PRESIDENT Goodluck Jonathan sent the latest draft of the wide-ranging Petroleum Industry Bill (PIB) to the National Assembly for debate on Wednesday, petroleum minister Diezani Alison-Madueke has revealed.
“I am happy to announce to you that this morning (that) Mr. President forwarded the Petroleum Industry Bill to the National Assembly,” Diezani Alison-Madueke told reporters at the presidential villa in Abuja.
The long-delayed and complex bill could be one of the most important pieces of legislation in the history of Africa’s biggest crude oil exporter, changing everything from fiscal terms to the make-up of the state-oil firm.
Several drafts have been drawn up in recent years but have been scrapped or re-written because government, lawmakers and foreign oil companies couldn’t agree on details.
The Bill, approved by the Cabinet on July 11, proposes 50 percent tax for onshore and shallow fields and 20 percent for deepwater fields, according to details of the Bill available to the press. The original proposals were for 85 percent and 50 percent respectively.
A fiscal framework was “developed to make the industry more investment-friendly and make it more profitable for investors,” Petroleum Minister Diezani Alison-Madueke said on July 11. At a time when more African countries are becoming oil producers, Nigeria needed to take measures to attract investors and remain competitive, she said.
The new draft includes plans to privatize the Nigerian National Petroleum Corporation, NNPC, and create an asset management company which will operate as a holding company, and set up a new gas company.
The proposed law would also ban flaring of gas in the course of oil production in Nigeria after Dec. 31. The West African nation, which has the continent’s largest gas reserves of more than 180 trillion cubic feet, burns away most of the fuel it produces along with oil because it lacks the infrastructure to process it. The petroleum minister may grant exceptions of up to 100 days to companies for safety flaring, equipment failure or because a customer can’t receive it.
Energy companies will be required to remit 10 percent of their profits to a fund to help develop communities in the oil region and curb sabotage bred by resentment to ecological damage from oil activities.
Attacks by armed groups including the Movement for the Emancipation of the Niger Delta , MEND, targeting Nigeria’s industry led to output losses of more than 28 percent from 2006 to 2009. The disruptions subsided after thousands of militants campaigning for more local control of the delta’s energy resources accepted a government amnesty and disarmed in 2009.
- Additional Reporting from Bloomberg News