The fall and rise of the Nigerian Petroleum Industry Governance Bill

A key part of the Petroleum Industry Bill (PIB) — the Petroleum Industry Governance Bill (PIGB) — has been passed by the House of Representatives (HoR) on 15 January 2018. Coming seven months after its passage by the Senate in May 2017, this is a landmark event aimed at the replacement of the obsolete Petroleum Act of 1969. The passage by both houses of the National Assembly is particularly noteworthy considering that the last 17 years have been characterised by failed attempts at policy reform in the petroleum sector.

Since 2008, Nigeria has been working to improve transparency and accountability in the oil sector. Despite being one of the largest suppliers of crude oil in Africa, the country has traditionally been unable to significantly translate its oil wealth into sufficient national development. There have been many reasons for this, including insufficient governance, weak sector regulation, and inefficiencies in oil operations. These have resulted in declining investment and returns in the industry, owing to the uncertain investment climate, incessant fuel shortage and insecurity. In response, the Petroleum Industry Bill (PIB) was developed.

The bill has since undergone numerous revisions and debates, and met with a complex set of obstacles. In July 2012, the then President Goodluck Jonathan’s administration presented a new version of the PIB to the National Assembly for consideration and enactment. There was some success in 2015, with the passage of the bill at the HoR in the 7th Assembly but progress stalled when the bill did not go through the Senate before the dissolution of the 7th Assembly following the change of government in May 2015. Politics, the transition of power from the Jonathan to Buhari administration, venal ambition of different sector stakeholders, and the bulky nature of the PIB have also since stalled the passage of the bill.

In 2015, the Buhari administration proposed passing the PIB in various segments, forming four separate bills (Petroleum Industry Governance Bill, Fiscal Regime Bill, Upstream and Midstream Administration Bill, Petroleum Host Communities Bill). They prioritised the PIGB, as it addresses reforms to the governance of the sector through:

• the establishment of an independent regulatory commission — the Nigerian Petroleum Regulatory Commission, which incorporates the current Department of Petroleum Resources (DPR) and the Petroleum Product Pricing Regulatory Agency (PPPRA);
• the unbundling of Nigerian National Petroleum Corporation (NNPC) into two limited liability companies, with one holding joint venture assets in the upstream sector and the other holding the production sharing contract assets; and
• governance and accountability arrangements with respect to the new institutions created.

To avoid conflicting versions of the PIGB, the Office of the Senate President and Vice President, enlisted technical support from partners. The Support was also enlisted towards improving the understanding of other stakeholders to ensure the Bill was kept at the front burner for rapid consideration and passage.

The PIGB was finally passed at the Senate in May 2017, and progress has been made through the passage to Second Reading of the other three segments of the bill. While various potential obstacles stood in the way of the HoR passing the PIGB — including 2019 elections politicking — political economy analysis indicated public attention and pressure on the HoR to match the achievement of the Senate in rapidly progressing the passage of the PIB, starting with the PIGB.

The House Ad-hoc committee on the PIB enlisted technical support for committee members to engage with the contents and improve their understanding of the bill. With this new understanding, the HoR was able to pass the PIGB on 25 January 2018. The Senate Presidentdescribed the achievement as ‘historic’ after ‘nearly two decades of back-and-forth, near-misses, and near-passages’ of the PIB. To translate the PIGB into an act, the 8th Assembly is expected to send a reconciled version of the PIGB to President for assent — meaning that the oil sector should foster better national development benefiting the people of Nigeria.

Kenneth Ene is a Programme Manager in our Natural Resources and Energy team.

Two phases of the Facility for Oil Sector Transformation (FOSTER) programme have strategically supported the Government of Nigeria’s work on the PIB since 2012, at various stages. Find out more about FOSTER.