After more than a decade long tussle, the National Assembly finally passed the much-anticipated Petroleum Industry Bill (PIB) at last week’s plenary session. The PIB seeks to ensure reforms, promote transparency, and attract capital flows into the oil & gas sector. The upper chamber passed the bill following careful consideration of each clause in the report by the Joint Committee of the National Assembly on Petroleum (Downstream, Upstream and Gas).
The bill comprises five major parts, including Governance and Institutions; Administration; Host Communities Development; Petroleum Industry Framework; and Miscellaneous Provisions comprising 319 clauses and 8 schedules. One of the key recommendations of the bill is the unbundling of the Nigerian National Petroleum Corporation (NNPC)) and a revision of the funding mechanism.
The bill which was first introduced to the National Assembly in December 2008 to overhaul and deregulate the oil and gas industry has been met with disagreements between the Executive and Legislative arms of the government and other stakeholders. In a move to ease its passage, the bill was broken into four parts in 2015. These parts were the Petroleum Industry Governance Bill (PIGB), Petroleum Host and Impacted Community Bill (PHICB), Petroleum Industry Administration Bill (PIAB) and Petroleum Industry Fiscal Bill (PIFB).
Sadly, the outcome of events deviated from plans because of the full dissolution of the 7th Assembly following the change of government in May 2015. Also, in 2017, despite the passage of the PIGB (a part of the PIB) by the Senate, it failed to become a law.
In September 2020, the entire bill was presented by the President to the National Assembly for consideration once again. Some of the key objectives of the PIB are safeguarding the long-term macroeconomic stability of the country, reforming the extractive industry institutional framework, providing better clarity for Nigeria and its partners (particularly IOCs), entrenching a domestic gas to power market, increasing oil and gas production whilst protecting the environment and supporting the economic diversification agenda of the country.
Despite the many years of delay, the bill that was passed still has many contentious aspects such as the approval of remittance of only 3% of the profit made by oil firms to host communities. Lawmakers from the South-South protested the 3% approved for the host communities and called for 5% which was in the original document sent to the Senate. The bill also allows for 30% of profits accruing from oil and gas operations by the Nigerian National Petroleum Corporation to be set aside for exploration of oil in the frontier basins.
The passage of the PIB after so many years is a step in the right direction needed to attract investments across the industry’s entire value chain. However, many wonder if the bill is not coming too late considering the current global shift away from fossil fuels. The country has lost so much from the delay of the passage of the bill which may now be impossible to recoup. That said, the proposed law which seeks to maximize the benefits of the nation’s gas potentials may help improve the state of power supply and boost revenue receipts.
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