44 The petroleum bill and last minute legislative contortion

This was published in 234NEXT in May 2011 highlighted the poor environmental and community concerns in the Petroleum Industry Bill[1]

Legislative advocacy can be a double-edged sword, if what you fight for is shrouded in secrecy and all you depend on is the initial draft that was in the public domain. One case in point is the much-expected Petroleum Industry Bill (PIB). The PIB has generated so much interest because the oil and gas sector has been left open to manipulation by political and industry players who made massive gains while the nation got short-changed.

Aside the campaign for the passage of the Freedom of Information bill, the clamour for the passage of the PIB has really captured the attention of many. We all remember the recent public demonstrations of extractive sector transparency campaigners in Abuja, demanding that the national assembly passes the PIB into law before their tenure elapses later on this month.

Some observers have been careful to note that passage of the bill, without public inkling as to what the final contents are, could be quite injurious and on that account it is essential that the public be let in on what has been cooked between the legislators, the petroleum ministry (the executive) and the oil companies.

As May 29 draws close and industry watchers expect that the PIB will be passed into law anytime before then, we have sought to have a peek into what the final document may look like. The best we have been able to see is a document that is yet to be cleaned up, but that gives an indication as to what we may expect.

If you have pointed interest in environmental and social elements of our laws, as some of us do, you can expect a PIB that is not as good as the initial draft that was made public and was subject to many comments and inputs.

A cursory look at the items deleted from the original document by the final draughtsmen gives an indication that the pressures for this watered-down law came heavily from those who care least about the environment and the communities in whose territory the oil fields happen to be.

At the same time one gets the impression that the lawmakers believe that the concerns of the communities can be fully taken care of by allocating some cash to them. This has always been the bait and is not innovative in the least.

The senate committee recommends the deletion of a section that stipulated that oil companies ‘be responsible for any environmental damage, pollution or ecological degradation occurring within the licence or lease area as the result of exploration or production activities, in the case of upstream operators and as a result of any licensed activity in the case of downstream activities.’

The reason for the deletion is that another section provides sufficiently for any ‘direct’ impacts on the environment. Deleting the section is suspicious, just as we note that environmental degradation is not only caused by ‘direct’ impacts and polluters should not be allowed to carry on with business as usual under this cover.

The ‘final’ PIB also rejects the proposal to measure production volumes at wellhead rather than at distribution terminals. This will undoubtedly ensure the opacity of the sector and the reckless thievery it engenders. To add to the profit pile of the oil companies’ royalty and tax regimes have been manipulated in their favour.

Another section that has significant deletions is found in the provisions for labour rights. The legislators would not allow anything that protects the rights of workers in the sector and the reason given is that other laws already cover such needs. They pointedly deleted the ‘right to freedom of association and effective recognition of the right of collective bargaining.’ They also chucked out protection against forced labour or use of underaged persons.

In reality, the restriction of collective bargaining rights (including the sustained casualisation of labour) has been a major area of struggle for labour unionists in the sector.

The legislators also think that it is wrong to create space for the engagement of federal, state and local governments and communities in promoting and ensuring ‘peace and development of the petroleum producing areas.’ The reason given for this is that the provision is a mere policy statement and ‘has no legal binding character.’ At another level, the final PIB rejects the idea of incorporating the existing joint ventures and thus promotes the retaining of business as usual.

On the trump card that should silence communities, the PIB seeks to create a Host Communities Fund which would require that operators pay a ‘nominal ten percent equity participation in upstream petroleum operations in the Fund as beneficial owners to hold in trust.’ This section is presented in such a contorted way that anyone can dance any which way.

Of the total sum held, 80 percent will, from time to time, be allocated for development projects within the communities. The provision here is that it will be of benefit to communities wholly or partially within the lease areas of the oil and gas operators. It is very interesting to note that the benefiting communities will have to demonstrate their direct involvement or exposure to petroleum operation within the licensing area.

How would the direct involvement of the communities be determined? Watch this: they have to collate the number of oil wells, flow stations, oil terminals and power generating plants in their territory. They also have to sum up the length of pipelines that cross their area and also the number of gas flares. If gas flares suddenly become an asset, one wonders why communities are not equally required to count the number of oil spills as well as measure the volumes of oil spilled into their lands, swamps and rivers for the same purpose.

Gas flares?

One would have thought that the final drafters of the PIB knew nothing about gas flares because even the little mention of this illegal activity in the initial draft has been yanked off the ‘final’ copy.

If the copy of the PIB we have seen is an indication of what we are to expect, it is clear that another opportunity to sanitise the sector is being squandered. It will be a sad day indeed if the current legislators foist a rigged PIB on the nation in the throes of their departure.


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Oil Politics by Nnimmo Bassey is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.


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