Deputy Petroleum Minister Timipre Sylva and Nigerian National Petroleum Corporation (NNPC) managing director Mele Kyari have been promoting the oil sector but with crucial strategic differences over how to reform it.
Both men used this last month’s high-profile Nigerian International Petroleum Summit in Abuja to reassure delegates about the country’s openness to investment and efforts to bolster the regulatory framework. These include attempting to ensure passage of the Petroleum Industry Bill (PIB) into law during 2020. On 26 February the House of Representatives speaker Femi Gbajabiamila said that the House would do all it could to pass the Petroleum Industry Governance Bill (PIGB), one portion of the PIB, before the end of June.
Contrary messages on the timing and structure of the reforms have, however, come from Sylva, Kyari, Senate president Ahmed Lawan, and other officials. These encompass the following options:
- The PIB will be completely redrafted.
- A single bill will be prepared.
- Two separate bills – divided between fiscal terms and provisions for local communities – will be drafted.
- The PIB will revert to the four-track model – governance, fiscal, local communities, and administrative – that was contemplated in President Muhammadu Buhari’s first term.
Sylva suggests that a revised PIB, or at least a section of it, should be on its way to the National Assembly in the coming weeks although this has not yet happened. Industry sources say that the bill’s passage and signing into law by President Buhari is in fact a distant prospect, given heightened fiscal concerns of the oil companies after the amended law on production-sharing contracts and the diverging interests of the country’s geopolitical regions.
Sylva’s previous comment — that delay in passing the PIB could, in turn, delay the planned marginal and major onshore and offshore licensing rounds — is now clouding the oil sector outlook. And his optimism, expressed at the Abuja summit, that Nigeria stands to benefit from around ‘a billion barrels’ of newly discovered oil reserves in the north-east have failed to convince.
Although every senior civil servant and industry official agrees that passing the PIB and establishing a new regulatory framework to attract fresh investment should have been top priority for the Buhari government since it took office in 2015.
For five years, failure to agree on the terms of the law has been the single biggest and most avoidable factor holding back investment in the Nigerian energy industry, as it was under Buhari’s predecessor, Goodluck Jonathan. This has prompted investors to look at new, if less well-resourced, oil and gas territories such as Senegal, Mauritania Ghana, Tanzania, and Mozambique.