As recommended by various stakeholders, the 223-page Petroleum Industry Bill (PIB) which has been stalled for over 12 years has now been split into at least 2 separate bills. The first is a 45-page Petroleum Industry Governance and Institutional Framework (PIGIF) bill. It is expected that there will be at least one more bill to address the fiscal and taxation regime in the oil and gas industry.
Below are some of the key proposals in the PIGIF bill.
- A new regulatory body will be established known as the Nigerian Petroleum Regulatory Commission (NPRC) to issue, renew and cancel licences, permits and authorisations among other functions.
- Creation of 2 companies (the National Oil Company and the Nigerian Petroleum Asset Management Company) to replace the NNPC. The National oil company will operate as a commercial entity to be partly privatised (at least 30%). It will pay dividends from its operations to the federation account in addition to royalty and taxes. The Nigerian Petroleum Asset Management Company will own and manage petroleum assets on behalf of the government. It will be responsible for the management of the oil and gas assets that do not require cash calls (upfront funding).
- Significant limits on the powers of the minister compared to the PIB. Board appointments will be made by the president and confirmed by the Senate.
The Minister of State for Petroleum recently estimated that Nigeria loses about US$15 billion annually as a result of failure to pass PIB into law. Other concerns in the oil industry which the proposed law seeks to address are lack of transparency, poor accountability, unclear roles of institutions, and weak regulations.
Expectations are high but no one should expect that this will be a quick fix. Complications may arise not from the content of the PIGIF but rather from what it does not contain such as the host community issues, local content and special provisions for indigenous petroleum companies.
It is not clear if government intends to continue with price regulation given the functions of the NPRC. Whether the new bill is a new dawn or business as usual, time will tell.
Below is a copy of the PIGIF bill for your reference and reading pleasure.
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