Let Petroluem Industry Bill, Build Institutions, not individuals, says ERA/FoEN

The Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) has frowned at provisions of the draft Petroleum Industry Bill (PIB) which unduly bestows discretionary powers on the President and the Minister of Petroleum, saying a PIB with the mandate of the people must be built around institutions and not individuals for it to be impactful.

ERA/FoEN suggested that such provisions be totally expunged from the draft PIB while issues such as award of oil blocks be made open to transparent and competitive bidding processes.

The call is coming on the heels of the Public Hearing on the Draft PIB organised by the House of Representatives in Lagos and Port Harcourt earlier this week which was conducted in such manner that community and civil society groups were not adequately sensitized to be part of. In a release issued today (April 25, 2013) ERA/FoEN wondered why information about the public hearing and date of the sittings were carefully shielded from community people, civil society groups, and other critical stakeholders while oil multinationals, petroleum marketers and their consultants had adequate information and were prominently represented at the sittings.

‘While we applaud the House for organising the hearing, we are not too satisfied that community groups impacted by the activities of the oil industry and in whose interest the PIB is being fashioned were not duly notified so as to make their observations known’, said ERA/FoEN Executive Director, Dr. Godwin Uyi Ojo.

Uyi Ojo who delivered a memorandum on behalf of ERA/FoEN and civiel society groups at the Lagos hearing held at the Lagos Airport Hotel on April 23, specifically listed certain critical areas of the PIB that civil society and community groups want reviewed before it is finally passed into law.
“The absence of community groups at the hearings seems to justify our call for a redefinition of Section 2 of the PIB 2012 which deals with the question of Sovereignty and Ownership. As against the proposal which vests ownership and control of all petroleum resources in Nigeria on the government of the federation, we propose that it be amended to reflect that ‘it is vested in the People of the Federal Republic of Nigeria”.

Ojo further recommend that a new provision be added that vests management and administration of petroleum resources on the government of the federation.
A critical area that we demand intervention is the section on the Discretionary Powers which bestows powers on ‘the President to grant licenses and leases in special circumstances’, to which ERA/FoEN insists such provision should no longer find a safe haven in legislations in Nigeria as such powers have been severally abused, increases corruption and creates systemic distortions of due process and accountability.
ERA/FoEN wants the provision totally removed while award of oil blocks be made open to transparent and competitive bidding processes.

Other areas of intervention
The memorandum presented by ERA/FoEN criticised the portions of the PIB which vests overarching powers on the Petroleum Minister, insisting that such powers defeats key objectives of the bill such as providing level playing ground for all actors and creating efficient and effective regulatory agencies and promote transparency and openness in the administration of petroleum resources in Nigeria.

“This draft bill makes the Minister as it were, the sole administrator over the entire Petroleum Industry. Apart from chairing most of the institutions and agencies created under the draft PIB, the minister is also saddled with the responsibility of nominating appointees for the different agencies to the President. It does appear that Section 6 of the Bill grants the minister superhuman powers but spectacularly fails to provide appropriate checks on the minister’.

CSOs articulated opinion is that these powers are incongruous with present realities and dangerous. An overzealous minister could use the powers itemized under Section 6 to create instability in the polity and engender unbridled and egregious assault on the environment and local communities by supporting reckless oil field practices. The group therefore recommends that the powers of the minister in Section 6 of the bill be properly scrutinized.

Re-defining of Host Community:

The current version of the PIB defines host communities as communities bearing oil facilities. However it was agreed that there is need to go beyond this myopic view to also categorize communities that suffer impacts under host communities. ERA/FoEN defines host communities as communities hosting oil facilities as well as those that will be potentially affected in the event of pollution. It must not be restricted to those that have facilities only. The challenge however, is that, in the Niger Delta some communities suffer more impacts than others. It is however possible to host a facility and not suffer as much impacts as communities nearby eg downstream communities that suffer from facilities in upstream communities.

Percentage of Community Host Fund:

The current version of the PIB pegs the per cent of the CHF to the communities at 10 per cent of net profit from the companies. It was agreed that the percentage was commendable though it could also be as high as the 20 per cent recommended by some participants at the CSO Consultation. Another submission of CSOs is that the fund must be gross profit. This was accepted by the expert review team.

Management of the fund: It was observed that Section 116-118 of the draft PIB seems to be an introduction of the oil companies who also want to manage and control the fund. It was therefore agreed that the shortcomings in the status quo should be strengthened by setting up local institutional structure that will determine what projects to be embarked upon, what should be done, how much will go to it and who controls it. This stands against a central control which the current version of the PIB promotes. It was agreed that the management of the fund be a bottom-top approach. Another point that was agreed on is that midstream companies must also contribute to the fund since their operations also impact on the environment.

Structure for community host fund should be decentralized to ensure local ownership and control. A structure should be set up and how it is run determined by local communities.

Remediation:
Polluter Pays Principle should be adopted but the polluter must not carry out the cleanup. The National Environmental Standards and Regulations and Enforcement Agency (NESREA) or an independent institution should be tasked with the clean-up.  Before clean-up is recommended, an Environmental audit should be done to determine how much the polluter will be fined.

Enforcement:
Enforcement mechanisms have to be strengthened especially in regard to arrest of Chief Executive Officers or their agents or lockup or shutdown of the companies that pollute. Corporate criminal liability should be instituted against such companies. There should also be a cross-reference on offences and punishments in the PIB. In this regard, it was agreed that the provisions relating to offences in ERA/FoEN Environmental Protection Bill be adopted. It was noted that Enforcement and Penalty must go together as this is not clear in the draft PIB. It was agreed that there is need for the establishment of a Petroleum Pollution Control and Management to balance all interests. In this wise, the National Oil Spills Detection and Remediation Agency (NOSDRA) and the National Environmental Standards and Regulations Enforcement Agency (NESREA) should be involved and given prime roles.

On Gas flaring prohibition and Punishment:
ERA frowns at the ambigiuty with which punishment for gas flaring, a factor which has engangerd oil producing communities for five decades, was treated in the bill. It wants a more direct approach and more stringent punishments for violators, especially considering that routine gas flaring had been declared illegal in Nigeria since 1984.

ERA further recommends that the amended Section 275 should read “natural gas shall not be flared or vented after the commencement of this Act in any oil and gas production operation, block or field, onshore, or offshore, or gas facility such as processing or treatment plant, with the exception of permits granted under subsection (1) of Section 277 of this Act.

According to Ojo, ERA/FoEN advocates the establishment of the Nigeria Environmental Tribunals in the State and Federal High Courts and empowered to experdite action on environmental cases which often times linger endlessly in courts.

‘Only when all these errors and oversights are corrected and the relevant amendments made can we be said to have a bill that meets the aspiration of the majority of Nigerians and global standards, and that truly seeks to redress the five decades of environmental and human rights violation attended by the exploration of crude oil in Nigeria, starting from Oloibiri in Bayelsa State in 1958’, Ojo insisted.

Philip Jakpor
Head of Media
ERA/FoEN
08037256939

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