The Nigeria Natural Resource Charter (NNRC) has commended the National Assembly for the passage of the Petroleum Industry Governance Bill (PIGB). It urged President Muhammadu Buhari to sign the Bill into law.

NNRC Programme Coordinator, Ms. Tengi George-Ikoli, said in a statement issued on Thursday that in spite of the prolonged delay in the passage of the Petroleum Industry Bill, this nonetheless is an important step. She advised the National Assembly to prioritise the fiscal component of the PIB to encourage increased investments in the Nigerian petroleum sector to improve her competitiveness on the world stage.

“The overarching importance of this development to the oil and gas sector cannot be over emphasised. From the NNRC’s point of view, there is no better time than now, especially with the Government’s commitment towards economic diversification, greater private sector participation, openness and accountability, inclusivity and environmental remediation, all encapsulated within the 12 Precepts of the Nigeria Natural Resource Charter (NNRC) Framework,” the statement said.

The absence of a functional petroleum sector has reportedly cost the Nigerian economy significantly as it is estimated that the country has lost over $200 billion in revenues over the years. If Nigerians are to benefit from the natural resource endowments, the role of functional legal framework cannot be down-played, Ms George-Ikoli noted. “With the new governance law for the industry, these huge revenue losses to the nation as a result of process lapses will be strictly limited if not eliminated,” she said.

The Bill, the first of four relating to the petroleum industry, promises to revolutionise the way in which is the oil and gas sector is governed and are designed to curb the high levels of corruption associated with the sector by introducing more transparency and accountability measures.

One notable change under the PIGB is the break-up of the Nigerian National Petroleum Corporation (NNPC) and the creation of several new organisations. These include a National Petroleum Company (NPC), which will handle state stakes in upstream ventures, and Nigeria Petroleum Assets Management (NPAM), which will administer government interests in offshore production-sharing contracts among other responsibilities. The plan is for both NPC and NPAM to be established within six months of the Bill passing into law. Transfer of NNPC assets to the new entities is due to happen in the 12 months after they have been set up.

NPC is intended to operate as “a fully commercial entity”, which will be permitted to raise funding for its share of upstream project costs independently from the government—something which will be welcomed by the international oil companies. Their projects have been subject to delays due to the absence of adequate state funding and a lack of clarity in government decision making.

The bill also allows for NPC to float some of its shares on the market, although the timeline for this is not clear which should also encourage the international oil companies back to the Nigerian shores.

To achieve this passage, the original draft Petroleum Industry Bill — which was kicked around among lawmakers for 17 years to no effect — was split into a number of separate draft bills two years ago. This was part of an effort to make the legislation more digestible and to give it a better chance of becoming law.

Senate President, Dr. Abubakar Saraki, was quoted as saying that he expects the two most important components of the PIB — the Petroleum Host Community Bill (PHCB) and the Petroleum Industry Fiscal Bill (PIFB) — to be passed soon. The PHCB includes legislation designed to assuage unrest in the Niger Delta region by providing support for communities there, while the PIFB deals with fiscal terms expected to provide clarity to investors and encourage increased investment.

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