10 Things To Know About Nigeria’s Petroleum Industry Bill, PIB

1. What is the Petroleum Industry Bill, PIB?
The Petroleum Industry Bill, PIB, 2020 is a law in the
making, which seeks to introduce far-reaching reforms in
the Nigerian oil and gas industry. It was first presented to
the National Assembly in 2008.
2. What are the major objectives?
The bill aims at establishing good governance, best
practices, and ease of doing business in the industry by
clarifying roles and responsibilities of officials and
institutions, enable frontier exploration, mandate improved
environmental compliance, and transform NNPC into a
commercially viable enterprise.
3. Why do we need the PIB?
The PIB is necessary because almost all petroleum-related
laws, including the Petroleum Act of 1969, had been
belated for decades. In other words, they are no more
relevant and competitive globally. With the advancement
in technology, the volatility of oil prices, climatic changes
influencing the driving forces of the global economy, it has
become imperative to review extant laws to bring them in
alignment with current realities.
4. What are the regulatory institutions to be expected?
The bill proposes the Upstream Regulatory Commission
for upstream operations, including the granting of
petroleum exploration licenses. A petroleum exploration
license shall be for three years and may be renewable for
an additional period of three years subject to the
fulfillment of prescribed conditions. The PIB also provides
for the establishment of the Midstream and Downstream
Regulatory Authority for midstream and downstream
operations. But the president has been advised to go for
only one Commission with many departments, using the
example of the Nigerian Communications Commission,
NCC, as an example.
5. What about the Host Communities Development Trust?
The PIB further provides for the creation of a Host
Communities Development Trust. The oil operators,
described as settlors, are obliged to incorporate a trust for
the benefit of the host communities and shall make an
annual contribution, based on a certain percentage of their
yearly operating expenditure.
6. What are the environmental concerns in the PIB?
As a condition for the grant of a license or lease and prior
to the approval of the environmental management plan, all
licensees or oil companies are required to make financial
contribution to an Environmental Remediation Fund for the
rehabilitation or management of negative environmental
impact with respect to the license or lease. Financial
contributions depend on the size of the petroleum
operations and the level of environmental risk that may
exist.
The regulator will apply the Fund towards the
rehabilitation, remediation or management of negative
environmental impact only when the licensed operator
lacks the capacity, or is unable to undertake the
rehabilitation or management of any negative impact on
the environment effectively.
7. Why did previous administrations fail to pass the PIB
into law?
The previous administrations failed to pass it into law
because of many factors, especially politics, sectional
interests, and lack of political will.
8. Why has it become possible to pass it?
It was more enhanced by a combination of factors,
including the commitment of the President Muhammadu
Buhari-led administration, host communities and oil and
gas operators. Unlike the past when community issues
were widely condemned, the conversation about Host
Community Trust Fund shifted to community
representation, the structure of the fund, and equity
stakes.
9. What should the public expect in the coming weeks?
The public should expect the House of Representatives to
conclude work on the PIB, which will be followed by a
joint session of the Senate and the Representatives to
review it, before the PIB goes to president Buhari.
10. So, when will it eventually become an Act, and what
impact should be expected?
It is now certain that the PIB will become an Act this year.
It will bring about the restructuring of institutions, attracts
local and foreign investors, and enhance transparency and
accountability in the oil and gas industry.