THE BILL TO OVERHAUL the Oil Industry in Nigeria, known as Petroleum Industry Bill, PIB, on Monday, was signed into law by President Buhari, amidst some controversies in its contents. Just for the process in the search for oil [exploration], the PIB law allocated 30 per cent oil profit sharing for the exploration of oil in what is described as “frontier basins”. Northern Nigeria and other parts of the country would receive this boost.
The PIB law, in Section 9 says: “The frontier exploration fund shall be 10 per cent of rents on petroleum prospecting licences and 10 per cent on petroleum mining leases; and 30 per cent of NNPC Limited’s profit oil and profit gas as in product sharing, profit sharing and risk service contracts. The fund shall be applied to all basins and undertaken simultaneously.”
While Section 9 says: “NNPC Limited shall transfer the 30 per cent of profit oil and profit gas to the frontier exploration fund escrow account dedicated for the development of frontier acreages only.”
Areas of the “frontier basins”, among others, include Chad Basin, Gongola Basin, Sokoto Basin, Dahomey Basin, Bida Basin, Benue Trough, Anambra Basin. Oil exploration in the Niger Delta was not caried out with State funds. Oil industry business prospectors funded their exploration as private business.
Presently, crude oil is produced in eight states in the Niger Delta region – Abia, Akwa Ibom, Bayelsa, Delta, Edo, Imo, Ondo and Rivers.
EQUITY SHARE to oil host communities was also controversial and contentious, in the PIB law. The present oil producing host communities proposed 10 per cent equity share to their communities during public hearing of the proposed Bill. But the PIB law signed by President Buhari made provision for 3 per cent allocation for host communities.
During legislative debates on the PIB Bill by the lawmakers, in the Senate and the House of Representatives, there were outcries and condemnation over the proposed 3 per cent equity sharing to host communities. Given the long years of neglect, pollution and degradation of oil producing communities.
Despite the agitations, the Bill was passed by the Senate and the House of Representatives. The agitators went further to implore President Buhari to show statesmanship, by reversing, especially, the proposed 3 per cent equity sharing to host communities, and expunge the 30 per cent proposed payment to oil prospectors in the “frontier basins”.
The arguments were that oil exploration in the Niger Delta was not carried out with Nigeria’s fund. Also, that the oil industry is business. Anybody or organizations intending to explore oil in the country, should fund it from their private purse, and not from the nation’s resources.
Nigeria’s oil sector accounts for over 90 per cent foreign exchange and over 50 per cent annual national budget. The Bill has been in the works since the 2000s – over 20 years.
Expected reactions to the signed PIB law, specially, the 3 per cent equity share to the present oil host communities and the 30 per cent allocation for oil exploration, could be further controversial.