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Even with the passing of the bill on the governance of the oil industry by the National Assembly, unresolved issues, which should have been addressed in the legislation, STANLEY OPARA writes
There is no news that the current National Assembly has adopted the governance of the oil industry, which aims to provide the governance and institutional framework of the Oil industry.
This bill is definitely the first part of the petroleum industry bill. National Assembly.
A highlight of the IGBP is that it imposes a 5% tax on fuel sold across the country to fund the Oil Equalization Fund.
According to the provisions of the draft law, Nigerians must wait for the unbundling of the Nigerian National Petroleum Corporation (NNPC) and the creation of the Federal Ministry of Petroleum, Nigerian Petroleum Regulatory Commission (NPRC), N Petroleum Assets Management Company and National Petroleum Company (NPC)
Although this development comes after several failed attempts to pass a law to regulate the oil industry of the country, Nigeria does not seem to have used the good model, even with the Senate. first adoption of the law in May 2017.
The IGBP, however, was passed only in January 2018 by the lower house of the National Assembly (the House of Representatives), opening the way to the passage of a synchronized version. The 10-year-old bill was passed on to President Muhammadu Buhari only for his assent in July 2018.
The bill, which had been initiated by President Umaru Yar & Adua and sent to the 6th National Assembly in 2008, was trapped
The Senate adopted the IGBP on March 28 after adopting the report of the IGBP conference committee that harmonized the versions previously adopted by the Senate and the House of Commons. representatives
. Among other things, the bill's purpose is to unbundle the NNPC and merge its subsidiaries such as the Department of Petroleum Resources (DPR) and the Petroleum Product Prices Regulatory Agency (PPPRA) into a single entity.
. Stakeholders welcomed the adoption of the draft law by the National Assembly, qualifying development as a necessary step to reform the oil and gas sector and encourage investment.
There are a number of problems that some consider a major gap in the framework and that must be solved in order to make the petroleum industry competitive.
One of the major areas of concern, according to Pricewaterhouse Coopers, for example, "in a national emergency, the Minister will have the right of first refusal on all petroleum and petroleum products, under the terms of the law. 39, a permit or a lease. The Minister may then order a crude oil producer or an oil trader to supply products either to the government or to a specific licensee.
19659018] The fine for contravention is technically unlimited, since the minister can increase the fine imposed by the bill (N10m), by regulation.
The Minister also has the power to determine assets, liabilities and the bill proposes the establishment of boards of directors for commercial institutions.
However, the composition of these boards, according to KPMG's analysts' views, may not reflect the appropriate balance of powers to ensure effective oversight of the board; reduce the risk of executive decision making; and promote sufficient independence within the board to minimize undue government interference.
The firm therefore recommended that it may be necessary to increase the ratio of non-executive directors to executive directors and provide specific criteria to ensure the independence of non-executive directors.
The NNPC has always experienced frequent changes in the board and management, which has had serious repercussions on the company's performance for decades
Although the IGBP has defined mandates for non-executive directors. Currently, there is no provision to ensure the stability of the terms of office of executive directors and to prevent them from changing the dynamics of the political context as much as possible, KPMG noted, asserting that the issuance of well-defined contracts to executive directors could solve the problem. .
Newly established business entities should be governed in accordance with the provisions of the Corporate Governance Code. However, the bill does not include any recommendations for dealing with any conflicts that may arise between its members. the provisions of the SEC Code, according to analysts, who felt that to avoid any ambiguity, it will be necessary to emphasize the superiority of the provisions of the bill over those of the SEC Code, where such conflicts arise.
In view of the broad powers and functions conferred on the NPRC, there are concerns that the NPRC owes
KPMG, in its report, stated: "One of the functions of the NPRC is to & C est est est est est est est est. establish the framework for calculating the fair market value of petroleum products and gas treatment rates. and transportation
This seems to indicate that the government might not want to deregulate the downstream sector of the oil industry.
In addition, the involvement of automotive diesel (diesel), which has been deregulated, is not clear.
"The NPRC is authorized to levy fees for" services rendered "to industry players.This may create a conflict of interest with its regulatory role
" The Bill allows the commission to levy special rights on dealerships and tenants for carrying out any project that is of common interest to the oil and gas industry. The amount of this special levy or its frequency is not indicated in the bill, which may create uncertainty for potential investors. "
IGBP Provides for the Surrender of at Least 40% of NPC Shares in 10 Years It is questionable, however, that private investors are willing to engage in a majority-owned and managed company by the government in the long term.
According to the bill, the Nigerian Petroleum Asset Management Company (NAPAMC) is to be incorporated as a public limited company within six months from the date of the agreement.
NAPAT shares will be held by the Ministry of Petroleum Incorporated (40 per cent), the Inco Ministry of Finance NAPATM is therefore responsible for the management of all assets currently held by NAPATC. the NNPC under the Production Sharing Contracts (PSC) and Back-in.
But there are fears that the bill does not indicate the specific type of liability that will be transferred or how the new company will be finan
It is unclear whether the government will allocate funds to settle the transferred liabilities or whether the shareholders will be required to fund the NAPLMC and settle the liabilities, which could adversely affect the viability of any investment in the NPC.
Market experts decide [19659007] Cowry Asset Management Limited Chief Executive Officer Johnson Chukwu has expressed his concern over the retention of the Oil Equalization Fund in the IGBP, saying the decision remains a huge gap from the objective participation of stakeholders He said, "This will require us to continue to regulate the downstream section of the industry with its consequential problems.
That's the reason our refineries do not work. ; we continue to import petroleum products, we should normally export.
"With the PEF still in place, we will achieve the regulation of the market, and this will be supported by law.
The President will not have the discretion to adjust the price regime , as he would need to get the approval of the National Assembly to do it.
"This, he said, would multiply the woes of the industry.
The President, Council Institute of Oil Professor Akin Akindoyeni stated that although the bill allows the decentralization and commercialization of NNPC's activities, major deficiencies still remain in this area.
To a large extent, he said with the IGBP: "It will still be as usual", because more equity is still not given to the host communities. "
He said that with the highly degraded environment of the communities and its main source of livelihood, there were no clear provisions in terms of alternative sources of livelihood for the host communities
But Senate Belief on IGBP Steadfast
The Senate Speaker, Dr. Bukola Saraki, had recently listed the objectives of the IGBP, namely the transformation of the administration of the upstream sectors. , intermediate and downstream of the Nigerian oil industry.
Saraki had also welcomed the move He added that the bill, when enacted, will modernize the oil industry and modernize the oil industry. system to create an environment conducive to oil activities
promote openness and transparency in industry – by clarifying the rules, processes and procedures that govern the petroleum sector
This should eliminate or, worse yet, significantly reduce corruption and make the sector more efficient and productive, "he said.
Saraki is excited: "Nigerians should know that the IGBP, once it has the force of law, will help alleviate the problems that lead to scarcity. supply of Premium Motor Spirit (gasoline); the poor timing of import planning that results in fuel import constraints; corruption, diversion and smuggling – which lead to artificial scarcity;
CIOs express optimism
In the midst of this regulatory turmoil, international oil companies in Nigeria have expressed a sort of hope over the government's current actions in the oil industry, which they say able to attract more investment, especially after the $ 5.1 billion joint venture argument between the federal government and international oil companies.
The general manager of Mobil Proding Nigeria, Paul McGrath, said that the oil industry bill The Assembly was commendable, but she stressed the need for a final outcome.
McGrath said, "We must have an industry reform bill or a set of bills that will attract international investment. I have been very encouraged by the dialogues we have had with the National Assembly and the technical teams so far.
"They listened, they listen and try to engage the industry, and I think it's very interesting.
But in the end, we must stop talking about industry reform, reform the industry, and then move forward and unlock the potential.
The National President, Shell Companies in Nigeria and Managing Director, SPDC, Osagie Okunbor, said that the security issues, the procurement cycle, the sanctity of the contracts and the Joint Venture and of Production Sharing remained to be sorted, as well as the laws of industry reform
. For the first time, we see very serious efforts to try to solve this problem and what is useful is that we do not have a cacophony of voices.
GDP must be spent to remove uncertain but not a GDP that does not encourage investment.
Chevron General Manager, Jeff Ewing, noted that there had been fewer arguments on the problems of the joint venture and that this had restored confidence to the industry
said in Abuja that "the government and our partners have done good things on the backlogs of the JV.
The execution of these agreements went very well, and this really boosted our confidence in the JV. be globally competitive in tax policies and the ease of doing business.
This is the discussion we had with the government and we make sure that they understand the implication of the competitiveness of the industry. "
in Governance in African Countries
In terms of governance of its oil and gas industry, the Resource Governance Index of 2017, which was unveiled by the Institute of Governance of natural resources, ranked Nigeria 55th out of 89 Ghana, with its African counterparts, and 15 other African counterparts
its West African counterpart, Ghana, was the first country to rank 13th, followed by Burkina Faso, which was in 20th place Other African countries that have drawn up this list were South Africa, Côte d 'Ivoire, Cameroon, Niger, Mali, Tanzania, Morocco. , Zambia, Mozambique, Sierra Leone, Uganda, Liberia, Botswana and Tunisia The NRGI stressed that Nigeria's oil and gas sector governance issues have an impact on the well-being from a large number of people because the country is the country most dependent on natural resources.
"The challenges of governance are present throughout the extractive decision chain
Value is lost especially in licenses and in Nigerian National Petroleum." eum Corporation, as well as oil and gas revenues are shared and saved, "says the report.
He adds:" In addition, scandals involving senior officials of the NNPC have afflicted the sector and Given the central role of the NNPC at all stages of the decision-making chain, improving the governance of the public enterprise is crucial. "
The license was identified as the weak link in the value of Nigeria. The report notes that the score and ranking reflect high levels of opacity in key areas of decision making, including corporate qualification.
Sarah Muyonga, Director of NRGI Nigeria, explained that a well-organized and transparent licensing cycle gives Nigeria an excellent opportunity to send a message of its recent report. NRGU also stressed that "the Nigerian government does not publicly disclose the financial interests of government officials in the extractive sector. sector or the identity of beneficial owners of extractive companies, although it has made early commitments with the Extractive Industries Transparency Initiative and the Open Government Partnership.
"The government is committed to divulging all oil, gas and mining contracts in its" Seven Big Wins "political strategy and as part of its OGP action plan, but until the end of the year. at present, he has not disclosed any contracts. "
The Way Forward
Governance is generally the whole process, custom, policy, law, and institution affecting how a society is directed, administered or controlled.
Effective mechanisms and measures are in place either to: meet current social expectations or meet the narrowest expectations of shareholders.
With respect to On corporate governance and compliance issues, PwC stated that governance is about setting a direction and strategy for shaping, improving transparency, and
reputation through checks and balances; shape the relationship between business owners and managers; provide appropriate oversight of senior management; and determine the rights and equitable treatment of stakeholders.
According to the consulting firm, the Nigerian oil and gas industry needs to establish a strong and balanced board of directors; select CEOs and senior management based on proven expertise and integrity; guide the company strategy and monitor the performance of the company; establish an appropriate succession plan; and monitor the effectiveness of governance arrangements and modify them as necessary.
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