Page 6 - DMEA Week 33 2021

DMEA COMMENTARY DMEA
Buhari signs PIB into law
Head of NNPC hails new legal regime, says it will resolve host communities’ concerns
AFRICA
WHAT:
Nigeria’s president has signed the long-awaited Petroleum Industry Bill (PIB).
WHY:
The West African state
is finally in a position
to establish a stronger foundation for the economically vital oil and gas sector.
WHAT NEXT:
According to the head of NNPC, the bill will do a better job of addressing host communities’ concerns.
NIGERIAN President Muhammadu Buhari has signed the Petroleum Industry Bill (PIB), a piece of legislation that establishes a new legal regime for the country’s oil and gas industry, into law.
According to Femi Adesina, a spokesman for Buhari, the president took this step on August 16, a month after the PIB was passed by both houses of Nigeria’s National Assembly. He signed the bill at his home, while observing a five-day quarantine following his return from a visit to London on August 13, Adesina said.
“[The] president assented to the bill Monday, August 16, in his determination to fulfill his con- stitutional duty,” the spokesman said. “The cer- emonial part of the new legislation will be done on Wednesday [August 18], after the days of mandatoryisolationwouldhavebeenfulfilled.”
Background
Nigeria’s government has been working for more than a decade to secure the adoption of a new law governing the oil and gas sector.
This was partly because the existing legal regime was thought to be outdated and incapable of handling all the challenges posed by changes in the industry and partly because it did not ade- quately address the concerns that international oil companies (IOCs) had voiced about corrup- tion, contracts and other issues. However, all previous attempts to pass a new law failed.
The most recent of these attempts began in August 2020, when Buhari’s administration sub- mitted its draft version of the PIB to the National Assembly.
At the time, the president said he expected
MPs to approve the measure by the end of the year. Members of the Senate and House of Rep- resentatives duly passed the legislation in the first draft in late September and in the second draft in late October. But they subsequently postponed the third reading in order to concentrate on other key tasks, including the passage of a new budget for 2021. After resuming debate on the PIB in the spring of 2021, they finally approved the bill in the third reading in July.
Now that the president has signed the PIB, Abuja can start the process of implementation. This is likely to generate some controversy, given that the final version of the bill reserves only a 3% share of total oil expenditures in the previ- ous year for the communities that host oil and gasdevelopmentoperations.Representativesof many host communities in southern Nigeria, where most of the country’s onshore fields are located, have complained that this share is too small and have lobbied for 5% or 10%.
This issue has the potential to become conten- tious. Resentment of federal policies on oil and gas development is widespread and long-stand- ing in these southern host communities, and it could intensify if the PIB attracts more invest- ment to the hydrocarbon sector as planned.
Host community concerns
But according to Mele Kyari, the group manag- ing director of state-owned Nigerian National Petroleum Corp. (NNPC), host communities are actually likely to realize greater gains under the new legal regime, even though the portion of investments to which they are entitled is
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w w w . N E W S B A S E . c o m Week 33 19•August•2021