Shelve the proposed PIA amendment now

A proposal to amend the Petroleum Industry Act (PIA) 2021 by President Bola Tinubu has been presented to the Nigerian oil and gas sector and the Nigerian public.   The proposed amendment, titled Petroleum Industry Act (Amendment) Act 2025, as spelt out by the Attorney-General of the Federation (AGF), Lateef Fagbemi, a Senior Advocate of Nigeria […]

A proposal to amend the Petroleum Industry Act (PIA) 2021 by President Bola Tinubu has been presented to the Nigerian oil and gas sector and the Nigerian public.  

The proposed amendment, titled Petroleum Industry Act (Amendment) Act 2025, as spelt out by the Attorney-General of the Federation (AGF), Lateef Fagbemi, a Senior Advocate of Nigeria (SAN), originated from the Ministry of Finance, which said the goal was to address “the escalating fiscal leakage and revenue loss confronting the federation.”

According to the AGF, the proposal intends to introduce three key changes to the PIA, namely, the regulatory role of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC); Ownership Structure of Nigerian National Petroleum Company Limited; Integrated Operations between NUPRC and Nigerian Midstream and Downstream Regulatory Authority (NMDRA)

Specifically, the proposed amendment intends to turn the NUPRC, which under the existing PIA is the regulator of the industry, to a participant and a player in oil contracts.

In justifying the move, the AGF said, “Some provisions of the PIA have created structural and legal channels through which substantial revenues of the federation are being diverted away from the Federation Account. The observed decline in net oil revenue inflows is largely attributable to statutory leakages and opaque deductions under current PIA architecture.”

Another key provision of the proposed amendment is the transfer of the power of the Nigeria National Petroleum Company Limited (NNPCL) to determine its budget and formulation of strategy to the Ministry of Finance Incorporated (MOFI). This effectively makes MOFI the “bare agent” of the NNPCL, ousting the Ministry of Petroleum Incorporated (MOPI), which is vested with the powers to perform such role under the present PIA.

As expected, the proposed amendment, which will be introduced as an executive bill, has raised concerns among key industry players, including International Oil and Gas (IOCs) and the general public.

The first area of concern is the timing of the amendment.

It is worth noting that the PIA took a painstaking period of over two decades of drafting, debate and refining beginning from 2000 until it was finally passed by the National Assembly in July 2021, and signed into law by President Muhammadu Buhari a month later. The PIA replaced the Petroleum Act of 1969, and at its signing into law in 2021, it was intended to establish a comprehensive framework for the operation of the oil and gas industry, including critically a new regulatory structure and fiscal regime for the sector. Other key aspects of the PIA were institutional changes leading to the turning of the NNPC into a limited liability company; the establishment of Host Community Development Trust Fund, as well as New Frontiers Development Agency to cater for the development of new oil exploration fields in the country.

Having gone through a detailed process in arriving at the current PIA, which is less than five years in operation now, many Nigerians are of the opinion that it is too early to begin to propose wholesale changes to a law that had taken decades to bring about.

The second, and perhaps, more critical area of concern regarding the proposed amendment, are the changes to the regulatory and institutional framework of the PIA. One of the core demands of investors and players in the industry prior to the passing of the PIA was that the NNPC cannot be both a player and a regulator as it then was because this very often leads to conflict of interest. It was this reason that made the setting up of NUPRC and NMDRA to handle those functions as independent entities under the PIA.

The proposed transfer of the budgetary and strategic decision-making powers of the NNPCL from MOPI to MOFI also raises questions. How would the NNPCL perform its expected role as a commercial entity when its board has been stripped of the power to make its budget and strategies for its operations?

While recognising the power of government to make amendments to laws, Weekend Trust hastens to caution and point out that the proposed changes to the PIA do not follow the necessary due diligence expected. The essence of the amendment, which is to plug leakages in the administration of oil contracts and revenues accruing to the Federation Account, however, does not consider the risks in governance and the contradictions in making the NUPRC, which is a regulator, to a participant in the oil industry.

If this proposal scales through, investors with the technical and capital capacities may not feel comfortable dealing with an entity, which is both a regulator and a competitor. We recall that this was what led to local and foreign investors pushing for the establishment of independent regulatory agencies in the industry.

 

We believe that although the government is justified in trying to increase revenue take with the proposed amendment, the PIA is not just about revenues, it is also about establishing the trust, integrity and best practices, which will attract the confidence of investors into the industry.

With the passage of the PIA, we have seen a record level of investors coming into the Nigerian oil industry over the past five years in contrast to almost zero levels before.

The proposed amendment to the PIA will have the effect of setting the hands of the clock backwards and will signal to investors who have invested and who intend to invest in the industry that their investments are not safe in the short and long terms. And rather than attract the necessary investment and revenues it hopes to get from the amendment, the government will on the contrary find its revenue expectations shrinking.

All said, we believe that as the amendment is being done in suspicious haste and without the necessary due diligence, taking into account the implications of such a move, we hereby, without reservation, call on the government to shelve it for now.