Nigeria’s House of Representatives proposes new guidelines

Jan 13, 2005 01:00 AM

Perturbed by perceived anomalies in the nation's petroleum sector, the House of Representatives Committee on Petroleum has proposed a new set of guidelines aimed at sanitising the industry.
Chairman of the committee, Dr Cairo Ojougboh, spoke at the National Assembly after the bill containing the new guidelines passed the first reading. He said that the time had come for oil companies operating in the country to refine parts of their crude locally.

The chairman said specifically, the petroleum Act cap 350 LFN 1990 had been thoroughly studied and amendments proposed. In the area of casualisation, the amendment makes it a criminal offence for any Nigerian to be employed as a casual worker. The fine for violation is N 50,000 per each day the person remains a casual worker.
The amendment reads: "All skilled, semi-skilled and unskilled workers who are citizens of Nigeria employed by the lessee... shall be employed as permanent staff. Accordingly, casual or temporarily employment is hereby prohibited from the commencement of this amendment act."

Subsection(I) reads: "From the commencement of this act, any company carrying on petroleum operations in Nigeria who employs a casual or temporary staff shall be guilty of an offence and shall be liable to a fine of N 50,000 for each day the casual or temporary staff is in its employment."
Subsection (II) says: "Any casual or temporary staff of any company carrying on petroleum operation as at the 1st day of January, 2004 who has put in two years service shall be deemed as a permanent staff."

The amendment also makes it mandatory for a company applying for oil block to show evidence of commitment to a minimum work programme regarding projects of national interest and implementation of government policy on development of Nigerian content in the petroleum industry.
Also, award of licences must be published in government gazettes and the Department of Petroleum Resources (DPR) or any committee appointed by the ministry of petroleum shall supervise the implementation of modality.

The amendment further prevents oil companies from placing any installation or structure on any continental shelf or any exclusive economic zone unless the minister verifies and confirms that removal of such is feasible upon abandonment. The amendment also outlaws abandonment of all onshore facilities.
On ratification by the House, the new law says operators shall provide fund yearly in US dollars for abandonment security paid into an interest-bearing Escrow Account in a bank in Nigeria having a requisite rating not later than 30 days from the commencement of production.

As from April 30, 2005 according to the proposed law, notwithstanding anything to the contrary contained in any other enactment, all major oil companies operating in Nigeria and producing more than 5,000 barrels shall be required to refine part of their equity crude oil in the nation's refineries or their own if they elect to build in Nigeria with the following conditions:
-- with effect from January 2005, the percentage of the company's equity crude oil to be refined shall be 25 %;
-- from January 2007, the percentage of the company's equity crude oil to be refined shall be 5 %;
-- products refined locally shall attract prices that match import parity;
-- government shall divest 51 % of its shareholding interest in the refineries to the companies and the companies can take up management and technical positions.

Source: LiquidAfrica
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