₦airaland Forum

DEBUNKING THE TOP 5 MISINFORMATION ON THE PETROLEUM INDUSTRY ACT (PIA) 2021:

1. NNPC is being privatized?

No, NNPC is not privatized. NNPC is only becoming a limited liability company subject to CAMA, to be named NNPC Ltd (C will also now mean Company, not corporation). The share is still 100% government owned.

A major difference is, prior to PIA, NNPC had its own law: NNPC Act 1977, which guided it. Now, NNPC Ltd will be subject to law guiding other companies in Nigeria. PIA repeals (abolishes in layman's term) the NNPC Act.

NNPC Ltd will run like a company with full profit/commercial motive (did it ever have loss motive?). 20% of its profits to be retained for its own growth and 80% remitted to government as its shareholder.

2. 30% frontier exploration fund (FEF) is bigger than 3% host community levy (HCL)

There are two things wrong with this info. Firstly, the bases of computation are different. The basis for FEF is profit oil/gas, the basis for HCL is prior year operating expenses.

Secondly, the 30% FEF applies only on NNPC's profit oil/gas, while 3% HCL applies on opex of all upstream companies in Nigeria and there are over 50 of them. So mere comparison of the headline % without regard to bases and number of companies in each bucket, is misinformation.

Noteworthy that I also personally think that that commitment to FEF is too big in light of country's financial situation, dire need of revenue for other things, but the facts stated above need to be corrected.

3. NNPC to contribute 30% of its profits to FEF

This is wrong. There is a difference btw NNPC profits vs NNPC profit oil & profit gas. The former is the corporate accounting profit, as in when all its expenses as a company are deducted from its revenues, what is left.

This is not the profit the PIA is talking about as the basis of the 30% of FEF. What PIA is talking about is profit oil and profit gas from NNPC's upstream oil & gas contracts (production sharing, profit sharing & risk sharing contracts).
Profit oil/gas is what is left after
royalty, tax and operating cost are deducted from crude oil or crude gas production in any of the contract types above. It's an upstream thing, so it means profits from NNPC subsidiaries like NGC are not part of it. In short, it's not the corporate profit of NNPC as group.

4. Frontier Exploration = North

Wished I could avoid mentioning this, but section 9 that establishes FEF actually says the fund will be used for the development of "frontier acreages". The definition section says "frontier acreages" would be as defined through regulation by Commission.

Effectively, the Commission (i.e successor to DPR) will later issue a Regulation to define and say where the "frontier acreages" are. However, it is expected that frontier basins would be part of these frontier acreages and PIA listed Anambra, Dahomey, Bida, Chad & Benue trough as the basins which would effectively (but not exhaustively) be part of frontier acreages. From that list, 2 of the 5 determined frontier fields are not in the North. So frontier exploration fund use is not only for the North. Now sounding like I'm defending FG? No, just the law.

5. PIA has become effective:

No PIA is not yet in force. While the signing by the president means it has become a law, it doesn't mean it became effective on the day it was signed. A gazetted version will be issued that says the date of commencement.

A couple of provisions there will also not start immediately. For example; the Minister of Finance will incorporate NNPC Ltd under CAMA within 6 months after effective date.

In short, the date of signing is not necessarily the effective date. And the effective date is not yet public yet.

Copied.
By: Suraj Oyeleye.

Gratitudes081:
I hope this addresses some of the basic misinformations about the recently passed Petroleum Industry Bill, and accented by Mr. President.

God bless the Federal Republic of Nigeria.

seunmsg:
The new PIA just like any other law is not 100% perfect. However, it’s a significant improvement over what we had before. Let’s implement this for a while and observe the shortcomings. We can then amend the law based on the observed shortcomings.

CoolAmbience:
Which young visionary leaders are you talking about? People like you who reason in a one way traffic-like manner?

Was it the PIA signed by Buhari that compelled the likes of Ibori, Odili, Alamaeseigha etc, to loot the resources of the region? Couldn't such huge resources have been deployed into enhancing development and wellbeing of people in the region?

Which policies do not have shortcomings anywhere in the world? Name one!

As far as I know, the PIA is a welcome development, and Nigeria can always move from there to improving efficiency in the Oil & Gas industry.

For me, it is not about giving more money to communities and states, it is about expanding advocacies around fiscal responsibility and getting leaders to account for their stewardship, especially by their own people.

All that young people in the South south do is, hail their thieving leaders; calling them Chiefs instead of Thiefs, that they truly are; while condemning the FG at the slightest opportunity. That's absolute nonsense!

Buckeyemedia1:
Nice work Mr SeniorWriter.

Timmi:
It is sad that even with the explanation that is provided, you still find it difficult to understand what the PIB is all about, 2 of the 5 states that will benefit from the frontier fund are not in the north.

Seniorwriter:
SMH.....
It is very sad to be a witness to gross injustice....a country where the south south are shortchanged to please a nothern sect!


This PIA is more lopsided than the PIB...#Fact


WE NEED YOUNG VISIONARY LEADERS IN NIGERIA COME 2023.


@SENIORWRITER

ThatFairGuy1:
Thanks for bringing this clarification here

seunmsg:
The new PIA just like any other law is not 100% perfect. However, it’s a significant improvement over what we had before. Let’s implement this for a while and observe the shortcomings. We can then amend the law based on the observed shortcomings.

seunmsg:
The new PIA just like any other law is not 100% perfect. However, it’s a significant improvement over what we had before. Let’s implement this for a while and observe the shortcomings. We can then amend the law based on the observed shortcomings.

Criticizing the entire law simply because you don’t like Buhari’s face is silly. Jonathan is from the Niger Delta and he was president for about 6 years without passing the law despite having comfortable majority in both houses of the National Assembly.

So, quit the hate and let’s talk about the positives of the law. Host communities getting 3% OPEX of oil companies in the upstream sector is a big deal. This is in addition to the existing 13% derivation, Ministry of Niger Delta and NDDC.

What people from host communities should be worried about now is how the 3% OPEX will be paid. Who are the people that will manage the funds on their behalf? I sincerely hope the funds will not be administered same way NDDC is being administered.

Gratitudes081:
DEBUNKING THE TOP 5 MISINFORMATION ON THE PETROLEUM INDUSTRY ACT (PIA) 2021:

1. NNPC is being privatized?

No, NNPC is not privatized. NNPC is only becoming a limited liability company subject to CAMA, to be named NNPC Ltd (C will also now mean Company, not corporation). The share is still 100% government owned.

A major difference is, prior to PIA, NNPC had its own law: NNPC Act 1977, which guided it. Now, NNPC Ltd will be subject to law guiding other companies in Nigeria. PIA repeals (abolishes in layman's term) the NNPC Act.

NNPC Ltd will run like a company with full profit/commercial motive (did it ever have loss motive?). 20% of its profits to be retained for its own growth and 80% remitted to government as its shareholder.

2. 30% frontier exploration fund (FEF) is bigger than 3% host community levy (HCL)

There are two things wrong with this info. Firstly, the bases of computation are different. The basis for FEF is profit oil/gas, the basis for HCL is prior year operating expenses.

Secondly, the 30% FEF applies only on NNPC's profit oil/gas, while 3% HCL applies on opex of all upstream companies in Nigeria and there are over 50 of them. So mere comparison of the headline % without regard to bases and number of companies in each bucket, is misinformation.

Noteworthy that I also personally think that that commitment to FEF is too big in light of country's financial situation, dire need of revenue for other things, but the facts stated above need to be corrected.

3. NNPC to contribute 30% of its profits to FEF

This is wrong. There is a difference btw NNPC profits vs NNPC profit oil & profit gas. The former is the corporate accounting profit, as in when all its expenses as a company are deducted from its revenues, what is left.

This is not the profit the PIA is talking about as the basis of the 30% of FEF. What PIA is talking about is profit oil and profit gas from NNPC's upstream oil & gas contracts (production sharing, profit sharing & risk sharing contracts).
Profit oil/gas is what is left after
royalty, tax and operating cost are deducted from crude oil or crude gas production in any of the contract types above. It's an upstream thing, so it means profits from NNPC subsidiaries like NGC are not part of it. In short, it's not the corporate profit of NNPC as group.

4. Frontier Exploration = North

Wished I could avoid mentioning this, but section 9 that establishes FEF actually says the fund will be used for the development of "frontier acreages". The definition section says "frontier acreages" would be as defined through regulation by Commission.

Effectively, the Commission (i.e successor to DPR) will later issue a Regulation to define and say where the "frontier acreages" are. However, it is expected that frontier basins would be part of these frontier acreages and PIA listed Anambra, Dahomey, Bida, Chad & Benue trough as the basins which would effectively (but not exhaustively) be part of frontier acreages. From that list, 2 of the 5 determined frontier fields are not in the North. So frontier exploration fund use is not only for the North. Now sounding like I'm defending FG? No, just the law.

5. PIA has become effective:

No PIA is not yet in force. While the signing by the president means it has become a law, it doesn't mean it became effective on the day it was signed. A gazetted version will be issued that says the date of commencement.

A couple of provisions there will also not start immediately. For example; the Minister of Finance will incorporate NNPC Ltd under CAMA within 6 months after effective date.

In short, the date of signing is not necessarily the effective date. And the effective date is not yet public yet.

Copied.
By: Suraj Oyeleye.

Gratitudes081:
I hope this addresses some of the basic misinformations about the recently passed Petroleum Industry Bill, and accented by Mr. President.

God bless the Federal Republic of Nigeria.

Danjikanbauchi:
The evil APC and northern Muslims are sponsoring evil propaganda. We know the truth.

Danjikanbauchi:
you support every evil done by this government.

Antoeni:
PMB emergence as President is a prayer answered by sincere and honest Nigerians

Seniorwriter:
SMH.....
It is very sad to be a witness to gross injustice....a country where the south south are shortchanged to please a nothern sect!


This PIA is more lopsided than the PIB...#Fact

What is wrong with you ? Why can't you use critical thinking on national issues and policies that make or mare lives and economic development!
Why support the implementation of something that already has shortcomings...that's DOA to people like me that will rather create a custom unique approach and development policy.
It is absurd that whilst other oil producing countries are doing better with the same oil resources the past and present leadership administrations in Nigeria makes it look like a curse because of their nepotism, incompetence and greedy nature.

WE NEED YOUNG VISIONARY LEADERS IN NIGERIA COME 2023.


@SENIORWRITER

Antoeni:
PMB emergence as President is a prayer answered by sincere and honest Nigerians