A proposed amendment to Nigeria’s Petroleum Industry Act (PIA) has sparked concerns that it could undermine investor confidence and create legal issues in the country’s oil and gas sector. The PIA, which was passed in 2021 after nearly two decades of debate, aimed to address outdated laws and overlapping roles that hindered investment in the sector.
According to reports, the Ministry of Finance is sponsoring the amendment to address fiscal leakages and revenue shortfalls. The targeted provisions include Section 8, which establishes the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as the regulator of upstream operations. If amended, the NUPRC would replace the Nigerian National Petroleum Company Limited (NNPC Ltd.) as the government’s representative in all model contracts under licenses and leases.
Public affairs analyst Ben Ekori has warned that making NUPRC both regulator and concessionaire would recreate conflicts of interest that plagued the industry before the PIA. This, he argues, would lead to an erosion of confidence among investors, who may doubt fair treatment in disputes. Ekori also expressed concerns about the proposal to vest all NNPC Ltd. shares in the Ministry of Finance Incorporated (MOFI), stating that it would undermine the company’s planned Initial Public Offering (IPO) and send wrong signals about government interference.
The PIA was conceived to resolve issues such as outdated laws and overlapping roles that had scared investors away from Nigeria’s oil and gas sector. The Act has gradually restored confidence in the sector since its passage. However, tampering with the Act barely four years after its passage could reverse these gains and return Nigeria to an era of uncertainty. Ekori stressed that any amendment that blurs roles or heightens uncertainty would be a costly mistake, potentially scaring investors away once again.
The proposed amendment has significant implications for Nigeria’s oil and gas sector, and the government’s next steps will be closely watched by investors and industry stakeholders. As the country seeks to attract investment and boost its economy, it is crucial that any changes to the PIA are carefully considered to avoid undermining the progress made so far. The Nigerian government must balance its efforts to address fiscal challenges with the need to maintain a stable and attractive investment environment in the oil and gas sector.
