Nigeria’s Petroleum Industry Bill: A Second Chance for Upstream Growth
ProMedia Confidential held a webinar on Tuesday to discuss upstream fiscal incentives, regulatory transparency and global competitiveness associated with the proposed Nigerian Petroleum Industry Bill (PIB), which currently sits under review after passing its second Senate reading on October 20.
Key speakers in the webinar included Najim Animashaun, General Counsel of Nova Power and Senior Consultant to the National Assembly on Petroleum Resources; Israel Aye, Senior Partner of Primera Africa Legal and Senior Consultant to the National Assembly on Petroleum Resources; Antony Goldman, Director of ProMedia Confidential and former Financial Times correspondent in Nigeria; and Olufemi Lijadu, Chairman of Nigeria’s Security and Exchange Commission.
The panel reached a consensus that the Bill represents the right course of action in ensuring Nigeria’s energy industry survival; capitalizing on a shared sense of urgency following long-held imperatives that Nigeria needs a new petroleum framework.
Goldman pointed out that the strength of the PIB lies in what it leaves out – previous drafts of the Bill were considered too ambitious and too restrictive for foreign investors, and so were not adopted.
Key provisions of the Bill include the prioritization of gas development, infrastructure and pricing, with a view to eliminating the bureaucracy that accompanied previous legislation. Additional provisions include fiscal features of the PIB, which Animashaun noted are complementary for upstream companies, enabling them to operate more effectively and prudently. Because the global market has become increasingly competitive, Animashaun argued, Nigeria needs to ensure that its sector is fiscally attractive to potential investors.
Furthermore, the new PIB targets the restructuring of the Nigerian National Petroleum Corporation (NNPC).The country’s management of its oil and gas industry has been characterized as political,withgovernment interference through managerial appointment significantly impacting the sector. The PIB seeks to address this issue by separating the functions of the Federal Ministry of Petroleum Resources, the NNPC and regulators, with the Ministry assuming responsibility for policy development, the NNPC operating on a solely commercial basis, and regulators remaining independent of other institutions.
Additionally, Animashaun stated that the Bill prioritizes transparency and accountability, in which the alleviation of Ministerial power – specifically in removing the discretion of the Minister regarding license awards and regulation – serves as a pathway for more efficient processes. However, Animashaun identified an ongoing concern, in which the Federal Government will continue to withhold responsibility and control over the NNPC’s management selection, noting that it will be difficult to raise money on capital markets if senior management is politically assigned.