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SENATOR BASSEY ALBERT: RE-ENGINEERING THE GAS SECTOR THROUGH LEGISLATION

By Victor Effik
Statistics made available by the Department of Petroleum Resources (DPR) show that Nigeria ranks first in Africa in Gas reserves and the eighth in the world. It is also reported by National Petroleum Investment Management Services (NAPIMS) that exploration efforts in the in-land basins have the potential to add to national gas resource volumes. An overview of Nigerian Gas Industry presented to the Senate Committee on Gas in January 2016 by Nigerian Gas Association (NGA) revealed that Nigeria currently has proven gas reserves of 187 Trillion Cubic Feet (TCF), accounting for one-third of Africa’s proven gas reserves while undiscovered potential natural gas reserves is also estimated at 600 TCF.


Senator Bassey Albert Akpan, Chairman, Senate Committee on Gas Resources
It has also been discovered that the country’s gas consumption is significantly low in comparison with other developing countries. This has contributed in some way to Nigeria’s economic misfortune and resulted in its low GDP per capita. While interacting with the Senate Committee on Gas, officials of NGA told the committee members that countries consuming substantial volumes of gas have been able to significantly meet their energy needs hence achieving economic development as represented by their high GDP per capita. The key to the country’s economic growth and development, it maintained, lies in gas consumption and not resource base. It is reported that if Nigeria can unlock its natural gas resources, the economic growth potential is endless.
However, there are inadequate incentives to grow reserves to meet domestic gas obligations as well as export requirements; in addition, the issue of stranded gas reserves has not been adequately tackled. There is also this recurring lack of effective regulation and strong flaring policies; a situation which allows almost 9% of the total gas reserves of the country to be flared.
Given this scenario, there was urgent need to turn the situation around. The Eighth Senate has been leading the campaign to reposition the gas sector to enable the country and its citizens reap benefits from the country’s enormous gas resources. The upper house needed someone who would chair its Committee on Gas to carry out the needed reforms in the sector. Senator Bassey Albert Akpan, the erudite banker and former Akwa Ibom State Commissioner for Finance was the man the leadership of the Senate found well suited to do the job. The committee has been working in tandem with other stakeholders to deliver on its mandate. Senator Albert, who represents Akwa Ibom North East (Uyo) Senatorial District in the Senate was appointed Chairman of committee at a time the international oil price slumped to an all-time low. The slump naturally affected Nigeria because much of the country’s revenue for development comes from oil. But this ought not to be so because the country has abundant gas resources, which should have been adequately tapped to compliment revenues from oil.
To carry out its legislative mandate, the first task of the committee upon its inauguration was to engage the services of consultants to brief members of the committee on all aspects of gas development in Nigeria. It thereafter engaged other stakeholders including the Nigerian National Petroleum Company (NNPC) and its subsidiaries preparatory to oversights visits to gas infrastructure projects and inspection of gas flaring sites. At the meeting with the consultants, Senator Albert hinted that the country cannot talk of diversifying the country’s economy without looking at the critical sectors of the economy such as gas. At the interactive meeting, the consultants, S & R Lite-Up Consult, made detailed presentations on the origin of gas and crude oil discovery, Nigerian Gas masterplan including an appraisal of what has been done in the past; management of gas projects in Nigeria, the activities of International Oil Companies (IOCs). At the end of the interaction, members of the committee expressed satisfaction that the briefing by the consultants left the members more knowledgeable about the workings in the gas sector..
The committee also interacted with the regulators of the sector and the major operators to find out the recurring problem that has stagnated the growth of the sector for decades. The committee held several meetings with representatives of NNPC, NAPIMS, Nigeria Gas Company (NGS), Nigeria Petroleum Development Company (NPDC) and IOCs. One of the startling discoveries made by the committee in the course of its investigations was that NNPC has not done enough to protect the interest of the country in its relationship with the IOCs as the former demonstrated reluctance to invest in the downstream. The committee also discovered that the Nigeria Gas Company, whose statory responsibility is to develop infrastructure for domestic gas supply, spent $2billion to repair the vandalized gas pipelines and that its inability to make profits was because the company was being owed by power consummers to the tune of $7.1 billion.

One of the intractable problems in the gas sector identified by the committee is the reluctance of the Joint Venture partners to invest in the downstream, as obtained in other countries. Had these partners been investing in the downstream, monies paid as cash calls by government could have been used to provide the needed infrastructure in the sector. Another area which the committee wants a robust reform is the strengthening of the nation’s laws on gas flaring, which presently works against national interest as the oil majors are taking advantage of the abysmally low penalties to continue to flare gas.

The issue of gas flaring has also been an issue that the committee has taken up with the IOCs. Just recently, the Senate mandated the Joint Committees on Gas Resources and Niger Delta to investigate the impact of gas flaring on the Niger Delta region following a motion sponsored in the Senate on the impact of gas flaring on the region. To ensure a comprehensive investigations into the matter, the Senate Committee on Gas held interactive meetings with the Managing Director of Nigeria Liquiefied and Natural Gas (NLNG), Mr. Babs Omotowa on Thursday, 21st January, 2016 to find out what strategic plan the company was putting in place to make gas use more available to Nigerians at affordable price.

The committee has also demonstrated its determination to bring sanity and transparency in operations in the oil and gas sector. In the course of its investigations, the committee was not satisfied with the level of compliance with tax laws by oil regulators and operators. The committee also raised issues on the level of remittances from the NNPC to the Federation Account. It was as a result of this that the Chairman of the committee, Senator Albert requested those companies to submit documentary evidences of taxes and dividends they paid since inception. He also informed them that the committee will seek to verify from FIRS the claims made by them. While welcoming the members of Council of the Nigeria Gas Association (NGA) who paid a courtesy visit to the committee on Tuesday, 26th January 2016, Senator Albert informed the members of the association that the committee will take its oversight function seriously, as according to him, “anyone who runs afoul of the law must be dealt with”. Senator Albert and his colleagues in the committee agree that the new economy is gas, and that it is imperative that the country deepen indigenous participation in this sector by expanding our local content regime.
The activities of the IOCs with respect to their Corporate Social Responsibility (CSR) and their reluctance to submit to the laws of the land has pitched the committee against the IOCs. For instance, it was observed in the course of investigations that the IOCs were not paying 3% contribution to Niger Delta Development Commission (NDDC) as demanded by the law establishing the commission. The law also demands the IOCs to submit their budgets, but none of them have done so since the formation of NDDC. The committee found out that what some of the IOCs have been presenting as their corporate social responsibilities are mere tokenism as mere furnishing of classroom blocks cannot compensate for the ecological devastation of Niger Delta region resulting from oil spill and gas flare.
On the payment of a paltry N10 penalty for a cubic feet of gas flared, Senator Albert frowned at such a retrogressive law, noting that companies capitalize on our weak laws to flare gas. He directed the IOCs to itemize their environmental remediation and CSR to their host communities and forward them to the committee in four working days. He also asked them to attach cost to the projects and backward integration plan executed by them. The committee also sought to know whether the money the IOCs claims to spend on community projects correspond to 3% of their budgets. He directed all IOCs to present their annual budgets since the inception of NDDC in 2000. They were also requested to submit their environmental remediation and CSR to show steps taken to ameliorate the impact of gas flaring in their areas of operations. NAPIM as the regulator of oil and gas sector was mandated by the committee to ensure that oil companies comply with the laws of the land. The committee also asked DPR to provide location by location the gas flaring sites and the quantity of gas flared.
While engaging the Ministry of Petroleum Resources during the defense of the 2016 Budget, the Senate Committee on Gas raised queries on some of the contents of the budget presented by the ministry. For instance, the committee disagreed with the Ministry over the allocation of funds in the 2016 Budget for the passage of the Petroleum Industry Bill (PIB). The committee also questioned the allocation of funds for the review of the Nigeria Gas Masterplan. Senator Bassey Albert backed by other members of the committee said the allocation was not necessary because the bill is already with the National Assembly. “This bill is already with the National Assembly. So what do we need the money for? I don’t think you need the money. This could be one of the reasons why we have so much deficit in this year’s budget. Unless you can justify this expenditure, we need to do away with this”, Senator Albert said at a meeting with ministry officials..
The committee also disagreed with the ministry officials over the N250 million proposed in the 2016 budget for the review of the Nigerian Gas Masterplan. The committee discovered that funding request for the plan has been a recurring figure in previous budgets without anything to show for it. “You cannot be asking for funds to review what you have not even implemented”, Senator Albert said, adding that the only problem with the Gas Masterplan is that there is no law backing it.
The budget defense by DPR and NNPC on Tuesday, 9th February, 2016 afforded the committee to examine the 2016 budgetary provisions of regulatory agencies in the gas sector. Senator Albert demanded to know why DPR was requesting for N30.5 billion for personnel cost in 2016 Budget. The chairman asked to know why personnel cost of the department with a staff strength of 1,200 grew from N17 billion in 2009 to N30.5 billion in 2016, a period of five years. The chairman also asked them for evidences of tax payments.
On revenue generation, the committee advised DPR to raise the bar of revenue generation. The committee asked it to furnish it with production sharing contracts, and details of gas flaring penalties. The committee frowned at a situation where the IOCs provide the metering equipment to DPR. It said this was wrong because IOCs intimidate and manipulate the oil regulators through this way. While calling on DPR to procure or even look at the possibility of manufacturing its metering equipment, it observed that DPR is not better equipped to regulate the operators.
The committee also met with officials of NAPIMS, NPDC and NNPC on Thursday, 11th February, 2016 as continuation of the defense of the 2016 budget. Senator Albert in his opening statement said the committee needed to do justice in view of cases of errors, paddling discovered in the course of this year’s budget defense. In attendance were the following: Managing Director, Nigeria Gas Company (NGC), Mr. Tunde Bakare; Deputy General Manager, Gas Infrastructure, NNPC, Farouk Said,Group Genral Manager, NAPIMS, Mr. Sejebor. NPDC was also represented. The key issues the committee wanted information were the stage of implementation of the Gas Masterplan in terms of domestic gas supply; Gas infrastructure development; Budget of NNPC and its subsidiaries as demanded by the law and remittance of NLNG dividends to Federation Account. NNPC, NPDP, NAPIMS all failed to submit their audit accounts as ordered by the Senate Committee. They merely promised to do so later. NPDC admitted it has an audited account, but the committee said the audited account has not been made public as demanded by the company Income Tax Act. The committee also undertook oversight visits to oil and gas projects to see their level of completion. In order to be properly briefed about those projects, the committee decided to first of all visit NNPC headquarters on Monday, 15th February, 2016 preparatory to its planned oversight visits to Delta state to inspect Escravos Phase 2, Delta Gas City and Industrial Park.
Investigations into the mystery surrounding the cost of the Escravos Gas to Liquid (EGTL) Project formed part of the agenda of the Committee. The Senate, at its plenary had asked the committee to investigate the controversies surrounding the project. The two previous sessions of the Senate undertook investigations into the project but their investigations hit the brickwall. Will the 8th Senate leap through this brickwall? Chairman of the Committee on Gas, Senator Bassey Albert Bassey thinks so. “We should put an end to this matter”, he assured, in a clarion call on his colleagues to start thinking outside the box to unravel the mysteries wrapped around the project.
The project is said to have gulped over $10 billion already as against the initial approved cost of $2.95 billion. The same project in Qatar was awarded at the same time at the cost of $1.1 billion, yet the project has been completed and put to use in that country. It is a project two previous Senate sessions have investigated without result. Senator Albert thinks there is something his committee must do differently to achieve result. Senator Barnabas Gemade, a high ranking senator and a member of the committee thinks the same way: “Change is in the air. We must get to the root of the matter”.
Senator Albert and his colleagues in the committee strive to ensure that operations in the oil and gas sector is as transparent as possible. This motivated him to sponsor a motion on Wednesday, 13th April, 2016 urging effective implementation of the Joint Venture cash calls obligations by the NNPC, Resulting from the motion, the Senate, at its plenary adopted the motion and set up an ad-hoc committee headed by him to conduct investigations into the matter. The motion observed that the persistent constraint by NNPC to meet its cash call obligations have taken a turn for the worse on the country’s crude oil production output and sundry activities in the oil and gas industry. The motion noted that although the National Assembly has been appropriating for the NNPC Joint Venture cash calls obligations in the past, it disclosed that the current outstanding cash call obligations in the oil and gas sector stands at over $6 billion.
With the current effort of the Senate Committee on Gas resources chaired by Senator Bassey Albert Akpan to sanitize operations in the gas sector, it will be a matter of time before the country starts to reap benefits from its enormous gas resources.
• Victor Effik is the Media Adviser to the Chairman, Senate Committee on Gas Resources

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