Southern Governors Reject 3% Share to Host Communities as Proposed in PIB


…Reject 30 percent NNPC Ltd allocation

…Expert condemn duopoly by bill in downstream sector.

By Ikenna Omeje

The governors of states in the southern part of Nigeria have rejected the proposed 3 per cent share to host communities in the Petroleum Industry Bill recently passed by the National Assembly.
In a communique issued  at the end of their meeting in Lagos on July 6, the governors supported 5 per cent share to host  communities, instead of the proposed 3 percent.
The governors who also rejected  the allocation of at least 30 percent of the profit generated by the proposed Nigerian National Petroleum Company Limited for the exploration of oil in ‘frontier basins’, however, commended the lawmakers for the passage of the PIB.
“We commend the National Assembly for the progress made in the passage of the PIB. The Forum rejects the proposed 3% and supports the 5% share of the oil revenue to the host community as recommended by the House of Representatives.
“The forum also rejects the proposed 30% share of profit for the exploration of oil and gas in the basins,” the communique read.
The governors also rejected the ownership structure of the proposed NNPC, arguing that instead of it to be  vested in the Federal Ministry of Finance, it should be held in trust by Nigeria Sovereign Investment Authority (NSIA) since all tiers of government have stakes in that vehicle.
“However, the Forum rejects the ownership structure of the proposed Nigeria National Petroleum Company Limited (NNPC).
“The Forum disagrees that the company be vested in the Federal Ministry of Finance but should be held in trust by Nigeria Sovereign Investment Authority (NSIA) since all tiers of Government have stakes in that vehicle,”  the governors said.
Meanwhile,  an oil industry analyst and public affairs commentator, Jerry Lazarus, has  expressed concerns about certain provisions of the bill as it affects the downstream. He said that while the bill removed price controls on petroleum products in Section 205, the senate version of the bill has a clause that constrains market competition by restricting importation of products to only players with local refining capacity, which clearly counters the provision of 205(1).
He also argued that Section 317 (8) of the Senate version of the bill  will create a duopoly in a price deregulated price environment thereby destroying the Nigerian downstream industry as it is known today.
Lazarus said, “This clause needs to be expunged from the PIB. The Authority should be left to develop regulations that are fair, inclusive and transparent for petroleum product importation that ensures open and diverse market supply and hence competition, only then would the objectives of the bill be achieved.  It is worth repeating that as price control is being removed, supply must be competitive, inclusive, transparent and seen to encourage efficiency. Then, and only then will Nigerians and Nigerians win.

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