Nigeria's Senate, during its plenary session on 25 May 2017, passed the Petroleum Industry Governance Bill ("PIGB" or "the Bill") following the recommendation of the Joint Committee of the National Assembly on Petroleum (upstream, downstream and gas).
The PIGB is only a segment of the original Petroleum Industry Bill (PIB) that was sent to the National Assembly over 12 years ago. With several years of deliberation, the previous assemblies were unable pass the holistic PIB in its original form. However, the inspired determination of the current regime led to a split of the PIB into smaller parts for ease of legislative review, the result of which is the passage of PIGB.
PIGB seeks to provide governance and institutional framework for the Nigerian Petroleum Industry and create clear separation between, the policy, regulatory and commercial institutions. Amongst other broader and far-reaching goals, the PIGB when enacted will seek to:
- Create efficient and effective governing institutions with clear and separate roles for the Petroleum industry
- Establish a framework for the creation of commercially-oriented, profit driven petroleum entities that ensures value addition and internationalization of the petroleum industry
- Promote transparency and accountability in the administration of petroleum resources in Nigeria
- Foster a conducive business environment for petroleum industry operations
Furthermore, the Bill when enacted will establish the Nigerian Petroleum Regulatory Commission (NPRC), which will consolidate the Petroleum Inspectorate, Department of Petroleum Resources, Petroleum Products Pricing Regulatory Agency and the Petroleum Equalization fund (Management Board) as one body.
Additionally, the Bill also proposes the establishment of the Ministry of Petroleum Incorporated, which shall hold on behalf of the government, shares in commercial entities established as a direct outcome from the restructuring of the Nigerian National Petroleum Commission (NNPC).
One of such entities will be the Nigerian Petroleum Assets Management Company (NPAMC) which shall, among other objectives, hold and manage certain petroleum assets on behalf of the government and enter into new exploration and production agreements with other petroleum companies as may be required by the government.
The second entity, The National Petroleum Company (NPC), will be charged with operating the assets transferred to it as a fully commercial entity. The Bill also seeks to mandate NNPC to transfer employees, assets and liabilities to the NPAMC and NPC within 6 months of incorporation.
Although the PIGB still awaits passage by the House of Representatives before being signed into law by the President, this development is expected to ignite extensive public deliberation on what the new legislation bodes for the future of the various stakeholders of the Petroleum industry.
While the passage of the PIGB by the Senate is a step in the right direction, it is just a drop in the ocean when compared to the enormity of the holistic PIB (which includes Petroleum Fiscal Framework Bill, the Petroleum Industry Downstream Administration Bill, the Petroleum Industry Revenue Management Framework Bill and the Petroleum Host Community Bill) which are yet to be passed. Various industry stakeholders are looking forward to the day when the entire Bill will be passed in order to derive the full benefits thereof.
A copy of PIGB 2017 can be accessed HERE.
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