PIA: There is a misunderstanding over 30 percent of profit of oil – Senator Matthew Urhoghide
Senator Matthew Urhoghide Representing Edo South Senatorial District Speaks On Petroleum Industry Act,( PIA)
By Ikhili Ebalu, Benin City.
What is the real issue of the PIA
I’m privileged to be a member of the senate Committee on upstream petroleum. My committee was one of the three committees charged with the responsibility of addressing the issue when the new act was a bill we considered the provisions that make up the bill.
I explained how we can to achieve the 3 percent and what the actual fiscals in terms number of the amount of money it translates to and the 30 percent that is being proposed for the frontier basins and of course the new acreages that are being thought of within the frontier basins and know what the 30 percent of oil profits means for NNPC Ltd and what it is going to be used for, and the amount it is in terms of dollars every year.
The law has not been definite about who make up membership of the host communities. So, when it come to the administration of the money budgeted because it is expected that all the set laws or investors in crude oil exploration activities what they are going to contribute which is 3 percent of their operating cost. We are very definite about this term-3percent of their operating cost is what they are going to commit.
I watched on TV some of the mistakes regarding these terms and people are saying the National Assembly gave 30 percent to frontier basins and 3 percent to host communities. It only means there is no clear understanding among the public; 30 percent of profit of oil that was accrued from NNPC Ltd because they will be the commercial entity that will be set up. NNPC will also be involved in business with other International and national oil companies and any other one that is doing a Joint Venture with any subsidiary that probably would be set up by the government.
Today, we have many subsidiaries such as subsidiary for exploration in NPDC so if NPDC is still going to remain and continue to function under NNPC Ltd which is going to be set up, then in which case what NPDC will accrue to NNPC Ltd by way of NPDC and those doing joint venture like Seplat, all that they get from their activities on crude oil. Remember, we have oil and we have gas.
What the law says is that what comes to NNPC Ltd from profit oil or profit gas they will commit 30 percent of it. What it translates or what it projects to is that NNPC Ltd is committing 30 percent of profits oil will amount to about $320m a year. And if we are going to invest it, what do we mean by frontier basins.
They are pockets of places scattered around the country where there are prospective oil. These frontier basins are not limited to chad basins, we have over six basins including Anambra basin, there is one in Kwara and Gombe. For instance, Anambra basin is in Anambra and we have been hearing of crude oil in Anambra state, also there are crude oil deposits in Ebony state. So, these states put together is called Anambra basin.
First, the misconception that it will be used in the north is not correct. So, there are new areas in where frontier basins have been existing that were not being explored for oil before now; those are what we call the new acreages that are opening within existing frontier basins and that is what the money will be used for. Again, that money is an investment and not a commitment; it is a business venture NNPC Ltd.
NNPC Ltd is just one business entity owned by the government but it is fully commercialized and that is why we are saying who do vest NNPC Ltd on, is it the federal ministry of finance, people have come up with or proposed that is should be vested in NSIA because the NSIA is doing a lot of infrastructural development. NSIA is taking money from outside Nigerian shores.
If you remember the first Eurobond that was floated by the Nigerian government that is the first external borrowing of N1bn that was supposed to be used for gas to power project, NNPC was supposed to spearhead it but somehow when the money was borrowed, NNPC was supposed to get $600m which they didn’t get because they were not able to meet some conditions when Okonjo-Iweala was the minister of finance at that time. So, NNPC fell short and they had to source the money. We had borrowed the money to service the loan. Some of that money was given to NSIA, specifically $350million was given to NSIA. So, NSIA was now paying interest on that money.
Again, at the 8th senate , my committee was charged with the responsibility to investigating where that money went to and what it was used for. The committee of the senate stated that the money was diverted and given to General Electric to buy turbines. So, when we did investigations, I called NSIA and they told us where the money is.
They said it came to them by way of the Nigerian Bulk Electricity Trading Company (NBETC). It is a company that was set by the government to interface between the Gencos and Discos. So, if the discos were buying power from Gencos and there was shortfall, the NBETC was supposed to intercede, either pay part of the money to Gencos or to the Discos.
We found it that the money that was meant for gas to power project how come this money got to NBETC, and they were supposed to used the money to interface between Gencos and Discos. What happened was that NSIA said it got the money while NBETC said it took the money to NSIA. NSIA is building infrastructure, so it is like a loan to NSIA. We queried that and asked if that amount they are paying for loan is enough to service the external debts.
Why we are proposing that the NNPC Ltd should be vested in the NSIA is because it has better reputation for management of our funds. Whether FG now vest it eventually when we are talking about the nitty gritty of the Act.
The same thing what constitute the host communities, who will now be charged with the responsibility of utilizing what come to them because it is the money that all investors will bring (3peecent of operating cost) is called the host community trust fund. The 3 percent translates to about $530million.
So, understanding the 3percent going to host communities which is the operating cost of all investors is about $530million but when we were pressing for 5 percent it translates to $825million. When the bill was being proposed, we had our public hearing on it and the real investors equally made their points clear because it is an international businesses and it is ruled by indices that are dictated internationally. So, they are there carrying their investments around the world; if it is favorable they drop it and if it is not favorable, they take and go to another country.
In the senate, the day we debated that bill, they invited the General Managing Director of NNPC and Minster of state petroleum to brief the senate and they come up with all these details for us to see.
The scare which some of us senators was that of the Venezuelan experience where investors said they are no longer going because the conditions given by the government is not right. Again, the issue of crude oil in the world is that there is a trend going on, people are no longer interested in oil as a source of energy.
Now, they are beginning to get electric cars and nobody wants to use petrol or diesel to drive their engines anymore. So, most countries are trying to quickly use their oil resources to build up another national assets and because of that fossil fuels has become another source. Renewable energy are sources opening up in the world. Everybody in the world are run away from crude oil. So, Venezuelan said they should leave their oil alone if they are not able to pay 10 percent and that is what they called the ugly Venezuelan experience, and we don’t want it.
We are cut in between because we have a mono product that we run which is crude oil. So, that is where the problem is. Then our brothers in the north and south said we should allow the investors to come in because in the last ten years we have not had investments in that area. It is really offshore facilities we are using to build the activities in the oil sector. So, we try to manage all the provisions of this bill; it must be a win-win between the people who are privileged to have it as a natural resource and the people who are investing. So, we must be able to strike a balance to say we want them to invest because we can’t do it ourselves, and we too want to get the benefit of having it as a blessing.
When that 3 percent was settled, we too from the Niger Delta were looking at other provisions for instance gas flaring. Till date, areas where you have gas flaring hardly see the night, it’s all day and we know what this means to the health of those people and the attendant environmental degradation.
So, we came up with a suggestion that all proceeds derived from gas flaring will go to host communities(100percent). Initially, they said no that we are going to use it to develop gas infrastructure particularly, mainstream that is pipelines but we said no. And we said we want to use it for environmental regeneration and welfare of our people. So, these are silent facts of the Act that people don’t talk about. 100 percent of the proceeds from penalties from gas flaring will go to the host communities for us to remediate environment and welfare of our people.
The house passed 5 percent but because we were briefed by the GMD NNPC and the minister of state petroleum, we were more on the issue. It was not that the northern senators doesn’t want to be sympathetic with us from the niger delta but we all wanted to consider it from the business angle.
When we get the investors, there can be amendment to the law; it can be a clause and then they would have invested and know that the investments they have done are not fair to our people, and it is for them to provide the ambience in which they are doing their activities. Niger Deltan senators wasn’t just sitting down there. There is a place in Gombe that has oil and will soon start exploration. We decided to be dispassionate and allow the investors come before we can amend the law.
The document is five-paragraph document with 315 clauses.
For an amendment to the electoral act, the one that was contentious was the electronic transmission of results from the polling units to the collation centers. People can truly express their wish through the ballot at the polling unit but the point between that polling units and the collation is where the problem lies.
It’s either the electoral officers introduces new result sheets on the way or they change figures. So, we said it should transmitted electronically from the unit to the server even if you have to do physical collation, the results will be there. But what was played was party politics, we will not want this transmission and they asked NCC to guarantee it that there is network coverage for it to be transmitted and we rejected. INEC has already said they have the capacity and they don’t need to go to NCC. Section 78 of the electoral act is very clear on it that INEC is independent and doesn’t take instructions from the National Assembly neither will it take instructions from the NCC.
So, what they were trying to do was to bring Patami in (minister) because he is an unrepentant party man who is ready to do anything against the interest of other Nigerians as long as they are satisfying the whims and caprices of the president and the APC.
Anyway, we are still waiting, just like he did to this when we get back, the PIA is going to probably get the first attention of amendment. Any law, no matter how new it is once it is signed into law, somebody will call on amendment to the PIA when we resume. It will go through first and second reading, then to committee for further legislative action and public hearing. And if it succeeds, it goes through third hearing and once it passed, it goes to the president for amendment.
So, we are expecting that because of the hues and cry of the Niger Delta, the president will probably sent it back to the National Assembly and it will go by way of substantive motion back on the floor to say that bill that was passed needs amendment and we can now reopen it.
The president has already signed it and can only come as an amendment to the act. If he goes ahead too to sign the one that was passed which is clear violation of the position of our constitution, then we will ask for an amendment immediately because where any law is in conflict with constitutional provisions, the constitution takes precedence.
This whole thing that has been signed is whole lot of optimism. Nothing that time was sacrosanct about the contribution in terms of amount of money that the oil companies will bring to the host communities, we didn’t have it before.
Now that we have it, how do we administer the money; it is not going to go through any state government anymore where there will be interference and that is why the constitution of the host community trust fund committee who and who will be there because the investors will oversee it. There will be needs assessment for everything that will be done with the money. Certainly, we want more.
The issue of security and Nigeria’s existence is not negotiable:
I’m a lawmaker representing a segment of Nigerian population which is Edo south senatorial district and even though I don’t come to have the usual consultations, it is palpable in the air what their thinking is, and it is the summation of their thinking of our different senatorial districts when we exchange views as colleagues we actually feel the pulse of the country. There is no segment that has said it is satisfied with the security situation of our nation. We have all talking the same way that there is no security in Nigeria; no security of lives and property.
If somebody wants to commit suicide is to go on a mission to Abuja-Kaduna by road, you will have a 50 percent chance of not returning. If you go from Benin to Auchi, there is 50 percent chance of being kidnapped. The security situation in Nigeria is bad, whether PDP or APC, man or woman, north or south.
There maybe a preponderance of more in the north because of banditry and others, the same thing happening in the south, our women are being raped, farms are being destroyed. Now, the security being an essential components to determine good governance because section 14(2)BC of our constitution is very clear that the primary purpose of any government is the security of lives and property.
I have sworn in the second schedule that I will uphold, as a member of the Nigerian senate, provisions of our constitution. So, if I come to section 14(2), the primary purpose of any government is that the National Assembly or legislature is an arm of government and because we have sworn to oath to uphold the provisions of the constitution, I will never compromise that has to do with security of lives of the people.
So, if the executive is charged with responsibility of eliciting and ensuring that, I should be able to talk to the executive that he is not doing his job well. That has been arguments in the senate, I don’t want to know the sentiments whether APC or the president. If he is doing his job, I will stand and praise him to the hills but if he is not doing it, I will tell him to his face that he isn’t doing it.
For me, let’s go to section 143 and jacket the president in there. There are 11 subsections, the last is impeachment but let us follow it step by step. The first is write to the president that we observed that he has fallen short of expectations of what is required of his office in terms securing lives and property.
We have invited him to come and explain, he has blatantly flouted those orders and APC is happy; they want to protect and guide him because they know he is incompetent. He doesn’t know the details of these things, but those who are overtly sympathetic with him and don’t want to expose him so that people will not know his shortcomings or inadequacies. So, if you write the president and he is not able to explain, then you go to the next step of constituting a committee and collect signatures. If I’m in his shoes, remove me from office for incompetence. If the president gets to know we are collecting signatures or getting the right numbers, then he knows he has to sit up but APC and the leadership we have in the National Assembly are protecting him.
So, each time I say let’s go to section 143, it is not to say let’s just remove him, let him know that we are acting according to the provisions of our constitution. 1999 constitution is about one man, the president and that is why some of us believe it is not a good document for us. The power for the president is too weighty. I have been in the senate and can see all these nepotistic tendencies of his are too clear; greater majority of people nominated and brought for confirmation are from the north west, and when we confirm, the chairman will be from katsina and a floor member will be from Edo State.
So, when we are looking at his tribalistic tendencies, I should be able to say or quit the senate. It is not that I dislike him but we have never had the privilege of seeing him on the saddle presiding over the governance of our country. We speak the truth, and if APC has to say that PDP did for 16 years, do they want to plunder this country for another 16 years, that is wicked. You want to remain in power for another 16 years, it may not be PDP or APC but let it be some who means well for Nigeria. That is my position on executive occupation of the governance of this country.
For me, the way we see this argument when they say the indivisibility of this nation is not negotiable, I said we must start to think it in the reversed direction. You cannot circumscribe a man, when the conditions are favorable to him it is violation of the constitution of our fundamental human rights. So, if you don’t meet the man’s aspirations, objectives for his existence, then he has a right to say I want to leave. So, don’t use the indivisibility to circumscribe or force people to remain in the Nigerian nation and subscribe himself to Nigerian state.
You cannot do that otherwise let’s have a discussion if I am happy with it, I will submit myself to it. Let’s not talk about indivisibility of Nigeria when you are taking others for granted; the indivisibility is guaranteed for as long as we respect the sensibilities, aspirations and wishes of other people. You cannot keep dominating me and say there is strength in diversity. Countries that have broken up such as Yugoslavia are stronger nations today.
South Africa respect themselves because of apartheid; they fought themselves to a standstill and there was bloodshed on the street; we should avoid such things. You don’t keep doing certain things because you have the number of 19 against southern states, therefore we can always do what we want to do because we have number. We must be able to strike compromises in some of these things, and to get along, you must know my position. If you don’t respect my existence, then go your way and I will go my way.
These are my strong personal views and I stand by it until things change.
Senator Kassim Shetima from APC stood up in the senate and said that any government, like the one we have, that cannot protect the lives and property of her people has lost its legitimacy. Those are strong words but he said it on the floor of the senate. We have an executive that is insensitive.
**Mandatory COVID-19 vaccine
Obaseki is the governor of the state and has spoken based on his observation. As a health practitioner, I totally agree with him. There is something that governs public health; you have a right not to be treated. In public health, you don’t have a right to infect other people no matter what your thinking is and that is why the governor is making it mandatory.
It is a matter of public health and it is governed by laws. Do not leave your house since you have decided to be public danger. You have a right to kill yourself but not to kill other people. You cannot appear in public spaces where you will be compromise the health of other people.
On the Issue of open grazing :
Nobody wants anything to do with open grazing because it is outdated and it brings clashes between farmers and herders. Again, the cow that you are going to take from northern to southern Nigeria would have lost value in terms of the quality of meat. So, everywhere in the world do ranching and the social hazards they will constitute. Open grazing is not part of us here. Consider the security risks and social hazards. Look at our forests being populated by fulanis and they have come to compromise our security.
If that is what the case is, there is no southern states that have come up to say that they are for open grazing. Even the governor of Kano said open grazing is outdated, we should go with civilization. Ranching is what is going round the world and Nigeria cannot be exception. I support ranching and that is my position.
About the present situation of
Counter verdicts from different courts:
The electoral act amendment that was passed has taken care of things like these. Once the electoral processes start no court can stop it because we have outlawed that in the new provision. We are only waiting for the president to sign it. Even if it is signed into law by the president, it can be addressed through amendments. The judiciary are already doing something about it because they are embarrassed.
Giving ex parte motions contradicting themselves is not in the National Assembly but the arm of government charged with responsibility of interpreting the law that is embarrassing their own arm of government. So, I believe it is only when it comes to the electoral act that we can call for amendments. I want to tell you that the new amendments that we have passed to the president for assent has addressed the issue. End.