10 per cent oil bill still valid – Maeba

10 per cent oil bill still valid – Maeba

Headlines Nov 8, 2010 By Clara Nwachukwu
LAGOS— CHAIRMAN of the Senate Committee on Upstream Petroleum Resources, Senator Lee Maeba, weekend, clarified that the 10 per cent equity for oil granted to oil producing communities remained a valid section of the Petroleum Industry Bill, PIB, and can not be converted to cash.
The clarification followed online reports that the equity holding in the Petroleum Bill, currently undergoing legislative scrutiny at the National Assembly, might have been removed and replaced with a new provision to convert the equity to cash, as allegedly prescribed by the Presidential Adviser on Energy, Dr. Emmanuel Egbogah.
The 10 percent Oil for Equity was made by the Federal Government under the former President Umaru Yar’Adua’s regime in 2009, as part of measures to douse restiveness and militancy in the Niger Delta.
Sahara Reporters in its banner headlines, Tuesday, entitled “Jonathan’s PIB Memo: ’10 percent’ Profit Share For Niger Delta ‘Disappeared’ Under New Petroleum Industry Bill,” stated that rather than the 10 percent equity, oil producing communities under Egbogah’s revision were only pledged $600m a year – regardless of company profits – in ‘host community dividends’ as ‘compensation’.”
Vanguard’s calls to the presidential adviser’s line could not be connected, as the network provider said “Sorry, this number cannot receive calls at the moment; try again later.”
But in a telephone response from Cape Town, South Africa, Senator Maeba, told Vanguard that the oil for equity was his brain child, which was bought by late Yar’Adua.
He also argued that “the provisions of a bill cannot be expunged by pronouncements.”
The legislator asked: “Do you know that the 10 percent equity is a provision in the PIB?
How can you then say a presidential adviser recommended that the equity be replaced with a flat rate of $600m. Have you seen any bill where a specific amount is attached for compensation?”
Maeba noted that even if the presidential adviser made such a suggestion, it cannot be adopted except it was presented at the public hearing, adding that the PIB was on the National Assembly’s website.
Provisions in the Bill
Although the Petroleum Bill could not be traced in the Bills Progression on the Assembly’s home page, the Committee Secretary, Umunnakwe-Ilobah Isabella, in a telephone interview read the provision on the title: Beneficial Entitlement to Petroleum Producing Communities to Vanguard.
Section 169, sub-sections 1 and 2 states: “The Act hereby vests a nominal 10 percent equity (communities participating in the Upstream Petroleum Resources Fund), as beneficial owners to hold in trust for the communities enclosed fully or partially within the respective petroleum mining lease.
“The contribution of the community equity will be paid into the fund and to communities that hold an equity or contractual right to the mining lease.”
Corroborating Maeba’s views, the committee secretary said any input or amendment to the provisions would be by public hearing, “where anyone who has anything to say on the provisions can say it, and if it meets the approval of the legislators, such an input can then be adopted.”
Provision is highly political
To underscore the issues surrounding the equity for oil, all the relevant stakeholders – other legislators, Ministry of Petroleum Resources and oil companies in joint ventures with the Nigerian National Petroleum Corporation, NNPC, refused to speak when contacted on the issue.
Some of those who did not want to be quoted officially simply said: “The issue is a very dicey one and still a no-go-area,” while others said: “This section of the bill, PIB, is very political, it will not be proper to comment on it now.”
Sahara Reporters, quoting a Government Memorandum on the PIB, also included in the report, allegedly prepared by Egbogah, questioned the rational for the conversion of the equity to cash, saying that this “is way less than 10 per cent of anything: Under current production levels and prices, 10 per cent of joint venture revenues, whether gross or net, would amount to several billion dollars, not $600m.
$600m also is no more than one to two per cent of total annual government revenues from oil.”
The report further noted that “The plan contains no detailed provisions for how the $600m a year will be managed locally _ these are all left up to ‘regulations’.”
Even before the law becomes effective, oil producing communities have made representations on how to disburse and utilise the accruable amount in the development of the respective communities, and decried insinuations that they may be ill-equipped to manage the fund very well.
The memorandum
The Memorandum is basically explanations on the different sections of the Petroleum Bill, and how each section came about.
With regard to the oil equity and Niger Delta issue, the 383-page memo explained that “The objective is to establish direct dividends payments to the communities in the Niger Delta that are directly impacted by the petroleum developments in order to create a more positive relationship between the petroleum industry and the local population.”
It explained further that the compensation became necessary because, “The Niger Delta crisis has created conditions where the petroleum industry cannot really reach its full potential.
This is detrimental to Nigeria and the Niger Delta. The Government has rather significant development programmes in the Niger Delta. However, the local population does not feel part of these programmes and the benefit of these programmes does not always reach the communities that are impacted by oil and gas activities.”
The Memorandum also explained that the redraft of the bill was largely based on  proposals of the presidential adviser, with the creation of community dividends.
“These dividends constitute impact funding and are largely determined based on environmental and social impact. Impact funding is based on all upstream and midstream assets and product pipelines in the onshore and shallow water.
“All dividends go directly to the communities, no funding is provided for the littoral states. The total fund is estimated at $ 0.63 billion per year. There is no direct offset against royalty or tax payments, but level of government take, takes the higher costs into account,” it stated.