Published on August 2012^[1]

The draft Petroleum Industry Bill (PIB) submitted by the Nigerian Federal Executive Council to the National Assembly (NASS) has been long expected and drafts have been vigorously contested over the past decade. This is not surprising considering the array of vested interests and corrupt practices the petroleum sector in Nigeria has become well known for.

A polluting sector

The PIB ought to be predicated on the premise that the petroleum resources sector is a highly polluting sector. It should also have the clear understanding that the resources are non-renewable and are thus finite. It is not a resource that will be available or useful in perpetuity. They will either be exhausted or may simply fall out of use. This demands utmost care to ensure socially and environmentally acceptable practices. Acts that are socially and environmentally irredeemably contaminating ought to be shut down for the sake of present and future generations, irrespective of how lucrative they may be. Laws on environmental, social and related impact assessments suggest this.

Oil spills and gas flares should be dealt with as environmental security matters and clear powers to regulate and control activities, punish violators and restore the environment should be identified – and such should be vested on the Ministry of Environment and not on the Petroleum Resources Ministry (by any name). The minister in charge of the petroleum sector should not regulate a sector in which they are active polluters.

Gas flaring

The provisions on the contentious issues of gas flaring leave a lot to be desired. Gas flaring is already illegal in Nigeria (since 1984 and confirmed by a High Court decision in 2005) and the PIB should not legalise illegality. It is wasteful treatment of a resource and harms both the people and the local as well as global environment.The PIB pointedly seeks to abrogate the legislation that outlawed gas flaring and replaces it with nebulous provisions.

Section 201(1) provides that the Minister may permit and penalise gas flaring as deemed fit (by the Minister). Section 277(2) states that the fine for gas flaring shall not be less than the commercial value of the gas. The PIB should clearly state this in Section 201(1) to avoid the Minister lowering the fine to below commercial value. Indeed, the punishment for gas flaring should not be limited to fines but should have weightier consequences considering its criminal nature.

While the draft PIB states that gas flaring should end on 31 December 2012 Section 275 states ‘Natural gas shall not be flared or vented after a date (‘the flare-out date’) to be prescribed by the Minister…).’ This contradiction should be eliminated. An illegal act is already illegal and does not need a terminal date. That date ceased from the moment the act became illegal.

Seeking and accepting gifts

The draft as submitted does not come through as decisively focused on stemming the tide of sharp practices. It will amount to a lost opportunity if issues of transparency and accountability are not unambiguously outlined. The section (33) prescribing the powers to receive gifts should be eliminated. Seeking gifts smacks of a lack of sense of ownership of the resources in the first instance. It is also an open door for corrupt activities.

Discretionary powers of the President to award petroleum leases should not be condoned by the PIB. Such powers provide avenues for questionable practices that abort efforts at transparency and due process. Accordingly, Section 191 should be expunged outright.

Provisions for independently verifiable metering of extracted oil and gas should be stipulated in the PIB. A situation where the State does not know actual daily volumes of extracted crude oil and gas makes nonsense of any talks of transparency and feeds corrupt practices of players in the sector and their cohorts. This is the bedrock of the oil thefts that has become a national refrain.

Ownership, control and criminalisation of communities

Another major consideration must be that the politics of oil piths poor and technologically less developed nations against the rich, powerful and technologically advanced nations. There are no niceties in the sector. Thus the PIB should be clear on issues of national sovereignty and keep an understanding that as long as the international oil companies reap more (or comparative) profits in this sector and nation than they do or can do in other places they will not stop investing in Nigeria. Their kicking and screaming are all tactics to continue to reap inordinate profits.

Investing in the technological development of the sector is mandatory if true ownership and control of the resources is to be secured. There is no real ownership without operational control. A reading of the history of the often justifiably cited Norwegian model shows a clear understanding and practice of this. They outlawed gas flaring right from the onset, invested in technological and manpower development and equally determined to proceed on a controlled pace.

True ownership must include that of the communities living within the areas impacted by these activities. Community ownership should be positioned in a way that promotes adequate contribution to the national economy/purse as well as securing protection of the environment and investments. Sections 116-118 providing for Petroleum Host Communities Fund scratches the issue but remains tokenistic and requires deepening. For example it is not acceptable that communities should bear the cost of environmental restoration following incidents (including civil unrest!) in the oil field simply because a member of the community contributed to the incident. This sort of punishment criminalises communities and cannot be accepted.

Section 294(4) equally criminalises local and state governments for acts perceived to have been caused by sabotage. With these levels of government not controlling security outfits it is objectionable that they should be punished for security lapses that may result in sabotage.

Moreover, the deductions made before payment into the fund ensures that only tokens get paid as the oil operators are clearly in charge of the determination of their production costs.

Among other things, the draft PIB is needlessly verbose and repetitive, especially with regard to the organs to be established, and is not gender sensitive. The National Assembly must be ready to do the needed surgery on this piece of legislation.