The National Assembly is currently considering parts of the Petroleum Industry Bill (PIB) prior their being passed into law as separate legislations. The PIB is a piece of proposed legislation which was conceived to repeal and replace the Petroleum Act 1969. The PIB was broken up into small manageable Bills in line with the approach adopted at the inception of President Buhari’s administration and the 8th National Assembly. The Petroleum Industry Governance Bill (PIGB) and two gas sector-focused Bills which are “a Bill for an Act to Provide for the establishment of the Nigerian Gas Processing and Marketing Regulatory Board and for Related Matters (606)”; and “a Bill for an Act to Provide for the Establishment of the National Gas Resources Development Agency and for Related Matters (Bill 607))” are parts of the broken up PIB under consideration by the National Assembly. Bill 606 and Bill 607 are gas-sector focused Bills intended to establish a stand-alone gas sector that will be regulated separately and delinked from the oil sector.
Bill 606 is intended to establish a new agency which will be known as the Nigerian Gas Processing and Marketing Regulatory Board. This Board shall be headed by a Director-General. Section 2 of the Bill proposes the establishment of a Governing Council whose Chairman shall be appointed by the President. In addition to the Chairman, the membership of the Governing Council shall consist of one person each representing the Ministry responsible for Petroleum Resources; Ministry of Trade and Investment; the National Oil Company; the Association of Nigerian Gas Companies in the downstream sector; the Nigerian Association of Gas Engineers, the Manufacturers Association of Nigeria; and two persons from the public or private sector to be “appointed on individual merit”.
By the provision of section 7 of the Bill, the Board will have fourteen (14) functions which include the regulation and monitoring of technological modelling used for standard natural gas and petroleum liquefaction and other formats of gas to energy plants; to ensure standard and safety in the operation of gas barges and small unit gas tankers; the formulation and implementation of all policies on safety and security of gas processing, transportation, distribution as well as utilization of gas for domestic and industry purpose; the regulation of gas export and the grant of licences to downstream operators.
Section 8 (3) stipulates that the Director-General shall hold office for a period of four (4) years in the first instance and shall, subject to the pleasure of the appointing authority, be eligible for reappointment for one further term of two (2)years. A Director-General shall not be eligible for reappointment after serving the Board for a period totalling six years.
Additionally, Sections 9-16 provide for the removal of the Director-General, appointment of other staff of the Board, the application of the Pensions Act, funding and expenditure of the Board, annual estimates and accounts, annual reports and the power of the Minister to give directives to the Board.
As stated above, Bill 607 is a Bill for an Act to Provide for the Establishment of the National Gas Resources Development Agency and Related Matters. The Bill has eleven sections. Section 1 provides for the establishment of the National Gas Resources Development Agency also headed by a Director-General, while section 2 creates a Governing Board for the Agency which shall be headed by the Chairman. The Chairman shall be the appointee of the President. Membership of the Governing Board shall be drawn from Federal Government Ministries such as the Petroleum Resources; Science and Technology; Ministry of the Environment; Budget and National Planning; Niger Delta Affairs; Nigerian Institute of Geo-Sciences and Mining; Nigerian Institute of Oceanography and Marine Research; Nigerian Academy of Science; one person to represent Nigeria Association of Gas Engineers; and two persons to represent the universities, one of whom shall represent the universities of technology.
The composition of the Governing Board as stated above is noteworthy because of the number and functions of relevant ministries of the Federal of Government (relative to the subject matter of this Bill) which have been designated for membership of the Board. It is not exactly clear whether the possession of cognate skill or subject matter competency was considered in the proposed constitution of the Board.
Furthermore, by virtue of section 2 (e), the Director General is eligible to sit at the meetings of the Board but he/she will not be entitled to vote at such meetings. The tenure of the Board members other than an ex-officio member shall be for a single non-renewable term of four (4) years.
Also, the members of the Board shall be entitled to allowances as may be determined by the Board itself in consultation with the National Salaries, Wages and Income Commission (NSWIC). In other words, the members of the Board are empowered to fix their own allowances subject to or in consultation with the NSWIC.
It is submitted that in a country where cases of abuse of office and/or privileges are rampant, it will be inappropriate and against public interest to allow members of the Board who are senior civil servants to determine their allowances whether independently or in consultation with NSWIC.
Furthermore, sections 4, 5 and 6 make provisions for the mode of resignation of the membership of the Board, the circumstances under which any member may cease or lose his or her membership of the Board, and the President’s power to remove a member from the Board if any circumstance arises which would require the removal of that member from the Board.
The functions of the National Gas Resources Development Agency (the Agency) are provided for in section 7. One of the Agency’s functions is to collate and harness extant gas resources development schemes and to formulate a holistic and strategic national gas resources development and management policy for upstream gas exploration.
In furtherance of its legislative powers, the House Committee on Gas Resources conducted a public hearing on February 16, 2017 and also accepted memoranda from interested stakeholders. The decision to conduct a public hearing may have been in recognition of the enormous responsibility inherent in the task of enacting a gas-sector focused legislation(s) which is expected to identify the various challenges affecting gas exploration and production in Nigeria and to institute a regime that will address identified problems in order to engender a more viable sector.
In designing a competent regulatory framework for the regulation of the upstream, midstream, and downstream gas sector, it should be the norm to first identify a clear policy purpose that will guide the formulation of a gas sector legislation for Nigeria. The policy framework must reckon with the current realities and challenges and also should be able to project a medium and long term future for the sector in the context of a globally traded commodity. As part of the current realities and/or challenges, Nigeria must leverage her gas resources to ignite the urgently needed economic revival through industrialization, wealth and job creation, and to address the perennial power shortage issue.
To realise the established policy purposed, the proposed gas sector legislation must reflect and address the complexities of the sector and the extant lack of needed infrastructure, and the need to promote or stimulate investment so as to unlock the potentials of the Nigerian economy. Additionally, the current socio-economic and environment context of Nigeria characterised by poor gas sector infrastructure, militancy and insufficient investment in gas exploration should provide a perspective or the background for the proposed legislation(s).
It is submitted that the proposed legal framework must secure national interest by creating a business-friendly environment for gas sector operations. Historically, the Federal Government of Nigeria had related with and treated the oil and gas sector as the proverbial cash cow that generated (and continues to generate) the most income for the Federation. This restrictive perception of the sector must change. Thus, the gas sector should now be viewed as a resource with utility value and therefore possesses the capacity to serve as an engine for economic re-engineering, industrialisation, a tool for wealth and job creation and potentially, a catalyst for the longstanding quest for infrastructural development. This new philosophy needs to be properly articulated into a clear policy framework from which the new legal regime for the gas sector will be formulated.
Similarly, it is important to re-evaluate the structure and regulatory options for the governance of the proposed delinked gas sector. From the structure which can be gleaned from the above proposed legislations, it would seem that the legislature appears to favour the establishment of multiple agencies or regulatory authorities as opposed to a single but more competent authority that will be modelled after the Department of Petroleum Resources (DPR). The proposed delinked gas sector would require the support and guidance of a DPR styled regulator established to regulate all aspects of the gas sector. A regulatory agency of that mode will be best suited to providing the stable and systematic regulatory support that will be necessarily required by an emerging gas sector. Additionally, such a regulatory agency will be able to attract the competency and/or the various skills set which will be required for a more competent regulation of the gas sector. Therefore, the National Assembly may have to revisit and revise the institutional structure for the gas sector to ensure that whatever structure that is eventually adopted by the enabling Act is fit for purpose.
From the foregoing, the Nigerian gas sector is evidently in need of both a new regulatory framework and a new policy direction that mirrors the country’s current challenges and is also able to identify how to leverage our natural resources especially gas to engineer a vibrant economic development and industrialisation.
Thus, a new regime for gas sector has become imperative. However, the regime must be one that will provide short and medium term solutions for extant challenges and provide a well articulated direction into the future. These two Bills contain some useful provisions. However, it is posited that the Nigerian gas sector requires a regulator in the mode of the DPR. The gas sector will benefit from the existence of a dedicated regulator rather than some agencies and boards whose membership and functions will be limited to a maximum term of six (6) years. A DPR-styled regulator will be most suited for an independent gas sector that is free from the domineering influence of oil. Additionally, it will provide a better governance and support mechanism to the private sector as well as being able to attract, and to retain competent and skilled industry experts to drive gas sector regulation in Nigeria.
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