Some governors have faulted the President Muhammadu Buhari’s signing of the Petroleum Industry Bill into law saying that the Petroleum Industry Act did not give the state shares in the Nigerian National Petroleum Company Limited hence the excluding of states from this arrangement precluded them from having a voice in the running and administration of the company.

Recall that President Muhammadu Buhari signed the Petroleum Industry Bill 2021 into law on Monday while working during isolation.

The governors in a letter signed by Chairman of the Nigeria Governors’ Forum (NGF), EKiti State Governor Kayode Fayemi lamented that they were shocked and displeased that the ‘sub-nationals were not put into consideration’ before the bill was signed.

They went on to question why would only the Federal Government have shares in the Nigerian National Petroleum Company Limited (NNPC Limited) and stated that ownership of all the shares in the company shall be vested in Government and held by the Ministry of Finance on behalf of Government.

The governors called on the Buhari to accommodates the states in the allotment of shares and incorporation of NNPC Limited.

The governors’ letter read thus “We note with great shock and displeasure that the interests of the sub-nationals were not put into consideration in the bill that was recently passed by both chambers of the National Assembly.

“In a previous communication with the leadership of the National Assembly, we had noted that Section 53 of the Bill provided for the incorporation of the Nigerian National Petroleum Company Limited (NNPC Limited) under the Companies and Allied Matters Act to carry out petroleum operations on a commercial basis.

“The said Section 53 in (2) went on to provide for consultations between the Ministers of Petroleum and Finance on the number and nominal value of the shares to be allotted which “shall form the initial paid-up capital” of NNPC Limited and further added that the Company shall subscribe and pay cash for the shares.

“ In our said letter, we observed that the wording of (3) suggested that only the Federal Government would have shares in this company and stated that ownership of all the shares in the company shall be vested in Government and held by the Ministry of Finance on behalf of Government.

PIB: Is 3% for N/Delta not better than 100% of what you don’t know? – Sylva

We then recommended that a framework that accommodates the states be worked out and included in the allotment of shares and incorporation of NNPC Limited. We observed that excluding states from this arrangement precluded them from having a voice in the running and administration of the company and excludes them from sharing in the distribution of dividends when they become due.

“In the same vein, Section 53 (4) of the Bill provides that the Ministry of Finance Incorporated in consultation with the Government, may increase the equity capital of NNPC Limited. Here again, we note the non-inclusion of sub-nationals in the consideration of this very important provision and recommend that the Nigerian Sovereign Investment Authority (NSIA) and Central Bank of Nigeria in consultation with the Federation Governments and Federal Capital Territory, may from time to time increase the equity of NNPC Plc.”

“The removal of the requirement to transfer fiscal payments to the Federation Account is unconstitutional and of grave concern to Nigerians. NNPC Limited is an entity created from a national asset whose proceeds always went to the Federation account for distribution amongst the tiers of Government and we are at a loss as to the reason for excluding a necessary component of the Federation from owning stakes in a successor vehicle.

“Similarly, in Sections 9(4), (5) and 64 (c), the setting aside of 30% profit oil and gas as Frontier Exploration Funds constitutes further depletion of funds that should ordinarily accrue to the Federation Account.

“In Section 33, the imposition of gas flare penalties arising out of midstream operations which penalty shall be paid into the Midstream and Downstream Gas Infrastructure Fund, an account within the control of the NNPC and one in which only the NNPC alone would have access to carry out any infrastructural projects, constitute significant loss of revenue to the Federation Account.

“Section 54 (1) and (2) of the Bill empowered the Ministers of Petroleum and Finance to jointly determine assets, liabilities, and interests to be transferred to NNPC Limited.

“Again, we recommended that States ought to be consulted and involved in the processes to determine transfer of these assets, liabilities and interest to the new company.

“Our advice was predicated on the joint ownership of these assets, liabilities and interests. We extended our opinion on this to the winding down processes covered in Section 55 (1).

“ In Section 64 (b), NNPC Limited has an additional responsibility to act as a State Agent in all Production Sharing Contracts (PSCs) and entitled to oil and gas profits. NNPC appears in every commercial arrangement making its status even less commercially oriented and more favoured than is obtainable today.”

“We are concerned that rather than reforming NNPC and by extension the oil sector, the PIB as presently constituted makes NNPC Limited an even more powerful oil company.

“Mr. President would understand our shock at finding the version passed by the National Assembly without considering the concerns of the NGF and the States.

“We do not believe that in passing this Bill, the National Assembly gave adequate consideration to every relevant facet of our federation, and this can be a recipe for disaster.

“The afore-mentioned concerns represent some of the many pitfalls in this Bill capable of hurting the federation and we respectfully pray Mr. President to withhold assent pending the resolution of all the thorny areas.”