Govt to reap N4.5tr from oil sector reforms

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Even though the Petroleum Industry Bill (PIB) is yet to scale the hurdle at the National Assembly, the Federal Government has intensified efforts to highlight its economic benefits and woo stakeholders' support for the document.

 

 

The Nigerian National Petroleum Corporation (NNPC), which is at the forefront of the campaign to pass the bill, has predicted that the implementation of the provisions of the PIB could yield about N4.5 trillion for the country yearly.

 

 

In statement issued yesterday in Abuja on its just-concluded workshop for the 36 state commissioners of finance and other stakeholders on the PIB, the NNPC said the bill would increase government's take significantly from Joint Ventures (JVs) and Production Sharing Contracts (PSCs), which would lead to a haul of over N4.5 trillion or $300 billion in accruals to the Federation Account.

 

 

The corporation's Group Managing Director (GMD), Dr. Mohammed Barkindo, who led the NNPC team to the event, said the future of the industry lies in the passage and faithful implementation of the bill. The workshop was organised in collaboration with the Federation Account Allocation Committee (FAAC) to improve the states officials' understanding of the operations of Nigeria's oil and gas industry.

 

 

But yesterday, representatives of oil and gas producing communities in the Niger Delta protested against the passage of the PIB in its present form. They asked the National Assembly to suspend further consideration of the bill because it failed to address the plight of the people most affected by the exploitation of oil and gas.

 

 

At a press conference in Abuja yesterday, the communities and some civil society organisations described the document as an attempt by the ruling elite to exclude the people who suffer the consequences of oil exploitation from enjoying the benefits of having the black gold in their land.

 

 

Reeling out data and statistics to substantiate the financial outlay and cost implications of investments in the oil sector, Barkindo told the participants, who included accountants-general from the 36 states and members of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) that the government's revenue would rise by 40 per cent when the bill is in force.

 

 

In his breakdown of the projection, Mr. Victor Briggs, the General Manager, Planning of the National Petroleum Investment Management Services (NAPIMS), a subsidiary of the NNPC, stated that the PIB seeks to boost accruals to government coffers from the deepwater offshore operations from the present 32 per cent to 72.3 per cent.

 

 

He also revealed that the proposed law is aimed at raising revenue to the national purse from onshore and shallow waters to 87.5 per cent from the current 84 per cent, adding, "this is what we stand to lose if the PIB is not passed."

 

 

The Group General Manager, Corporate Planning and Strategy and Director of NNPC Transformation, Dr. Tim Okon, said besides increasing government's revenues, the PIB will engender a fresh fiscal regime that will simplify the calculation of royalties through the elimination of undue cost deductions.

 

 

"It will introduce same measurement point for royalty and taxes. The rates are reduced for small producers, meaning that government's take in small fields will be minimal to take care of the heavy cost burden they bear and encourage marginal field operators. We are also going to have price sensitive royalty scheme that will capture future benefit of price increase," Okon stated.

 

 

The Minister of State for Finance and Chairman of FAAC, Remi Babalola, lauded the NNPC for hosting the workshop which, according to him, would inspire trust and confidence and cement the relationship between FAAC members and the corporation.

 

 

The Minister of Petroleum Resources, Dr. Rilwan Lukman, who delivered the keynote address, said the workshop was designed to remove doubts and suspicions about the operations of the NNPC, especially as it affects accruals to the Federation Account.

 

 

The Chairman, House of Representatives Committee on Finance, Enoh John Owan, assured of the commitment of the House to the passage of a holistic and collective beneficiary PIB that would address concerns raised by all stakeholders in the oil and gas industry.

 

 

The spokesman of the Niger Delta communities, Mr. Celestine Akpobari, said their rejection of the PIB emanated from a two-day consultative meeting on the matter. He said: "We demand that the National Assembly suspends debate on the Petroleum Industry Bill until adequate time is created for consultation with the communities and the civil societies.

 

 

"The Community Development Agreements should be incorporated in the PIB to ensure development of the oil-producing communities and should be a prerequisite for the issuance of licenses as obtained in the Mineral and Mining Act of 2007.

 

 

"That the aspirations of the various ethnic nationalities as contained in their Bill of Rights and Declarations such as the Ogoni Bill of Rights (1990), the Charter of Demands of the Ogbia People (1992), Kaiama Declaration (1998), the Resolutions of the First Urhobo Economic Summit (1998); the Akalaka Declaration (1999); the Warri Accord (1999); the Ikwerre Rescue Charter (1999); the First Niger Delta Indigenous Conference (1999); Oron Bill of Rights (1999) and the Niger Delta Peoples' Compact (2008) be addressed in the PIB."

 

 

They further said the PIB should stipulate penalties for environmental violations by operators and expunge section 286, which requires states and local councils to pay one per cent and 0.5 per cent of their yearly derivation allocation into a Remediation Fund under the custody of the Inspectorate to restore the environment in cases of damage as a result of sabotage.

 

(Source:Guardian)

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