Nigerian Federal Executive Council Approves Petroleum Industry Bill

Diezani Alison-Madueke, the Minister of Petroleum in the Federal Republic of Nigeria, has been interviewed in ThisDay newspaper. Nigeria is a large oil exporter in West Africa., a photo by Pan-African News Wire File Photos on Flickr.

FEC okays PIB, creates six firms .

Thursday, 12 July 2012 00:00 From Madu Onuorah, Abuja News - National

THE Federal Executive Council (FEC) yesterday approved the Petroleum Industry Bill (PIB), creating six new companies that will help Nigeria drive the nation’s efforts towards transforming the oil and gas sector.

The six new firms that will be created with the passage of the PIB include National Oil Company, Asset Management Corporation, National Frontier Exploration Services, National Gas Company and the Petroleum Host Communities Development Fund.

The Council also approved the scrapping of the 10 per cent import duty on gluten enzymes used in the making of bread and other confectionery as part of incentives to encourage cheaper manufacture of cassava bread in the country. In the same vein, the Federal Government is to establish a Cassava Bread Development Fund, which will be sourced from increase in the levy in importation of wheat.

Minister of Petroleum, Mrs. Deziani Allison-Madueke, who briefed journalists along with the Ministers of Finance and Coordinating Minister for the Economy (Dr. Ngozi Okonjo-Iweala), Agriculture (Dr. Akinwumi Adesina) and Information (Mr. Labaran Maku) said the new PIB will involve “revolutionary changes” in the oil and gas sector. The draft PIB, she said, will be forwarded to the National Assembly “in a matter of days.”

According to Mrs. Alison-Madueke, “the new bill looks at new areas that were quite critical and first of all they are the Inspectorate, the regulatory agencies for the oil and gas sector to ensure that they are independent and that they can actually do the regulations. We also looked of course at the unbundling of the NNPC, which have been very critical and created out of the old NNPC, a National Oil Company, which will be Independent. It will be a registered company which will have shareholding and it will be ceded acreages and will also, as we implement the PIB, take over current infrastructure in the oil and gas sector - refineries, depots and certain down stream entities as well as production sharing contracts. We created an Asset Management Corporation as a holding company, which will operate an asset management company that will be a competitive private sector driven company. And it will hold what is today the joint venture hydro-carbon assets of the nation. We expect of course that as time goes on that the company will operate essentially along the line of private sector with the right profit and loss centres to give the federation the right return on investments in the hydro carbon sector.

“We looked at a couple of new agencies as well. This includes the National Frontier Exploration Services unit that will reside in the new petroleum policy bureau, which will be a technical arm of the Minister’s secretariat. This would be a unique department reporting directly to the Minister. It is expected that it will very robustly drive the seismic data acquisition for our various inland sedimentary basins. I will assure you that for the next few years, we will have a continuum in that particular enterprise, which I have always said is very critical if we are going to continue indeed to diversify our hydro-carbon base in the country. We created a very interesting fiscal regime and frame-work, which has been of great interest to operators in the oil and gas operators, both foreign and indigenous. Details will be given later but suffice to say that we have tried to ensure on balance, that Nigeria will accrue somewhat more revenues in the oil and gas sector as we go forward.

“We have also created a National Gas Company within the framework of the PIB which will absorb the former Nigerian Gas Company along with the former infrastructures. This gas company will drive the gas for power and gas for industry that are absolutely critical for our economy as we go forward. Existing parastatals such as Petroleum Trust Development Fund, Petroleum Equalisation Fund, the Petroleum Training Institute, the National Content Development Management Board will continue to exist until they are no longer necessary. A new Petroleum Host Community Fund, which again will take care of the participation of the host communities of oil and gas communities in the country.”

Dr. Okonjo-Iweala and Dr. Adesina, who briefed specifically on the cassava bread initiative, said the new incentives will enable cassava farmers and cassava flour-mills join master-bakers to key into government’s cassava bread initiative.

She said that Nigeria does not have the cassava enhancement enzymes used in cassava bread production in sufficient quantity.

“Therefore much of it is imported and it forms a good part of the high cost of the production of this bread. What we have decided with the support of Mr. President is that in the value chain of production of cassava bread, that the import duty rate for these enzymes should be reduced from 10 per cent to zero per cent. I think this will help immensely with the cost of production of the bread.

The second initiative is that there is going to be a levy on the importation of wheat. And we are planning that part of this levy, which will still to be worked out, will be put in a fund which will be called the cassava bread development fund. The whole idea is that the fund will be used to support the development of the value chain up to the point of actually baking the bread. The fund is being constituted at the moment. We hope to have the relevant agencies and ministers as part of the committee to manage the fund with the secretariat in the fiscal affairs department of the budget office.”

Added Dr. Adesina, “the cassava bread is cheaper bread. It cost 60 per cent of the cost of wheat flour bread. It is better bread. It is healthier bread. Therefore, it is one that we wanted all Nigerians to have the opportunity to do. To do that there are a number of things that are needed, master bakers require new equipments, they have to ship some equipment, some of their baking facility and that is very important. They require training. They also require some enzymes. This is another indication that Nigeria will not be a slave to wheat importers. We have an economy to grow, farmers to put to work, we have jobs to create. It is not a political matter. It is an economic issue.

Nigeria is the largest producer of cassava in the world. Yet, we are the largest importer of wheat in the world. These policies are all directed at turning Nigeria, which is the largest producer of cassava in the world, into the largest processor of cassava in the world, to create jobs in millions for our own farmers and our own people; and not to export jobs to other countries that are exporting wheat to Nigeria.”