Federal Government removes transparency clause from new Petroleum Industry Bill

The Federal Government has deleted a provision, which could force it to publish how much oil it pumps and all the payments it receives from oil firms from the new Petroleum Industry Bill (PIB), a thorough study of the Bill at the weekend revealed. The older version of the Bill contained the provision. The government had always promised to ensure that there was transparency in its oil transactions, which would entail publishing the exact barrels of crude oil produced and the revenue. President Goodluck Jonathan handed over the Bill to the National Assembly, according to Minister of Petroleum Resources, Diezani Alison-Madueke, “To particularly trigger the much-awaited reforms in the oil and gas sector.” But provisions that would have forced government to publish the exact barrels of crude oil it pumps and all the revenue it got from oil firms – in an industry where secrecy is blamed for corruption – have been removed from the Bill. In its place, the Nigerian National Petroleum Corporation (NNPC) at the weekend stated that transparency could be achieved in the sector through the Freedom of Information (FoI) Act, which the President signed few days to the 2011 general elections. Group Managing Director (GMD) of the NNPC, Andrew Yakubu, who stated this, pledged to abide by the spirit and letter of the FoI Act in all its operations to entrench a culture of probity and accountability. But an oil and gas expert, who consulted for the government on the PIB, Pedro Van Meurs, told Reuters that the removal of the provision on transparency should be a source of concern for Nigerians. “Transparency provisions related to corporate income tax, hydrocarbon tax and production sharing were deleted. This should be a source of concern,” he said. “I expect the petroleum industry to be happy. I expect many Nigerians to be upset,” he added. When the law finally comes, it looks likely to be a botched job that gives favourable tax terms to foreign oil firms while doing little to satisfy calls for transparency and reform of a corrupt and wasteful sector. The Bill also gives the oil minister new supervisory powers over all industry institutions, including a new regulator to police downstream and upstream, raising concerns about checks and balances. Lawmakers had rejected drafts that did this in the past. It says anyone who “interferes” with the minister will be fined or imprisoned. And it allows the oil minister and the directors of state institutions to receive gifts, which will not please civil society groups calling for an end to graft. NNPC, however, pledged to abide by the spirit and letters of the 2011 FoI Act in all its operations to entrench a culture of probity and accountability. Speaking at the induction ceremony for newly recruited graduate trainees at the NNPC Towers in Abuja, Yakubu stated that ahead of the signing into law of the then FoI Bill by Jonathan, the NNPC had taken bold measures to open its operations to public scrutiny. “Long before the Freedom of Information Act came into force, the NNPC has been maintaining an open door policy which sees it volunteering information to its various publics through press releases, advertorials and presentations at different forums, including hearings at the National Assembly,’’ the GMD stated. He said with the formal signing of the FoI Bill into law last year, the NNPC management swiftly established a task force with the goal of examining the new law and advising management on how best to comply with the provisions of the law. “We have since internalised the contents of that report and as a corporation, we are ready to ensure that our actions and processes live up to public scrutiny. “Under my watch as GMD, I intend to abide by this principle,’’ Yakubu affirmed. In the bill, foreign oil companies like Shell, Chevron and Exxon will be relieved that tax changes are more favourable compared with previous versions. This could be a sticky point with lawmakers seeking a better deal for Nigeria. Analysts believe that the taxes foreign firms pay on profits onshore, which will be published under the PIB, will amount to a big cut from the taxes that are now levied in secret. Furthermore, the cut will apply both to existing fields and new fields, unlike in earlier versions of the law where tax cuts were only on new fields, the analyst said. Van Meurs says the government could lose 20-50 per cent of its tax revenue per barrel on existing assets. The PIB is meant to change everything from fiscal terms to overhauling the NNPC. Its comprehensive nature caused years of disputes between lawmakers, ministers and oil majors. However, the latest copy proposes few changes that will improve transparency. For instance, keeping royalty payments secret will not be allowed. Oil company profit taxes proposed in the Bill are also in the public domain for the first time but it does not require disclosure of oil sales, of other taxes like income and hydrocarbon tax, nor of payments to the government, including signature bonuses. Openness on such subjects is vital to clean up the energy sector, say campaigners. Detail is thin on plans to partly sell off the mismanaged NNPC, seen by experts as the biggest barrier to progress. Nigeria exports about 2 million barrels per day (bpd) but could double this with a better-managed state oil firm able to pay for its share of joint ventures, foreign oil majors say. NNPC was last month described by the National Assembly as “answerable to no one” in a probe into a $6.8 billion fuel subsidy fraud. It is accused by oil traders of owing billions in unpaid bills. The NNPC has rejected allegations of corruption or insolvency.

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