Almost two decades after comprehensive reforms of the Nigerian oil industry were first mooted, political insiders say there is a strong chance the National Assembly will pass a new consolidated draft of the Petroleum Industry Bill (PIB) in the near future.
Previously divided into four separate bills — on governance, finance, administrative, and host communities — the current version has been combined into a single document. The latest draft reportedly contains some incentives for IOCs, including lower royalty rates and a rationalisation of the revenue assessment system, but also more demanding provisions for corporate contributions to community development projects in the Niger Delta.
Given current economic conditions the concerns about further delays in IOC investment decisions have concentrated minds in the government. The apparent breakthrough in Abuja comes after other African oil producers began revising their terms and conditions to provide incentives to more cautious investors.
Another pressing matter is the need to boost investment in gas development — in which Nigeria has the biggest reserves in Africa — to underpin a raft of new power generation projects that are a cornerstone of President Muhammadu Buhari’s second term. Unreliable power is a prime cause of Nigeria’s economic underdevelopment.
Three key factors are different this year.
- First, the revised and consolidated draft is the product of extensive soundings and consultations by Nigerian National Petroleum Corporation (NNPC) managing director Mele Kyari and Buhari’s former Chief of Staff, Abba Kyari, who died of COVID-19 in April. It was the latter’s last big project.
- Second, the latest draft has been discussed at length within the Presidency, and Buhari is said to have approved all the reforms as part of a rescue package for the oil and gas industry, which has been laid low by this year’s price crash.
- Third and most crucially, the All Progressives Congress (APC) has a comfortable majority in both the House of Representatives and the Senate. So far, the APC caucus has said it wants to get the bill through under Buhari’s watch.
The latest promises about the timetable have been made by Minister of State for Petroleum Resources Timipre Sylva. He says the bill will be sent to the National Assembly in a few days so that it can review and pass the bill within weeks rather than months. Some industry experts distrust his reassurances that key stakeholders — including the IOCs — have been consulted and given the opportunity to press their concerns.