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20 Jan

OIL AND GAS 1.8 NNPC

The NNPC.

The World War 1 and development of internal combustion engines increased the demand for oil. The first purely state owned oil company in Europe was (AGIP) Azienda Generale Italiana Petroli. Unlike private companies primarily set up to make profit. National Oil Companies were established to advance the interest and participation of the host countries in the production of their resources and derive revenue therefrom.

The Nigeria National Petroleum Corporation (NNPC) was established by Section 1 of the NNPC Act 1977. Resulted from the merger between the Ministry of Petroleum Resources and the Nigerian National Oil Corporation which was established in 1971. The NNOC, being an offshoot of the Ministry of Mines and Power had jurisdiction issues with the latter.

Section 1 of the NNPC act provides that the affairs are to be run by a board of directors chaired by the minister of petroleum Resources. Other members include:

  • DG of federal ministry of Finance.
  • MD of the Corporation.
  • Three other useful persons with professional experience and specialised knowledge to be appointed by the national council of ministers.

Functions of The NNPC Section 5.

  • Exploring, prospecting, winning and disposing of petroleum.
  • Refining, treating and processing petroleum.
  • Purchasing and marketing petroleum/ its products.
  • Providing and operating petroleum transport facilities like pipelines and tankers.
  • Constructing and maintain facilities for the handling of petroleum and its products.
  • Engaging in activities that would enhance the overall interest of Nigeria.

Giving effect to agreement and statutory enactments and the provisions of the NNPC Act.

The NNPC has undergone reorganisations which are not reflected in any enactment.

  • The first was carried out (in the 1980s) following the alleged missing 2.8 billion dollars. To this effect, a ministry of Petroleum and Energy was created and the department of petroleum Resources was created.
  • In 1988 as a result of the merger between the Petroleum Inspectorate of NNPC and ministry of petroleum, the Department of Petroleum Resources was created. This department (by a federal government Gazette) was vested with the power to
  • supervise the petroleum industry.
  • Permit and grant licences to a range of petroleum activities.
  • Monitor and control environmental pollution and enforce environmental protection laws.
  • Fixing production allowable and prices of petroleum.

This seems to return the Nigerian state participation regime to the position ab initio.

  • NNPC Act.

POWERS Section 6

  • Do anything that facilitates the execution of its duties under the Act.
  • Hold, purchase, manage and alienate moveable and immovable property.
  • Enter into contract that facilitate the execution of its functions.
  • Establish and maintain subsidiaries and train managerial staff to discharge its duties.

Immunities and Exemption from Liability.

  • Section 12(1) provides a time limit of 12 month for the institution of an action against the NNPC, it board member(s) or employee or her agents furthering her activities. 12(2) provides that at least one month pre-action notice must be served to the corporation. This gives it the option to rectify her inactions or proceed to a suit. No execution or attachment shall be issued against the corporation, indemnity shall be borne out of the corporation’s assets (general reserve fund) Section Where the action was brought against a board member in his official capacity, he shall be indemnified by the corporation-section 15.
  • Section 16-The installations (pipelines, rig, refineries, stations and so on) of the corporation shall not be regarded as assets for the purpose of imposing tenement rates. This does not preclude NNPC from being tax.
  • The corporation may from time to time be excluded from the provisions of paragraph 12 (relinquishment), paragraph 3 and 6 (duration of oml) and some other provisions.

By Section 21, land vested in the corporation shall not be subject to compulsory acquisition.

Isochukwu

Quite eccentric really

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