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Nigeria: New Oil Reform Bill to Tackle Pollution in Niger Delta

The 2020 Petroleum Industry Bill (PIB) that is presently before members of the National Assembly will substantially reduce environmental pollution in the oil-producing areas of the Niger Delta when passed into law.

Aside a ban on the use of chemicals for upstream petroleum operations, there will now exist an environmental remediation fund to be established by a body to be set up by the federal government into which all oil companies doing business in the region would contribute.

Much of the restiveness in the oil-producing communities in the area has always been partly due to the degradation of the rivers and the negative impact it has had on the livelihood of the people who mostly depend on fishing and farming for survival.

However, the new proposed law which has already passed first reading in the National Assembly, seeks to assess the oil licence applicants to have the capacity or has provided for the capacity to rehabilitate and manage negative impacts on the environment.

It also bars oil companies from flaring gas, except with express permission of the commission and for emergency purposes and the advance payment of a financial contribution for remediation of environmental damage.

From available reports, the advanced payment would be deployed in tackling the pollution in the particular area, where the spill happens, if the company fails to clean it up for any reason.

“As a condition for the grant of a licence or lease and prior to the approval of the environmental management plan by the ‘Commission or Authority’, a licensee or lessee shall pay a prescribed financial contribution to an environmental remediation fund established for the rehabilitation or management of negative environmental impacts with respect to the licence or lease.

“In determining the amount of the financial contribution, the commission or authority, as the case may be, shall take into consideration the size of the operations and the level of environmental risk that may exist.

“The financial contribution to an environmental remediation fund under subsection (1) of this section shall be subject to audit by the licensee or lessee, in accordance with guidelines that the commission or authority may, as the case may be, issue.

“Where a licensee or lessee fails to rehabilitate or manage or is unable to undertake the rehabilitation or management of any negative impact on the environment, the commission or authority, may, upon written notice to the holder, apply the fund under subsection (1) of this section to rehabilitate or manage the negative environmental impact,” it noted.

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It added that a licensee or lessee shall, pursuant to subsections (1) and (2) of the section assess its environmental liability annually and increase its financial contribution to the satisfaction of the commission.

Accordingly, where the commission, is not satisfied with the assessment and financial contribution referred to in the section, it will appoint an independent assessor to conduct the assessment and determine the financial contribution.

On gas flaring, the bill stated that a licensee, lessee or operator that flares or vents natural gas, except in the case of an emergency; pursuant to an exemption granted by the commission; or as an acceptable safety practice under established regulations, shall be liable to a fine as prescribed by the commission.

“A fine due under this section shall be paid in the same manner and be subject to the same procedure for the payment of royalties to the government by companies engaged in the production of petroleum.

“A fine paid pursuant to this section shall not be eligible for cost recovery or be tax deductible” it stressed.

Prior to the commencement of petroleum production, all oil companies are also to install metering equipment conforming to the specifications prescribed on every facility from which natural gas may be flared or vented as the commission or may prescribe.

The bill further proposed that a licensee or lessee who fails or refuses to install metering equipment pursuant to subsection (1) of the section commits an offence under the Act and is liable to a fine as the body to be established may deem fit under a regulation.

“The commission or the authority may grant a permit to a licensee or lessee to allow the flaring or venting of natural gas for a specific period – where it is required for facility start-up; or for strategic operational reasons, including testing,” it stated.

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