Page 6 - DMEA Week 27 2021

DMEA COMMENTARY DMEA

At long last, Nigeria passes PIB

Africa’s largest oil producer is on track to adopt a new petroleum law that has been in the
works for more than a decade, but it will take time to assess the impact of this development.

AFRICA NIGERIA’S government has been trying for a it in the second reading in late October – only to
long time to establish a new legal regime gov- postpone the third reading indefinitely so that
erning oil and gas operations. they could concentrate on drawing up a budget
WHAT: It has had ample reason to do so, since the for 2021.
Both chambers of the existing body of law is outdated. As the Ander- Subsequently, Ahmad Lawan, the president
National Assembly have sen Global consultancy noted last November, of Nigeria’s Senate, asserted that the delay would
passed the PIB in the Nigeria’s legal regime for the hydrocarbon sec- not be lengthy. He declared in January that he
third reading. tor is still largely based on the Petroleum Profit expected the National Assembly to pass the bill
Tax (PPT) Act of 1959 and the Petroleum Act of in the third reading in April and then send it to
WHY: 1969. Both of these acts were adopted at a time the president for signature in May.
The bill will replace an when conditions in the industry were quite dif- Somehow, though, the target date for the
outdated legal regime ferent – when major international oil companies third reading kept slipping back – first to May
that has drawn many (IOCs) dominated the scene and Nigeria did and then to June. Finally, late last month, mem-
complaints from IOCs. not have a national oil company (NOC), when bers of both chambers pledged to wrap up dis-
there was little interest in gas, when little thought cussion and pass the bill before their annual
WHAT NEXT: was given to the prospects for developing local recess began on July 16.
Assessing the impact of capacity and when transparency and ESG issues And this time they succeeded. On July 1, the
the PIB will take time. were easier to ignore. As a result, they have been PIB passed in the third reading in both the Sen-
inadequate for some time. ate and the House of Representatives. Then on
This inadequacy wasn’t just theoretical in July 6, the Senate set up a conference committee
nature. It was also a practical matter that couldn’t to harmonise the two chambers’ versions of the
be ignored, given the frequency with which IOCs bill. Once the committee finishes its work, the
complained about corruption, inadequate trans- PIB can be sent to Buhari, who is expected to
parency and lack of clarity about their financial sign it in the near future.
obligations. Additionally, it was substantiated
by the urgency with which government offi- Enthusiastic reception
cials spoke about the money the country was This success has drawn a great deal of positive
losing, as investors opted to focus on other ven- attention from the African Energy Chamber
ues where they could be more certain about the (AEC), an industry association formed to pro-
terms to which they were agreeing. mote the development of the continent’s oil and
gas resources.
Background In a statement dated July 1, the chamber said
Even so, previous efforts to replace this inade- that the passage of the bill would benefit Nigeria
quate legal regime failed multiple times. financially, economically, politically and dip-
Previous versions of the PIB failed in 2009, lomatically. “By ensuring an enabling environ-
2012 and 2018. The last of these, known as the ment for investors backed by a transparent and
Petroleum Industry Governance Bill (PIGB), strengthened regulatory framework, the PIB will
made it all the way through both houses of Nige- present significant investment opportunities for
ria’s National Assembly but was never signed by both regional and international stakeholders,” it
President Muhammadu Buhari, who said he commented. “At a time when the global energy
would not endorse it unless certain revisions sector is particularly competitive for foreign
were made. capital, the passing of the PIB serves to elevate
When no such revisions were forthcoming, Nigeria as an energy leader on the global stage.”
Buhari’s administration returned to the draw- NJ Ayuk, the AEC’s executive chairman,
ing board. Its efforts finally bore fruit last year, spoke enthusiastically about the PIB, describing
as the president submitted a new version of the it as a long-awaited milestone. “For 13 years, our
proposed law, the PIB, to the National Assembly oil and natural gas industry pushed and waited
in August 2020. for this moment. Passing the Petroleum Industry
At the time, Buhari said he expected mem- Bill lays the foundation for a stronger, efficient
bers of the House of Representatives and the and attractive energy industry in Nigeria,” he
Senate to pass the bill before the end of the year. remarked.
And initially it appeared that legislators might Ayuk also predicted that the West African
meet this deadline. They passed the PIB in the country would soon reap the benefits of the new
first reading in late September and then passed law. “What we must do is make this legislation

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