 245 as part of the assets of the NNPC to be transferred to the Nigerian Petroleum Assets Management Company, as part of the ongoing reform as encapsulated in the new Petroleum Industry Legislative Frameworks before the House of Representatives.
The Malabu Oil Block is among the 26 major Oil Mining Licences and Oil Processing Licences (OPLs) assets to be transferred to the Nigerian Petroleum Assets Management Company, in the process of winding-down the Nigerian National Petroleum Corporation (NNPC) and other entities.
The oil blocks are OML 123, OML 124, OPL 90, OPL 125, OPL 209, OPL 211, OPL 212, OPL 213, OPL 214, OPL 217 and OPL 218.
Others are OPL 219, OPL 220, OPL 211, OPL 222, OPL 242, OPL 244, OPL 245, OPL 247, OPL 256, OPL 318, OPL 320, OPL 322 and OPL 324.
Following claims and counter-claims of the ownership of the Malabu Oil Block and the $1.1 billion scandal associated with it, the House of Representatives initiated an investigation into it.
The oil block covers a massive area of 1,958 square kilometres with two deep water fields estimated to hold about 9.2 billion barrels of crude oil. The award of the oil block was allegedly shrouded in controversy, scandals, corruption and breach of due process that resulted to a monumental revenue loss to the country.
According to the three new bills on the Petroleum Industry Legislative Framework, measures to check revenue losses and militancy in the Niger Delta region are highlighted.
The three bills are an Act to establish a Fiscal Framework that encourages further Investment in Petroleum Industry whilst Increasing Accruable Revenues to Federal Government of Nigeria; an Act of Legal and Regulatory Framework, Institutions and Regulatory Authorities as well as for the Operations of the Upstream and Downstream Sectors of the Nigerian Petroleum Industry; and an An Act for Legislative Framework Relating to Petroleum Producing Host Community Participation, Cost and Benefit Sharing amongst Government, Petroleum Exploration Companies and Petroleum Host Communities and Matter’s Connected Thereto.
The bills have been gazetted for Second Reading in the House of Representatives and with strong assurance of being passed before the end of first quarter of 2017.
Overall, the bills seek to deregulate the downstream and upstream petroleum sectors and balkanise the NNPC to smaller entities including National Oil Company (NOC), the Nigerian Petroleum Assets Management Company, among others.
The legislative framework also seeks to enhance exploration and exploitation of petroleum resources in Nigeria and to promote petroleum products for the benefits of all Nigerians, significantly increase domestic gas supplies for power GENERATION and industrial development.
It also seeks to create a commercially-viable National Oil Company, deregulate petroleum products prices, create efficient regulatory efficiency, transparency and openness through robust governance mechanism and promote the Nigerian content policy.
To ensure the effective take-off of the NOC, the bill allows the Ministry of Finance Incorporated to acquire 51 percent while the Bureau of Public Enterprises (BPE) holds 49 percent of the initial shares of the company.
The two companies are to be managed and governed by the Companies and Allied Matters Act and Securities and Exchange Commission Codes of Corporate Governance.
In the Petroleum Host Community Legislative Framework, which provides for the establishment of Community Fund, the Federal Government is obligated to “pay directly to Local Governments’ accounts the amount for the benefits of the upstream petroleum communities within a local government”.
Ten percent of the total amount payable to a state government by the Federal Government in accordance with the derivative formula as contained in the nation’s constitution and an additional “30 percent of royalties is to be paid by a company from petroleum production on land within the territory of an upstream petroleum community.”
Similarly, “20 percent of an aggregate of the total royalties accruing to Federal Government for petroleum production is to be evenly divided by the number of local governments with facility.”
The legislative framework also provides that “50 percent of the amount payable to the Federal Government for pipeline right-of-way shall be PAID TO local government within pipeline communities are located, solely for the benefit of the people.