THE PETROLEUM INDUSTRY ACT (PIA) AND A LEGALIZED FRAUD: WHERE IS THE 30% OIL MONEY GOING? June 17, 2023

Another Hijack of Our Crude Oil Wealth Worse than Petroleum Subsidy and Ajaokuta Steel Mill is Emerging, and Nigerians are NOT Aware.

What you are about to read is not a product of conspiracy theory or work of fiction, research, or investigation. It happened under your nose, but you couldn't fathom the hanky-panky and absurd chauvinism that accompanied it from conception until birth. It has the color of legality (Parliamentary approval and Presidential assent); however, the goal isn't to serve the underserved as professed by its proponents, but to serve the interest of a privileged few. And that has been the sad story of Nigeria's fruitless search for socio-economic emancipation.

The Nigerian Petroleum Industry Act (PIA) 2021, set aside 30% of the Nigerian National Petroleum Corporation (NNPC)'s profit for exploration and production activities in the frontier basins, which include the Benue Trough, Chad Basin, Sokoto, and Bida Basins.

The PIA also established the Frontier Exploration Fund (FEF), which is a $10 billion fund to support exploration and production activities in the frontier basins. The FEF is managed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

There is nothing wrong with reducing dependency on the Niger Delta basin. However, what is wrong is devoting 30% of the Nigerian National Petroleum Corporation (NNPC)'s profit to exploration and production activities in the frontier basins every year? THAT IS A SCAM AND A LEGALIZED FRAUD.

The fact that the provisions covering the two funds appear transparent as embedded in the PIA is immaterial; it doesn't make the purpose transparent. It was a bare-knuckle political tactic and shameless demands. And it is another avenue to hijack the oil wealth via a legislative channel.

Thanks to General Sani Abacha, they enjoy a numerical strength or voting advantage at the NASS; therefore, passage into law of whatever they consider beneficial to them or to kill any bill they believe is abominable, like the PIB, is to them, a fundamental human right.

Why is the search tied to a percentage of the NNPC's annual profit? It has no explanation in economics or developmental quest; it's a scam. It was a condition precedent for their votes to pass the Petroleum Industry Bill into Law. That is it, Nigerians. There is no economic explanation justifying it. It is a quid pro. Period.

You give us 30% of the NNPC's annual profit, and we will agree to sign the PIB into law. That was what happened. And as long as the PIB is the law, industry experts are not perturbed about the immorality that encapsulates the process of approval in and outside of the National Assembly.

The PIB wasn't for the Niger Delta or to serve the interest of the Niger Delta. The Niger is a Nigerian territory - a part of Nigerian sovereignty. Why should a Bill that partially benefits the oil-producing region be treated as a Niger Delta Bill and be subjected to ridicule and sabotage?

Where is the one nation, one destiny, if we had to make a scandalous trade-off that is not in the best interest of Nigeria as a nation-state before a powerful voting block at the National Assembly could agree to pass the PIB into law?

Now this: What is the difference between the Frontier Exploration Fund (FEF), which is a $10 billion fund to support exploration and production activities in the frontier basins, and the 30% of the Nigerian National Petroleum Corporation (NNPC)'s profit for exploration and production activities in the frontier basins? No difference at all - same basins, same purpose. Yes, funds for the same exploration and production adventure.

First, 30% of NNPC's annual profit is not ascertainable; it is a blank cheque for an unascertainable voyage of discovery. It is a scam.

If we are truly sincere in our resource diversification and job creation narrative in the specified basins, must it always be for the search for crude oil deposits? Why not devote 30% to R&D in emerging industries like alternative or renewable energy, food processing, manufacturing, or mechanized agriculture?

The answer to that question is obvious: Investment in Agricultural training or renewable energy development would be under public scrutiny, ascertainable. Because, there must be something on the ground to show for the investments every year. On the other hand, with the search for crude oil in the specified basins, there are no accountability or control mechanisms. We have had a history of blank cheques indiscriminately issued for the search of crude oil in those basins, by successive military administrations in the past years, without results.

Those who fought for it (30% of the NNPC's annual profit for the search) were not patriotic or sincere. They did not have the interest of the Talakawa or Almajiri population at heart during the deliberations that culminated in the passage of the PIB into law. The atmosphere in and outside the National Assembly during the convalescing of the PIB (2011-2021) was as if they were doing the Niger Delta a big favor. It was a concerted effort to (1), dilute to the barest minimum whatever is accruing to the Niger Delta and (2), engineer a parliamentary or legislative command over a humongous percentage of our crude oil wealth.

In the original PIB, 10% of the net profit of oil companies doing business in the Niger Delta was designated for Host Community Fund (Host Fund) for ecological-related disasters and unforeseen environmental catastrophes. They voted it down to 3% in the new PIA, arguing that multiple funds already exist for the development of the Niger Delta, adding that allowing it is "skewing" more funds to the region.

The Host Fund has a global explanation of sustainable development and ecological protection in light of the Deepwater Horizon Oil Spill (the Gulf of Mexico) in April 2012, from the Deepwater Horizon rig operated by Transocean on behalf of BP that leased it.

About eleven people died from the explosion, and aquatic resources running into millions of dollars in valuation were decimated. Funding the cleanup took a toll on BP; there was no budget or set aside funds for such a catastrophic occurrence.

A related development was the ​2011 ​Bonga oil spill incident from an offshore field under the operation of Shell Nigeria Production that affected at least 168,000 victims in about 300 communities in Delta and Bayelsa, Nigeria.

Despite all these devastating occurrences, the leadership of the NASS remains adamant in embracing the crucial need for a consolidated fund. They sat on the passage of the PIB for years until the Minna Declaration of June 2021. It was at that meeting the massive funding for the search for crude oil in the specified basins was hammered home at the instance of powerful traditional rulers, regional stakeholders, and most members of the National Assembly.

It is worth repeating that financing the Host Funds is not by the Federal Government of Nigeria or from the NNPC or the Federation Account, but by oil companies doing business in the Niger Delta. Yet they voted the fund down astronomically from 10% to 3%. Whereas in the same PIA, they have appropriated for themselves, a whopping 30% of the NNPC's annual profit to do their bidding. That is more than a fraud. It is the epitome of colonialism and arbitrary sharing of the nation's wealth.

Again, there is nothing wrong with NASS voting and allocating funds to search for crude oil in the specified basins or anywhere in Nigeria. However, what I find most abhorrent in the instant case is the sense of entitlement and ethnic factors that underscored their demand and approval of the 30% by NASS members. And incorporating it into the Petroleum Industry Act by NASS to imbue it with forces of the law (an act of Parliament) is the most egregious aspect of the ethnic chauvinism that defined the passage of the PIP into law.

The legislative intent has been dubious from the onset, and the provision of job opportunities narrative for the jobless youth is ill-founded. The associated opportunities are for special interests, though the demands garnered legitimacy under the facade of bringing jobs to the region for the jobless youths.

Professor Jubril Aminu, while the Petroleum Resources Minister under President Ibrahim Babangida got a blank cheque to search for crude oil in the same basins, how many jobless Talakawa did he provide job opportunities? None. And recently, in the administration of President Buhari, the same ritual was repeated, how many Talakawa and jobless youths got a job in the process? None. A legitimate demand (job opportunities for the jobless) coached in illegality, does not make the funding reasonable or legitimate.

There is a better use of 30% of the NNPC's profit, than spending it every year to search for crude oil in the specified basins. Most oil-producing countries are gravitating towards renewable energy and shifting emphasis and reliance on fossil fuels. However, in Nigeria, while we are about dancing and singing Uhuru for the abrogation of the bogus petroleum subsidies, we have before us a clandestinely choreographed legit channel to continue the appropriation of our crude oil wealth by a sophisticated few, and we are not aware of it.

All reactions:

2Uyi Precious A and Matthew Ighodalo