APC Senate’s Wrong Act •Unbundles NNPC •To Privatize Most Coveted National Asset

By on May 26, 2017


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The ruling All Progressives Congress (APC) is at it again. This time around, it is the upper legislative chamber of the National Assembly.

In what seemed like a historic feat, the upper chamber announced its passing of the highly controversial Petroleum Industry Bill (PIB).

After 17years of waiting, the PIB the senate passed was what Nigerians do not deserve.

In all its topsy-turvy journey through the National Assembly- the Bill was inaugurated in 1999 under President Olusegun Obasanjo and went through 5 sessions, with several versions in existence- one thing certain is that the passed bill is simply the APC version of the PIB.
Unfortunately, Nigerians and its leadership never learn.

The PIB (first tranche), according to the senate is expected to take care of the governance aspect of the industry, scaled third reading following presentation of report of Joint Committee on Petroleum Resources (Upstream, Downstream, Oil and Gas). 

If assented to by the President, the Act will unbundle the Nigeria National Petroleum Corporation (NNPC) into two companies: Nigeria Petroleum Assets Management Company and the National Petroleum Company. 

According to the bill, the two companies shall be created and supervised by the Ministry Of Petroleum Incorporated. 

It provides that “the Minister shall, within six months after the Effective Date, take such steps as are necessary under the Companies and Allied Matters Act to incorporate two entities – the first may be called the Nigeria Petroleum Assets Management Company, or such other name as may be available and the other may be called the National Petroleum Company, or such other name as may be available, as companies limited by shares, which shall be vested with certain assets and liabilities of the Nigerian National Petroleum Corporation (“NNPC”). 

“Upon incorporation and the transfer of assets pursuant to this Act: the Nigeria Petroleum Assets Management Company (hereinafter called the “Management Company” in this Act) shall be responsible for the management of assets currently held by the Nigeria National Petroleum Corporation (NNPC) under the Production Sharing Contracts and Back-in Right Provisions under the Petroleum Act 1969 as amended; “The National Petroleum Company shall be responsible for the management of all other assets held by NNPC except the Production Sharing Contract and Back-in Right assets currently held by the NNPC; “At the time of its incorporation, the initial shares of the National Petroleum Assets Management Company shall be held in the ratio of 20% by the Bureau for Public Enterprises, 40% by the Ministry of Finance Incorporated and 40% by the Ministry of Petroleum Incorporated on behalf of the Government. 

Sen. Tayo Alasoadura, Chairman of the joint committee, who presented the report, said the PIGB was the first tranche of the PIB. According to him, other tranches, that would soon be presented before the senate are, Upstream Petroleum Licence and Lease Administration, Downstream Oil and Gas Administration and Petroleum Fiscals. 

He added that another tranche to be considered is the Petroleum Revenue Management including Petroleum Host Community Fund. 

Alasoadura said the PIGB would help to create efficient and effective governing institutions with clear and separate roles for the petroleum industry. 

The lawmaker said with the passage of the bill, there will be a slim, focused yet robust framework for effective institutional governance of the petroleum industry. He stressed that the Nigeria National Petroleum Corporation (NNPC) would be reformed into two liability companies, while all existing regulatory agencies would be absorbed into a new agency called Petroleum Regulatory Commission. 

“We supported and enhanced the creation of an independent one-stop-shop regulatory agency which will absorb the present Department of Petroleum Resources (DPR), Petroleum Products Pricing Regulatory Agency (PPPRA). 

“It will also absorb the Petroleum Equalisation Fund (PEF) into one agency. 

“We have streamlined the role of the Minister. 

“We have also enhanced the extensive reform of NNPC into two limited liability companies-the National Petroleum Company and the Nigeria Petroleum Assets Management Company. 

“This is to ensure efficient and effective commercial performance.’’

In conclusion, Alasoadura enthused that the Petroleum Industry Governance Bill (PIGB), currently awaiting final passage in the upper chamber held immense benefits for all Nigerians. 

A claim which is false.

The major area being this part: “At the time of its incorporation, the initial shares of the National Petroleum Assets Management Company shall be held in the ratio of 20% by the Bureau for Public Enterprises, 40% by the Ministry of Finance Incorporated and 40% by the Ministry of Petroleum Incorporated on behalf of the Government.” 

Ironically, the same senate, on Wednesday, strongly criticised the privatisation of Nigeria’s power sector, saying the model adopted in the transfer from public to private operators has failed.

The Senate, therefore, called for a review of the privatisation process to maximise the capacity of the power sector.

The lawmakers, while speaking on a motion by Senator Dino Melaye (Kogi-West) titled ‘DISCOSs, Electricity Consumers and the Burden of Overbilling,’ lamented the failure of the power sector even after it had been privatised.

Seconding the motion, Senator Bukar Mustapha stated that the problem with the sector was inefficiency.

He said, “The problem we have is the inefficiency within the system which we have actually, so far, not decided to address. I will give you a small example: Nigeria has an installed capacity of 12,522 megawatts of power; we have non-available of 5,300MW; we have non-operational capacity of 3,180MW; meaning that the amount that is actually available is just over 4,000MW out of 12,500MW.

“We have transmission loss of 228MW and we have distribution loss of 447MW. At the end of the day, only 3,800MW reaches the consumer, and we have commercial loss of more than 36 per cent. So, what is actually being paid for out of the over 3,000MW is only 1,800MW.

“So, unless and until we decide to look at this inefficiency within the value chain, there is no way we can have better electricity generation, distribution and also billing system in the country. So, I agree that the model they have used for privatisation has not worked. And unless and until this inefficiency is looked at, it will not work.”

The senator further stated that if the sector had the capacity to generate 12,500 megawatts but it could only deliver 4,000MW, it meant that more than 75 per cent of the capacity had not been utilised.

He added, “It means that we are sitting on an emergency situation and something has to be done drastically to address this problem.

“The value chain is weakest at the distribution companies’ level because they are the ones who collect the money and you will never know how much money is being collected because they have failed to install the metres that are needed. We need millions of metres.”

The same is likely to happen to the about to be unbundled NNPC.

The history of privatization in the country has, to say the least, been woeful. 

From the administration of Obasanjo to former President Goodluck Jonathan.

It has always been the case of those in power purloining the country’s national assets.

Sadly, this is about to happen to the NNPC.

The inclusion of  the Bureau for Public Enterprises (BPE) in the ownership of the Nigeria Petroleum Assets Management Company means that at a later date, the APC will sell the 20 per cent to top party members and the godfathers that smoothed the party’s way into power.

That is: the APC government is not satisfied with managing the country’s treasury but is now ready to not only dip its hands into it, but to also draw from it at will; and most certainly with reckless abandon.

Remember, the oil and gas sector is the country’s chief income earner; it should thus remain a public property and not be thrusted into the hands of a greedy few.

Source cattnews

Posted 26/05/2017 12:09:57 AM




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