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Nigeria’s house of representatives approves finalised Petroleum Industry Bill
The Nigerian House of Representatives has approved and passed the report on the Petroleum Industry Bill after minority lawmakers staged a walkout of the chamber today to address journalists over grey areas in the Electoral Act Amendment Bill. This comes after the Senate approved the reconciled version of the Petroleum Industry Bill on Thursday. The lawmakers are to harmonize the bill and transmit it to the President. Joining CNBC Africa to discuss this development is a Senior Partner at Gbenga Biobaku and Co, Gbenga Biobaku.
Fri, 16 Jul 2021 14:52:08 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The Petroleum Industry Bill, a comprehensive legislation comprising over 400 sections, covers critical aspects of the oil and gas sector, including host communities, allocation of funds, and regulatory frameworks.
- Controversies arose over the percentage allocation of funds for host communities, with the final bill settling on 3% after deliberations between the Senate and House of Representatives.
- The transformation of NNPC into a limited liability company, earmarking profits for exploration in frontier basins, and promoting commercial operations mark significant milestones for the industry's development and growth.
Nigeria's House of Representatives has approved and passed the report on the Petroleum Industry Bill after minority lawmakers staged a walkout of the chamber today to address journalists over grey areas in the Electoral Act Amendment Bill. This development comes after the Senate approved the reconciled version of the Petroleum Industry Bill on Thursday. The lawmakers are now set to harmonize the bill and transmit it to the President for final approval. The passage of this bill marks a significant milestone for Nigeria's oil and gas industry, which has been grappling with regulatory uncertainties for over two decades.
The Petroleum Industry Bill, a comprehensive legislation comprising over 400 sections, covers critical aspects of the oil and gas sector, including upstream, midstream, downstream, and host communities. The bill aims to create a robust regulatory framework to govern the industry and stimulate investments while ensuring the fair participation of all stakeholders.
One of the key contentious areas of the bill is the provision for host communities, where disagreements arose over the percentage allocation of funds. Initially set at 5% of operating expenditure in the draft bill, the final version approved 3% for host communities, which was later increased to 5% by the House of Representatives before being harmonized back to 3%. Despite concerns from some host communities, the allocation is expected to amount to approximately $410 billion annually, providing a direct financial injection to the communities.
Another critical aspect of the bill is the earmarking of 30% of NNPC's limited profits to fund exploration in frontier basins. This provision aims to incentivize investments in untapped regions of the country and promote the overall growth of the oil and gas sector. The funds allocated for frontier basin exploration will be evenly distributed across all six frontier basins in Nigeria, signaling a balanced approach to resource allocation.
The transformation of the Nigerian National Petroleum Corporation (NNPC) into a limited liability company is a significant development outlined in the bill. This transformation will require NNPC to operate on a commercial basis, similar to other global oil corporations, and enhance its efficiency and accountability. Within the next 18 months, NNPC is expected to complete its transition and operate as a profit-driven entity, paying dividends to its shareholders, including the Nigerian government.
Overall, the passing of the Petroleum Industry Bill represents a critical step towards modernizing Nigeria's oil and gas sector, attracting investments, and ensuring sustainable development for host communities. While there are still challenges to overcome and areas to fine-tune, the bill lays a solid foundation for the industry's future growth and prosperity. The regulatory clarity provided by this legislation is expected to boost investor confidence and drive innovation and competitiveness in the sector. As Nigeria moves forward with implementing the provisions of the bill, close monitoring and effective governance will be vital to ensure its successful execution and maximize the industry's potential.
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