Olusola Bello
Legal personalities have advocated for total commitment by stakeholders in the Oil and Gas industry in order to ensure that the Petroleum Industry Act (PIA) succeeds.
They said it may not be a perfect law but its success would depend on if all operators are determined to make it work. “It may not be perfect from the beginning but we must all be committed to ensure that it works.
Adeyemi Akisanya, Partner, Adeyemi Akisanya Associate who was the chairman of CPI Oil and Gas Law Forum, titled “Nigeria National Petroleum Company Limited, How Reforms Fits the Evolving Structure”, said that making a success of the PIA will depend on the kind of mentality the implementers of the law and industry operators bring to bear on its implementation.
He said: “If we are determined to make the PIA work, it will work. No matter those that are on its board of directors, whether they are civil servants or the board is filled with industry experts. The facts are that it will take a will to make it work.
He encouraged industry operators, especially those that are influential to the bill, to put aside politics and face the realities of the jobs on the ground.
According to him, as far as the PIA is concerned: “We are in the right direction; we have a tool in our hands, let’s make it work.”
Gbenga Biobaku of Gbenga Biobaku and CO who spoke on the topic “Nigeria National Petroleum Company Limited, How Reforms Fits the Evolving Structure,” agreed with Mr Akisanya that no law is perfect.
He said: “The PIA is not a perfect Act or law but a workable document, as we go along necessary changes would be made, either in terms of legislation where necessary and also guidelines in regulations. But it is a good start and it is something if the will is there we can make it work.”
He mentioned some of the challenges that bedeviled NNPC to include its substantial political involvement, combining policy making and regulatory power, commercial activities, it has no control over its fund, had issues with asset rationalization in terms of the refineries and there were also concerns around transparency and accountability
On the Key reforms objective for the NNPC Limited with PIA, he stated that the PIA and the petroleum policy set out the objective for the NNPC limited, which is to create a new national oil company as a corporatized entity in accordance with international standards practice for the corporation. It is mandated to operate commercially while relinquishing policy and regulatory activities. It is to be treated on equal basis with private sector operators.
He the governance of NNPC Limited has to be in a transparent and accountable manner with the necessary degree of professionalism, independent judgment by the board. The board on the other hand is required to have the necessary authority, competencies and objectivity to carry out its functions of strategic guidance and monitoring of the management of the corporation.
Another major objective is to reduce the involvement of the federal government in the day-today management of the petroleum company and allow for full operational autonomy to allow the NOC to achieve its defined objectives.
The PIA provides that the NNPC Limited which is the successor entity to the corporation would carry out functions on a commercial basis comparable to the ways private companies carry out similar activities
To enable the new NNPC limited to do all the above, the PIA exempt NNPC limited from the public procurement act, fiscal Responsibility and the Single Treasury Account act.
It would however be subjected to fiscal regime applicable to any other players in the sector. “So there are clear provisions in the PIA that NNPC limited will pay royalty, pay taxes, make all payments that are required to be paid by other companies. It would also pay percentages of profit oil, profit gas which would be paid directly into federal accounts. NNPC Limited would be entitled to deduct 10 percent management fee from these activities
It would be invested as concessionaire of all the production Sharing Contracts (PSCs), and all the Risk Service Contracts which are currently held by NNPC. The Act also provided that NNPC Limited and its subsidiary would be structured into operationally independently self-accounting subsidiaries. So that the values of their assets and operational efficiency can be achieved