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Petroleum Industry Governance Bill 2016

The Petroleum Industry Governance Bill (PIGB) was carved out of the PIB as part of the initiative to break up the Petroleum Industry Bill (P.I.B) into manageable chunks.The PIGB emerged as a result of calls to break the original Petroleum Industry Bill (PIB) into component parts in order to achieve quick passage in parliament.The PIGB focuses on the organization and governing aspects of the PIB with regards to the Nigerian Petroleum Industry.

The Preamble to the bill states that it provides for the governance and institutional framework for the Petroleum Industry and other related matters.The PIGB will be the first of a series of bills that constitute the entirety of the PIB.Already, the bill has passed first reading at the senate since April.The PIGB adequately caters for the reorganization of the Institutional Framework for the Nigerian Petroleum Industry.

The Bill intends to achieve the following:

  1. Clarification of government roles and that of the Petroleum Minister in the oil and gas industry.
  2. Eliminate multiple regulatory entities and establish a new regulatory commission for Nigeria’s oil and gas industry.
  3. Unbundling the NNPC:The PIGB is also expected to break the current NNPC into two limited liability companies.

The current PIGB has a close semblance to the section of the PIB that addresses regulations in the oil Industry.

Changes and Updates in the Petroleum Industry Governance Bill

  1. The PIB originally allowed the Minister to advise, recommend and appoint members of the board of several agencies subject to the president’s confirmation and approval.This has been done away with.In the current bill, the president is empowered to appoint executive and non executive members of the Board of the Petroleum Regulatory Commission(To be established in pursuant to the bill as the industry regulator) subject to confirmation by the Senate.Extant laws allowed the Minister to appoint the Chief Executive of the Petroleum Inspectorate subject to the approval of the National Council of Ministers.
  2. The PIB originally vested the power to make regulations on the minister.This has been removed and vested in the Petroleum Regulatory Commission (Referred to henceforth as the Commission).It is important to note that this provision deals specifically with the provisions of the bill and does not affect the provision of other laws which grants the minister power to make regulations such as the Nigerian Oil and Gas Content Regulation Act, 2010.
  3. The PIGB maintains the ministers right for pre-emption.However,penalties of contravening the rights have been increased in line with current economic conditions. Failure to comply with the minister’s directive issued in respect of a right of preemption and interference with the exercise of the powers of the Minister under the Petroleum Act attracted a fine of 2000 Naira and 200 Naira or a maximum prison term of 6 months or both respectively upon conviction.

Under the PIGB, the maximum fines have been increased to 2,500,000 Naira and 5,000,000 Naira or a maximum prison term of six months.The minister is also empowered to make regulations to increase financial penalties imposed under the bill. Under extant legislation,the Petroleum Act grants the Minister exclusive and unfettered power to grant licenses and leases,to amend, renew,extend, or revoke same in pursuant to the provision of the Act.

The PIGB removes this right from the minister.The minister may now only exercise such powers based on the recommendation of the Commission.Currently,the grant of license is governed by the Petroleum (Drilling and Production) Regulations with new applications directed to the Ministers office.New applications for licenses will have to be directed to the Commission.Also, the power to revoke a license or lease can only be exercised by the Minister upon recommendation by the Commission.

Most importantly,the bill stipulates that the provisions of all existing enactments or laws including the Petroleum Act, the Petroleum Profit Tax Act and the Companies and Allied Matters Act shall be read with such modification as to bring them in conformity with the Petroleum Industry Governance Bill.

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