The Petroleum Industry Governance Bill And The Future Of NNPC

The effective restructuring of the Petroleum Industry in Nigeria is one of the major objectives of the Petroleum Industry Governance Bill (PIGB). An in debt analysis of the provisions of the PIGB reveals that the bill when passed into law would unbundle Nigerian National Petroleum Corporation (NNPC) and the Petroleum Industry.

Almost 17 years since the process of oil and gas legal reform started, the 8th Senate on May 25, 2017, passed the first part of the Bill. The bill awaits the house of representative concurrent passage and assent by the President before it becomes a law.

There is the hope that the bill will make available a legal framework that will restructure the state oil corporation, the Nigerian National Petroleum Corporation (NNPC).

The Bill seeks to split NNPC into two companies, the National Petroleum Company (NPC) and the National Petroleum Asset Management Company (NPAMC). Both companies will be supervised by the Ministry of Petroleum Incorporated (MOPI).

The Bill gives the NPAMC the statutory powers to assume and manage all assets currently held by the Nigeria National Petroleum Corporation (NNPC) and act as the administrator of the Production Sharing Agreements/Contracts (PSC) and Back in Rights assets and such other risk-based agreement entered into within the Nigeria petroleum industry under the 1969 Petroleum Act as amended.

The NPC shall run as a fully commercial entity and operate the assets transferred to it pursuant to the restructuring of the NNPC. It would be conferred with the responsibility of managing all the assets held by NNPC except the Production Sharing Contracts and back-in Rights assets which shall be assumed by the NPAMC.

To address the NNPC transparency challenge, the Bill allows NPC to retain the revenue from its operations to cater for its expenses which include its cash call obligations and also payment obligations to lenders.

Clause 85 of the bill provides, the NNPC Act will only become repealed on the date the minister issues the legal notice vesting the assets and liabilities of the NNPC in the relevant successor entities.

In addition, Petroleum Inspectorate, Department of Petroleum Resources, and Petroleum Products Pricing Regulatory Agency would be merged into a single agency, the Nigerian Petroleum Regulatory Commission (NPRC).

It is expected that this reform would remove the overlap functions among the regulatory, policy and commercial institutions, thus making the administration in the oil and gas sector more transparent and efficient.

PWYP-Nigeria believes that the bill would bring effective reform, and also promote transparency and accountability in the oil and gas sector. And thus, makes it possible for the citizens to benefit from their natural resources.

It is within this context that we urge the National Assembly to accelerate the consideration and passage of the bill.

We equally hope that the remaining part of the bill will be passed as soon as possible, while Nigeria cruises into effective reform in the oil and gas sector.

Ogechukwu Enwelum

Southeast Zonal Coordinator, Publish What You Pay-Nigeria