Kachikwu Makes Case for Petroleum Industry Governance Bill

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Kachikwu delivering his Ministerial Address at the Public Hearing of the National Assembly Joint Committee on Petroleum Industry Governance Bill

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EMMANUEL Ibe Kachikwu, minister of state for Petroleum Resources, on Friday, December 9, presented the views of the Executive on the proposed “Bill For An Act To Provide For The Governance Of The Institutional Framework For The Petroleum Industry And Other Related Matters”, otherwise known as the Petroleum Industry Governance Bill, PIGB.

Speaking at the Public Hearing of the National Assembly Joint Committee on Petroleum Industry Governance Bill, Kachikwu after reviewing the importance of the Bill said that the executive would align with the concept of a single regulator for the petroleum industry. “What Nigeria needs going forward is a regulator that covers the field, as opposed to dissipated regulatory power amongst agencies. The regulator should cover upstream, midstream and downstream oil, gas and products regulation, as well as technical, economic and HSE regulation,” he said.

He said the PIGB provides that the Commission will issue regulations in respect of a number of specified matters in order to give proper effect to the Act. He said that while the minister should be empowered to be the overall supervisor of the industry, there should be checks and balances on regulatory power through tools such as administrative law. “This ensures that power to issue delegated legislation is placed in the hands of the appropriate member of the executive with responsibility both to the President and also to the National assembly in terms of oversight. The counter check on this is that the technical issues are handled by the regulator, for consideration of the Minister, who upon approval of the recommendation, will issue the appropriate regulation,” he said.

Equally important according to the minister, is £the effectiveness of the minister’s powers to issue policies, supervise the industry and manage Nigeria’s petroleum resources, is the need for a well-resourced and solid technical back office.” Hence, he said that the National Oil Policy and the National Gas Policy contained proposals for institutional reforms at the Ministry of Petroleum Resources in such regard.

Besides, he said government would expect the PIGB to address the long standing issue legislatively by creating a Petroleum Technical Directorate.

As for the Board of the Commission, minister said that government would want Commission to be chaired by the serving minister, to ensure effective interface between the regulatory and policy making institutions.

The PIGB, he said, proposes four year terms for commissioners whose terms should be staggered in order to ensure continuity in the governance of the Commission such that at no time would there be no executive commissioners in office.

Kachikwu said further: “An essential regulatory tool for a sector that is being liberalised is the need for the Commission to be granted competition regulatory powers, especially in light of the nature of the midstream which is network bound and has several monopoly features that need to be carefully managed, otherwise we will be substituting government monopolies with private monopolies as we liberalise the sector.

“An essential issue, going forward, is the need to establish a registry of records for all the titles to be issued and managed by the commission. This will aid public access to information, and the due diligence reviews by third parties into assets.

“The composition of the board of the Commission should ensure linkages to critical and related sectors. As such, non-executive members of the commission should include the representatives from the Ministries of petroleum, power, finance and environment. Experiences from these sectors will no doubt enrich the work of the Commission.”

From left:  Kachikwu; Adegbite Adeniji, senior technical adviser on Policy and Regulation to the Minister; and David Hassan, director, Gas Department at the Ministry of Petroleum Resources
From left: Kachikwu; Adegbite Adeniji, senior technical adviser on Policy and Regulation to the Minister; and David Hassan, director, Gas Department at the Ministry of Petroleum Resources

Above all he said the Commission should be constituted with the following departments:

Upstream regulation; Midstream and Downstream Oil Regulation; Midstream and Downstream Gas Regulation as well as Health Safety & Environment.

“With respect to Government’s role on the commercial side, the reforms that we commenced earlier on in the year need to be sustained through legislation. The critical issues here are governance, funding, efficiency and accountability of the commercial entities.

“A National Oil Company, NOC, needs to be created as a holding company for an integrated operation that will operate on a fully commercial basis,” he said.

As regards funding, the minister said the government’s recommendation “is that there should be an explicit provision in the Bill that clarifies that the National Oil Company shall cease to be funded from the federation account and shall have the power to raise funding for its operations from the debt and capital markets.”

— Nov 28, 2016 @ 01:00 GMT

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