They described the law as a recipe for disaster.

The Nigerian Governors’ Forum has picked at least six holes in the Petroleum Industry Act signed by President Muhammad Buhari on Monday.

They described the law as a recipe for disaster.

According to Nation, the governors identified six unfavourable areas in an August 10 letter to the President.

They pleaded with him to withhold his assent to enable the National Assembly take another look at the Bill along the lines of their observations.

The letter was signed on their behalf by Chairman of the Nigeria Governors’ Forum (NGF), EKiti State Governor Kayode Fayemi.

The identified pitfalls, according to the governors are in Sections 9(4) and (5); 33; 53(2), (3); (4); 54 (1) and (2);  55 (1); and  64(c).

Despite the request for a stay of action, President Buhari got the advice to sign the Bill on his return from the United Kingdom at the weekend.

He signed the Bill while observing self-isolation on Monday.

The issues the governors raised include; The law will deny states their fair share from the Federation Account because it favours the Federal Government and the Nigerian National Petroleum Corporation (NNPC), which will transform to a limited liability company.

The governors, who nevertheless hailed the law as good for the oil and gas sector, are unhappy about the provisions for the incorporation of NNPC Limited under the Companies and Allied Matters Act.

They said rather than reforming the sector, the Petroleum Industry Act has made the NNPC Limited a more powerful oil company.

They faulted the removal of the requirement to transfer payments into the Federation Account as unconstitutional.

The letter by the governors, reads in part: “We note with great shock and displeasure that the interests of the sub-nationals were not put into consideration in the bill that was recently passed by both chambers of the National Assembly.

“In a previous communication with the leadership of the National Assembly, we had noted that Section 53 of the Bill provided for the incorporation of the Nigerian National Petroleum Company Limited (NNPC Limited) under the Companies and Allied Matters Act to carry out petroleum operations on a commercial basis.

“The said Section 53 in (2) went on to provide for consultations between the  Ministers of Petroleum  and  Finance  on  the  number  and nominal value of the shares to be allotted which “shall form the  initial paid-up capital” of NNPC  Limited and further added that the Company shall subscribe and pay cash for the shares.

“In our said letter, we observed that the  wording  of (3) suggested  that  only the  Federal Government would have shares in this company and stated that ownership of all the shares in  the  company  shall  be vested  in  Government  and  held  by the  Ministry  of Finance on behalf of Government.

“This sub-section is silent on what Government it referred to, but an inference could clearly be made by the express mention of the Ministry of Finance as the sole custodian of the shares.

“We then recommended that a framework that accommodates the states be worked out  and  included in the  allotment of shares  and  incorporation of NNPC Limited. We observed that excluding states from this arrangement precluded them from having  a voice in the running and administration of the company  and excludes them from sharing in the distribution of dividends when they become due.

“In  the  same   vein,   Section   53  (4)  of the  Bill  provides  that  the  Ministry  of  Finance Incorporated in consultation with the Government, may increase the equity capital of NNPC Limited. Here again, we note the non-inclusion of sub-nationals in the consideration of this very important provision and recommend that the Nigerian Sovereign Investment Authority (NSIA) and Central Bank of Nigeria in consultation  with the Federation Governments and Federal Capital Territory, may from time to time increase the equity of NNPC Plc.”

The governors raised some fundamental issues bordering on the removal  of the  requirement to transfer fiscal payments to the  Federation Account; 30%  profit  oil and  gas as Frontier  Exploration  Funds; and the  imposition of gas  flare  penalties.

They said rather than reforming, the Petroleum Industry Act has made NNPC Limited a more powerful oil company.

“We  do  not  believe  that  in  passing  this  Bill,  the  National  Assembly   gave  adequate consideration to every relevant facet of our federation, and this can be a recipe for disaster.

“The afore-mentioned concerns represent some of the many pitfalls in this Bill capable of hurting the federation and we respectfully pray Mr.  President to withhold assent pending the resolution of all the thorny areas,” the governors said.

Culled from the Sahara Reporters