Posted on by Adeoye Adefulu

Senate Public Hearing Day 1 – Summary of proceedings before live blogging

This summary has been provided to us by Sandra Gini.

  • Hearing opens at 11:20am
  • National Anthem and opening prayers
  • Opening remarks by Senator Marafa
  • Senate President Bukola Saraki delivers opening speech and declares the hearing officially open.
  • Senator Alaosadura thanks the Senate President

  • Presentations:
  • NNPC Presentations on the Bills:

The NNPC is in full agreement with the bills

  • Key Highlights
  • Ownership: vesting of ownership of resources in the state is not clear in the bills
  • Fiscal terms should be simplified for ease of interpretation
  • Regulatory issues should be taken out of the bill to enable the PRC regulate effectively
  • Contractual issues should not be included in the bill
  • Funding (PHICB):  funding should not place an excessive financial burden on the lessees.
  • FIRS Presentations on the Bills:
  • FIRS is in agreement with the bills
  • Raised issues on the bills as follows
    • No additional revenue with the proposed windfall tax
    • Where condensate spiked is treated as crude, what happens if a gas company has spiked condensate? Would they be charged tax as a crude company

 

  • REVENUE MOBILISATION AND ALLOCATION COMMISSION
  • RMC is in agreement with the principle and concept of the bills
  • Key concerns on PIFB
    • Clause stating that the revenue should go the federal government of Nigeria should be amended to that the revenue should go the federation of Nigeria
  • Key concerns on the PIAB
    • Section 2: RMC should have oversight monitoring over the FIRS and the PRC
    • Tax rate should not be lower than what is currently obtainable. Recommends that tax rate should be higher.
  • Key concerns on PHICB
    • No definition of host or impacted community in the bill. Communities having access road to oil producing areas be deemed as impacted communities as well as small clans sitting on pipeline right of way to avoid conflicts.
    • The criteria for defining host and impacted communities should be provided in the bill
    • Penalty for vandalisation of any facilities in such oil producing communities
    • Proposed 2.5% opex being tax deductible would have impact on the revenue of the country. Proposes that the 2.5% should be from the net profits of the company.

 

  • NAPIMS: adopts NNPC’s presentation

 

  • NCDMB Presentation on the Bills:
  • Key Concerns on PIAB
    • Definition of Nigerian company: “other laws” in the definition should be expunged and that of CAMA should be adopted
    • Compliance with NOGICD Act not infused in the bill

 

  • DPR Presentation on the Bills: No key concern

 

  • NUPENG/PENGASSAN Presentation on the Bills:
    1. Key Concerns on PIFB:
  • Production Allowances: would be counter-productive for the industry in the event of low oil prices and may lead to loss of jobs. 20% is too ambitious.
  • Removal of AGFA would lead to issues in gas projects.

 

  • Key Concerns on PIAB:
  • Powers of the PRC is excessive
  • Discretionary power of the president to award licences should be deleted
  •  NNRA should be included with regards to radioactive materials to avoid
  • Compliance with extant labour laws should be ensured in the Bill
  • Collaborations between the companies, PTI and PTDF

 

  • Key Concerns on PHICB:
  • Disbandment of NDDC and the funds channeled to the host community.
  • Definition of host and impacted communities should be addressed.

 

  • COALITION OF NIGER DELTA LIBERATION MOVEMENT Presentation:

Key Concerns on PHICB:

  • Amnesty, 13% derivative and NDDC should be scrapped and the fund should go directly to the communities. The funds are usually channeled to develop the cities and not the communities hosting the wells

 

  • MOMAN Presentation on the Bills:
  • Key Concerns on the PIAB:
  • Bill should be reviewed to remove existing inconsistencies
  • include  provision for guidelines in the bill for the prescribed fees to be charged by the PRC on licences. Renewal of licences should be automatic upon application and payment of the required fee.
  • There should be a first tier appeal mechanism like a board of appeals to which dissatisfied applicants can have recourse, failing which resolution, recourse to the courts.
  • Proposed the setting up of a consultative body during the transitional period consisting of the PRC and member companies to help ensure that the proper pricing regime is established.
  • Body should be set up ensure that HSE provisions are completely enshrined in the bill.
  • Propose the provision for concessioning out or leasing out national depots and pipeline assets to private 3rd party operators with proven ability to run such assets.
  • Proposed the carving out of existing private transport network or inbuilt capacity at the commencement date of the bill.
  • The definition of “reasonable and prudently incurred costs” and “reasonable return” should be clarified in the bill.
  • Proposes that the bill recommends that only persons with requisite expertise and sound understanding of the industry should be appointed as arbitrators not career civil servants. That the clause on judicial review be revised to allow for appeal of all matters/disputes arising from the bill
  • Recommends that the bill should be amended to make the commission responsible for publication of applications for and grants of licences.
  • That the bill does not set out criteria for the issuance of petroleum import licence
  • That transfer provisions for licenses and permits should exclude the downstream sector
  • Proposes the clarification in the definition of wholesale and bulk sale with regards to the quantity or parameters for the determination of wholesale or bulk sale in the bill
  • That the provision on 3rd party access and anti-competition should apply only to critical national assets and clearly define the yardstick for the grant or refusal of access to 3rd That the term “non-discriminatory” should be clearly defined to avoid arbitrary interpretations.

 

  • Key concerns on the PIFB:

Increased multiple taxation regime. That taxation of downstream companies should be harmonized throughout the country.

  • Key Concerns on the PHICB

Downstream assets should be excluded from the bill.

 

  • OPTS Presentation on the Bills:
    • Key Concerns on the PIFB: (Same as such raised during the House of Reps Public Hearing)
    • Key concerns on the PIAB: (Same as such raised during the House of Reps Public Hearing)
    • Key concerns on the PHICB

 

  • ADDAX Petroleum
    • The deepwater definition in the PIFB provides that deepwater starts from 200metres. There is the need to redefine this as some shallow water assets straddle between 100m to beyond 200m

 

  • IPPG Presentation on the Bills:

Key Concerns on the PIFB:

  • Recommends that tax rate should be 50% for onshore as well
  • Recommends gas terms should be reworked
  • Royalty measurement should be defined as being measured from the point of sale

Key concerns on the PIAB

  • The bill does not incentivize exploration
  • DGSO and DGSO should be removed
  • Gas flaring terms should be reviewed

Key concerns on the PHICB

  • The time for incorporation of  the trust is too short and the penalty for non-incorporation is too stiff.

 

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