By Gift Eguavoen
Governors of Southern Nigeria have rejected the ownership structure of the proposed Nigeria National Petroleum Company Limited (NNPC) as provided in the Petroleum Industry Bill (PIB) recently passed by the National Assembly.
The PIB provides that the NNPC Limited to be established under the new law be vested in the Federal Ministry of Finance. The Senate approved ownership of all shares in NNPC Limited to be vested in the government at incorporation and held by the Ministry of Finance Incorporated on behalf of the government.
The bill empowers the Minister of Petroleum Resources to incorporate the NNPC as a limited liability company six months after the commencement of the Act. He shall however, consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted, which would form the initial paid-up share capital of NNPC Limited.
Kicking against this provision, the governors, under the auspices of the Southern Governors Forum, insisted that the company should instead be held in trust by the Nigeria Sovereign Investment Authority (NSIA) since all tiers of government have stakes in that vehicle.
In a communiqué issued by the governors at the end of the meeting held in Lagos on Monday, and signed by Ondo State Governor and Chairman, Southern Governors’ Forum, Rotimi Odunayo Akeredolu SAN, the forum also rejected the proposed 3percent for host community funds and indicated their support for the 5percent as passed by the House of Representatives.
Recall that the House of Representatives adopted the 5percent proposed for host community fund, but the Senate reviewed it downwards and settled for 3percent after a futile effort by some lawmakers from the Southern part of the country who argued for the adoption of 5percent.
While commending the National Assembly for the progress made in the passage of the Bill, the Forum however, rejected the proposed 30percent share of NNPC Limited profit for the exploration of oil and gas in the frontier basins.
The Upper Chamber approved the funding mechanism of 30percent of NNPC limited’s oil and gas profit in the production sharing, profit sharing, and risk service contracts to fund exploration of frontier basins.
The PIB is a proposed legislation to reform the Nigerian oil and gas sector, it was passed last week after a clause-by-clause consideration of a report by the Joint Committee on Downstream Petroleum Sector, Petroleum Resources (Upstream) and Gas on the PIB.
Extractive 360 reports that the PIB consists of five distinct chapters which include Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Fiscal Framework; and Miscellaneous Provisions comprising 319 clauses and 8 schedules. The bill’s passage and eventual assent into law is expected to make the Nigerian oil sector more attractive and competitive as well as strengthen accountability and transparency of NNPC limited as a full-fledged company under statutory/regulatory oversight with better returns to its shareholders – the Nigerian people.