OrderPaperToday – The passage of the Petroleum Industry Bill (PIB) by the National Assembly on Thursday, July 1, 2021, has elicited excitement in the polity.

However, it has also drawn some confusion and controversy regarding the allocation to the proposed Host Community Development Trust Funds?

This is because while the Senate pegged the sum at 3 per cent of the annual operating expenditure (OPEX) in the previous year of company operations, the House of Representatives approved 5 per cent. Incidentally, the figure taken by the green Chamber is the exact recommendation of the joint committee of the National Assembly on the PIB.

So what next now that both chambers of the federal legislature have different per cent approvals for the host community funding? This explainer tells all you need to know.

Harmonisation is Next…

Now that the PIB has been passed with two different recommendations, the National Assembly joint conference Committee will be mandated to harmonise the positions and present a single front for approval from the Senate and House of Representatives. Both chambers will then be required to approve the harmonised version before the PIB is sent for presidential assent.

This image shows what per cent may eventually be for host coms
How a bill becomes law in Nigeria

Steps to Passing a Bill…

Once a bill is passed in one house, it is sent to the other Chamber for concurrence with its amendments. A conference or harmonisation committee is then constituted comprising members of both chambers to reconcile differences on the Bill and propose a single position adopted by the plenary of each Chamber.

Since there are disparities in the PIB passed by both houses, a Joint Conference Committee will be convened with the distinct mandate to harmonise the position of both chambers on the disputed recommendations or amendments. The Joint Committee outcome report will then be presented in both Chambers for consideration. If they both adopt the report, the Bill will then be sent to the Clerk of the originating Chamber, and then a clean copy of the Bills will be sent to the Clerk of the National Assembly.

Following harmonisation, the clean copy of the harmonised Bill will be produced for transmittal to the President for Assent. Thus, the PIB will then transition from a Bill into a Law.

PIB Highlights…

OrderPaper Nigeria takes a closer look at how far the PIB has come and the next steps to get it signed into law. The PIB, which has been in the pipeline for twenty years, was finally passed by the 9th Assembly Senate and House of Representative members. So what does the Bill entail? 

First, the PIB seeks to establish good governance, best practices, and ease of doing business in the petroleum industry by clarifying roles and responsibilities of officials and institutions, enabling frontier exploration, mandate improved environmental compliance, and transforming NNPC into a commercially viable enterprise.

Additionally, the PIB seeks to establish clearly defined regulatory institutions and foster sustainable prosperity and development in host communities. Finally, among other objectives, the PIB will see the creation of ancillary institutions tasked with providing specific support services assigned to them.

A recurring contention on the PIB is the amount to be dedicated funding host communities in terms of a per cent of company costs.

Background of the Bill…

For the past 20 years, there have been various attempts at reforming the petroleum industry. However, none of these efforts has yielded any tangible result until the introduction of the Petroleum Industry Bill (PIB) 2020. Before now, there were various iterations of the PIB. The PIB started as an omnibus bill and was later divided into four separate Bills before emerging in 2020 as a consolidated Bill.

Since the Obasanjo-led era more than two decades ago, there have been attempts to revamp Nigeria’s petroleum sector through the PIB. It was then introduced into the National Assembly in 2008 as an executive bill by then-President Umar Yar’Adua. However, the 6th Assembly (2007 – 2011) failed to pass the Bill.

Similarly, the Bill was reintroduced into the National Assembly in 2012 by President Goodluck Jonathan. Interestingly, 47 out of the 360 members of the House of Representatives in the 7th Assembly (2011 – 2015) were present when the Bill was passed a few hours to the end of their tenure. But the Bill failed to get a concurrent passage from the Senate.

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