The Petroleum Industry Governance Bill (PIGB) passed by the National Assembly would have been an excellent piece of legislation that will provide governance and institutional framework for the oil sector, but for the provision of a five per cent fuel tax meant to finance the Petroleum Equalisation Fund (PEF).
The fuel tax has raised strong speculation of a hike in the price of petroleum products across the country if the bill is assented to by President Muhammadu Buhari. The assurance of the Nigerian National Petroleum Corporation (NNPC) that government has no plans to increase the pump price of fuel has not removed the possibility of another fuel price increase, the second time under the present administration. The passage of the PIGB together with the contentious tax, a few weeks ago, followed final consideration and adoption of the conference committee report on the bill by the Joint Committee on Petroleum Downstream sector.
Since the passage of the bill, civil society organisations and organised labour have urged President Buhari to decline his assent to the bill. We urge the president to withhold his assent in respect to the five percent fuel tax. Section 36(1) of the bill states inter alia: “There shall be established the petroleum equalisation fund into which all monies payable to the Equalisation fund by way of a 5 percent fuel levy in respect of all fuel sold and distributed within the federation which shall be charged subject to the approval of the minister”.
Other sources of funding of the PEF as contained in the bill include subventions, fees and charges for services rendered, as well as net surplus revenue recovered from petroleum marketing companies. In addition, the bill states that the PEF shall collect all revenues and levies charged pursuant to the provisions of the bill, determine at such intervals as the board may direct the net surplus revenue recoverable from all marketing firms and accruing to that company from the sale of petroleum products at such uniform prices as may be fixed by the minister of Petroleum Resources.
Besides, the PIGB also created a new outfit to be known as the Nigeria Petroleum Regulatory Commission, which will, among other things, administer and enforce policies, laws and regulations relating to all aspects of petroleum operations, in addition to enforcing compliance with the terms and conditions of all leases, licences, permits and authorisations issued in respect of any petroleum operation. Generally, the PIGB seeks to unbundle the NNPC, provide for the establishment of the Federal Ministry of Petroleum Incorporated, Nigeria Petroleum Regulatory Comission, Nigeria Petroleum Assets Management Company, among other entities.
Undoubtedly, some of the provisions of the bill could make the oil industry to be efficiently managed. But, the PIGB is not a one-size-fits-all legislation. It is just one of the four key components of the omnibus Petroleum Industry Bill (PIB) designed to provide framework for investors in the oil industry, but has suffered endless delays at the National Assembly. It has passed through five sessions of the National Assembly since 1999 without a final legislation.