PIB: Petroleum Minister’s power to grant oil licence reduces

By Obas Esiedesa

The new Petroleum Industry Bill (PIB) currently before the National Assembly has reduced the discretionary power of the Minister of Petroleum Resources to grant oil and gas prospecting and mining licences.

The Bill however stated that the Minister can only do so on the recommendation of the Nigerian Upstream Regulatory Commission which the Bill has created to regulate the upstream sector of the Petroleum Industry.

The PIB in Chapter one part I, vested the ownership and management of petroleum resources in the country on the Federal Government.

“The property and ownership of petroleum within Nigeria and its territorial waters, continental shelf and Exclusive Economic Zone is vested in the Government of the Federation of Nigeria” it stated.

The prevailing law in the sector gives wide discretionary powers to the Minister to grants petroleum licences to whomever he/she pleases with following any known standard.

In the new PIB, the Nigerian Upstream Regulatory Commission is expected to be independent. The PIB says “The Commission shall be responsible for the technical and commercial regulation of upstream petroleum operations”.

The new proposes in Part II a clear path to oil licencing award after a transparent bid process.

“Subject to the provisions of sections 71(5), 74(3), 81(1) and 93(2) of this Act, petroleum prospecting licence or petroleum mining lease shall only be granted –

(a) based on a fair, transparent and competitive bidding process; and

(b) in compliance with the provisions of this Act, regulations made under this Act and licensing round guidelines issued by the Commission for each licensing round.

(2) The Commission may periodically publish a licensing round plan.

(3) Subject to the provisions of this Act, the Minister may, on the recommendation of the Commission, grant a petroleum prospecting licence or petroleum mining lease to a winning bidder in accordance with section 74 of this Act, provided that the winning bidder has complied with the requirements of the bid invitation.

(4) The Minister shall inform the Commission of his decision within 90 days of the application for licence or lease and where he fails to inform the Commission within the stipulated time, the licence or lease shall be deemed granted”.

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