Category: News

The Senate public hearing on petroleum industry reforms was closed at 2:00 pm by the Chairman of the Joint Committee, Senator Marafa who emphasised the resolve of the National Assembly to pass these bills imminently.

We will publish a summary of the presentations given on Day 1 before our live blogging commenced.

• Administration Bill
  • No commission in the world seats without supervision;
  • Like dormant fields concept – but should be set aside for indigenous companies;
  • transparency provisions should be bolstered;
  • strategic stocks should not be handled by the Commission.
• Host Community Bill
  • should be limited to upstream and downstream;
  • host community fund will attract a lot of attention – must not impose an additive burden on the industry;
  • contracting opportunities should be made available for indigenes of the host community;
  • definitions of host community should be fine-tuned.
• Fiscal Bill
  • fiscal operating conditions should be right;
  • average returns are currently high;
  • want a dual tax regime;
  • cost curtailment needs to be embedded in the bill;
  • no tax incentives for acquisitions.

Ondo State

• Bitumen should be categorised as hydrocarbon;
• deep offshore to be amended to 200 nautical miles as opposed to  200 metres water depth as currently defined.

Bayelsa State

• gas flaring penalties to be transferred to the host communities;
• oil companies should be located in the states where they are producing

Joint memorandum between Delta State government and its host communities

• settlor and communities should appoint the trustees
• trusts should be established within 3 months
• 5% of gross revenue;
• 50% of gas flaring penalties should be given to the host communities;
• take off grant to include 20% of license fee;
• objective should include creation of employment opportunities;
• members of the board of trustees should serve for only 4 years;
• secretary of the board of trustees should come from the host state;
• allocation of a specific sum for traditional rulers and for the management of the fund;
• surveillance contractors should be appointed in consultation with the host communities;
• state governments should be involved in dispute resolutions;
• legacy projects should be split into phases;

HOSTCOM

• Relationship should be a tripartite relationship between FG, Host Community & Oil Companies;
• 10% equity partnership;
• Representatives in the board and management committees of oil companies;
• No multiple trusts with various oil communities;
• A National trust fund should be administered by Hostcom and traditional rulers;
• Hostcom to nominate those who will be responsible for managing the funds;
• Hostcom should serve on the board of the regulatory commission;
• IOCs must set up refineries in Nigeria;
• Gas flaring penalties should be paid to Host Communities;
• Communities should not be penalised for pipeline vandalism;
• Nigeria must control majority shareholding in the national oil company;
• Hostcom must be included in every government institution;
• Host communities must have the first right of refusal in any privatisation.

We arrived late at the Senate’s public hearing on the three public hearings today. We will give a summary of all the presentations earlier.

Ministry of Petroleum Resources – Fiscal Bill

• many fiscal abuses in the current Fiscal Bill;
• lack of fiscal neutrality in the bill;
• bill does not sufficiently reward the domestication of oil

Administration Bill

• more reflection on the powers of the Minister;
• opportunity for checks & balances over the Commission by the Minister;
• there should be a requirement for bid rounds every 3 – 5 years;
• the decision on bid round should be a political decision;
• Minister to give guidelines;
• who regulates the regulator?
• provisions for acreages to the commission to be amended and explicitly granted to the state;
• more provisions for contract transparency;
• gas flaring provisions are scaled back in this bill;
• national strategic stocks should be handled by a regulated entity;