FW: What is the Petroleum Industry Governance Bill (PIGB)?

This article is part of our #FirstWord series to provide context on trending news.

The Petroleum Industry Governance Bill (PIGB) is a fraction of the Petroleum Industry Bill (PIB) aimed at reforming Nigeria’s oil and gas sector. The PIGB focuses on the governance of the oil & gas sector and seeks to promote transparency and accountability in the administration of petroleum resources in the country.

The piece of legislation is expected to encourage a conducive business environment for petroleum industry operations in the country and create effective governing institutions with separate roles for the petroleum industry.

On the 25th of May 2017, the Senate passed the PIGB after many years of the bill being stalled, sending it to President Muhammadu Buhari who withheld his assent to it. Without the President’s signature, it is unlikely to become law. 


What exactly is in the PIGB?

Even though it is just a quarter of the original PIB, the PIGB is dense enough that going through all its elements would be almost impossible.

The Bill looks to establish the Nigerian Petroleum Regulatory Commission (NPRC), a single regulator to serve as the supervisory body for the oil and gas industry. It will replace the Department of Petroleum Resources (DPR), the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Petroleum Inspectorate.

All of their functions will be carried out by the NPRC.

The Petroleum Industry Governance bill will also split the NNPC (Nigerian National Petroleum Corporation) into smaller entities, to ensure efficiency and transparency. The NNPC will be replaced by the National Petroleum Company (NPC), and all of the nation’s refineries and joint venture assets will be moved from the NNPC to the NPC.

In the PIGB, some of the regulatory functions of the minister of petroleum resources will be transferred to NPRC. A nine-man board will govern the NPRC with a fixed tenure, and the board is going to have representatives from the ministries of petroleum resources.


Who is going to fund the NPRC?

NPRC will be funded from Nigeria’s annual budget.

Regarding salaries and worker stipends, the commission is expected to establish a fund into which it will pay a certain percentage of the monies generated for the government. A fraction of fees from penalties, grants/loans and earnings from the sales of data is expected to be put aside for maintaining internal affairs and paying salaries.

So, why did Buhari refuse to sign the bill?

Last week, President Muhammadu Buhari refused to sign the PIGB.

Ita Enang, Senior Special Assistant to the President on National Assembly matters informed the public that the President’s decision to decline assent to the Petroleum industry Governance Bill is for legal and constitutional reasons. According to him, there were some legislative drafting concerns which, the President felt if assented to in the form presented, would create conflict in interpretation of the final law.

“In deference to the National Assembly I please state very limited of the rationale communicated to the legislature, to with:

a) That the provision of the Bill permitting the Petroleum Regulatory commission to retain as much as 10% of the revenue generated unduly increases the funds accruing to the Petroleum Regulatory commission to the detriment of the revenue available to the Federal, States, Federal capital Territory and Local governments in the country.

b) Expanding the scope of Petroleum equalisation fund and some provisions in divergence from this administration’s policy and indeed conflicting provisions on independent petroleum equalisation fund.”

- Ita Enang

But President Muhammadu Buhari has been accused of refusing to sign the bill because it waters down his powers as Petroleum Minister

Nigeria’s Petroleum Act, from which the President derives his powers, gives all rights and grant of leases and oil licenses to the Minister. Stakeholders have hinted that Buhari is possibly unwilling to relinquish that power. Others suggest it may be because of the recent back and forth between the National Assembly and the Presidency.


What does the public think?

A lot of stakeholders have expressed worry over the refusal of the President to sign the PIGB.

The Nigerian Association for Energy Economics (NAEE) and Nigerian Association of Petroleum of Petroleum Explorationists (NAPE) have released statements insisting it is in the best interest of Buhari to sign the bill. Not just because of the reforms it brings to the oil and gas sector, but also because not signing it is a taint to the President’s credibility.

And that’s where we are with the Petroleum Industry Governance Bill.

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