The Group Managing Director of Nigeria National Petroleum Corporation NNPC, Mele Kyari says the Petroleum Industry Act would help galvanize activities in the oil and gas sector of the country.
Kyari made the remark in an interview with Voice of Nigeria on Tuesday, where he listed some of the benefits of the long awaited law, adding that the law will also yield more revenue for the three tiers of government.
The NNPC boss added that the new legislation will help create an environment where gas infrastructure would be put in place for more development in all parts of the country.
“This is history made, in the sense that we have been battling with changing legislation around our petroleum operations. As you may be aware, the current petroleum framework is actually anchored around the petroleum Act and petroleum profit tax Act, both of them of 1967.
“There hasn’t been any substantial change to that, the minor change that has happened is the introduction of the deep offshore and inland basin Act. To that extent, you can reasonably say that there haven’t been significant changes in the petroleum industry.
“The end result is that we have seen very significant drop in investments in our country and since we introduced some form of uncertainty in year 2000 when we decided to do something about petroleum legislation in Nigeria, everything stopped and the real indication is that is the last five years, there were over $50 billion of direct foreign investment into Africa and out of that, less than $4billion came into Nigeria. That is an indication of concerns around the fiscal framework and also around the stability of our fiscal system,” he said.
New paradigm for oil sector
The NNPC Boss said the new law will now address the concerns of the past and pave a new paradigm for Nigeria’s oil sector as well as grant investors a new phase.
He said: “What this law has done is to remove all those uncertainties and bring our laws into conformity with the best practice in the world and also improve our fiscal environment in such a way that investors are sure that they will make a reasonable margin operating in this country.
“So for us, the assent to the bill by the President will certainly be a game changer for the whole of the oil and gas industry. What will happen is that there will be significant investment that will flow into this country, there will be activities created, more taxes would be realized by all institutions of government including all tiers of government; from local, state government, because activities will spring up.”
Host Communities
Mele Kyari said contrary to insinuations, oil producing areas in the country stand to gain a lot from the new law.
“The operationality of this bill will bring on ground the reality of what we have done for the host communities; not just in the Niger Delta but anywhere in the country.
“What this has done is to bring the host communities into focus. This was lacking in the past. We have seen many interventions that have taken place but have not materially changed the lives and the living conditions of these people in the host communities.
“What we have now done is to create a special fund for these host communities from our operating cost in such a way that the communities are now directly responsible for their fate, they are in control of activities that take place around them and ultimately those material benefits that were lacking in the past would be seen,” he explained.
Percentage for host communities
Kyari added that there was a misunderstanding of the percentage of money to be given to the communities, adding that the amount is not minute as being implied.
“The contention has been how much money are we ready to put in and this was clearly misunderstood and people are brandishing percentages and numbers but they don’t know what it is.
“When you say three percent of your operating expense; mind you, our operating expense in the industry is up to $16 billion in year, that means three percent of that is clearly somewhere around $500-600 million, which can even be as high a s $800 million so when you look at this, that value is almost bigger than the size of the budget of the Niger Delta Development Commission NDDC,” he added.
He further said that the three percent being talked about, when translated, would amount to a huge investment and intervention in favour of the host communities.
Nneka Ukachukwu
