What you need to know about Nigeria's new Petroleum Industry Bill

President Muhammadu Buhari has sent a new PIB to the bicameral National Assembly, where the Senate, along with the House of Representatives, must sign off on it before it can become law. The bill passed its first reading in the Senate on October 1.

What changes under the new bill?

The new bill could offer a radical departure from past norms. The bill plans for the selling of shares in a reformed NNPC, the replacement of regulatory bodies, and the reduction and streamlining of royalties.

The legislation suggests the NNPC should become “a commercially oriented and profit-driven national petroleum company” independent of government and audited annually, although no dates are yet given for a share sale. The PIB could also boost the amount of money companies pay to local communities and for environmental cleanups, introduce new dispute-resolution mechanisms between government and oil companies, and set up a midstream government infrastructure fund.

“It would play a key role in addressing inefficiencies, from slow approval for oil projects to budget shortfalls that hinder the ability to pursue public-private partnerships. What’s more, the bill would create a supportive environment for both International Oil Companies (IOCs) and indigenous petroleum companies, help protect the environment and the interests of host communities, support economic diversification in Nigeria, and critically important, promote transparency in Nigeria’s administration of petroleum resources,” writes NJ Ayuk, Executive Chairman of the African Energy Chamber.

Given the PIB’s tangled history, the passage of the bill would represent a remarkable political victory for the current administration and send a message to international investors. Furthermore, the plunge in global oil prices brought about by the Covid-19 pandemic, which has seen crude trading at less than $40 a barrel and triggered a 60% slump in Nigerian government revenues, may give renewed impetus to reform efforts.

Yet the complexity of the legislation remains a problem. The latest PIB comprises one version separated into four chapters, unlike previous failed versions in which the bill itself was separated. The Senate house speaker has resolved to pass the bill as quickly as possible but emphasized that it would not “sacrifice thoroughness at the altar of speed” – comments which may raise eyebrows among long-term industry observers.