National Assembly Finally Passes PIB but Failed to Meet Host Communities Expectation

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PIB

In the just concluded week, the National Assembly finally passed the long-overdue controversial Petroleum Industry Bill (PIB), but failed to meet the expectations of the hosts’ communities as only three percent equity holding in Hosts Communities Trust fund was approved, reducing it from five percent previously stated in the Bill.

The three percent of the Trust Fund which was finally approved by the legislators did not go down well with the people of the oil-producing areas as the approved percentage was way below their 10 percent demand.

Also, the National Assembly approved the funding mechanism of 30 percent of NNPC Limited’s oil and gas profit in the production sharing, profit sharing, and risk service contracts to fund exploration of frontier basins in Northern Nigeria as against the 10 percent, stakeholders in the Niger Delta suggested.

PIB

In accordance with the passed PIB, the Minister of Petroleum Resources is now empowered to incorporate Nigeria National Petroleum Corporation as a limited liability company – to be renamed as NNPC Limited, six months after the commencement of the Act.

Hence, the accountability and transparency of NNPC Limited will be boosted as it becomes a company operating under CAMA – subjecting itself to statutory and regulatory oversight. In another development, Federal Government proposed to spend N11.91 trillion in 2022, as it also plans to expend N900 billion on fuel subsidy.

According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, the country spent as much as N150 billion on fuel subsidy in a particular month, subsidizing Premium Motor Spirit (PMS) consumption.

The proposed key parameters for the 2022 budget include:

  1. Budget deficit of N5.60 trillion;
  2. Oil benchmark price of USD57 per barrel;
  3. Exchange rate of N410.15/USD;
  4. Oil production of 1.88 million barrels per day;
  5. Inflation rate of 13%; and
  6. A 2.3% economic growth rate.
  7. The 2022 budget deficit of N5.6 trillion is expected to be funded via local and foreign borrowings.
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We commend the lawmakers for the successful passage of the Bill, even as the President is expected to quickly assent to it, hence making it an Act, in order to unlock the potential benefits.

Although the Bill did not meet the expectations of the host’s communities, we feel that the country now has a modern law, that can later be amended to allow for greater fairness to oil-producing communities in the Niger Delta, and to regulate operations in the oil and gas industry; of which its effective implementation would stimulate investors interest and catalyze the long-awaited development in the industry.