The Senate President , Olubukola Saraki announced on twitter earlier this week, that both Houses of the National Assembly will start considering the “Petroleum Industry Governance Bill” next week. Based on publicly available information and exposure drafts, this paper briefly highlights five things to expect from the long-awaited bill.
- The Bill will only deal with selected issues. The earlier drafts of the Petroleum Industry Bill sought to address a wide range of industry issues – institutional reform, upstream, downstream and gas administration, upstream fiscal matters and revenue management matters. It now appears that the government has accepted that this approach has contributed to the delays in the passage of the industry reforms. The new Petroleum Industry Governance Bill (“PIGB”), will be the first of a number of bills addressing different aspects of the industry reforms. The PIGB will focus on the key governing institutions in Nigeria’s oil and gas industry.
- Separating the roles of the government in the oil and gas industry. Under the current regime, there is no clear separation of government roles in the oil and gas industry leading to potential conflicts of interest. It is expected that the new Bill would identify the key government roles of policy, regulatory and commercial and place those functions within specific entities.
- Clarifying the role of the Minister. The PIGB is likely to reduce the regulatory and commercial roles the Minister of Petroleum Resources has hitherto played in the oil and gas industry. The Minister will emerge as the driver of government policy in the sector.
- A new & independent regulatory institution. The current industry regulator, the Department of Petroleum Resources (“DPR”) sits within the Ministry of Petroleum Resources. The Bill is expected to create a new regulatory commission, fashioned after Nigeria’s electricity and communications commissions and merge the functions of DPR and the Petroleum Products and Pricing Regulatory Agency (“PPPRA”). The new commission should have independence from government to allow its decision to be taken with limited political influence as well as independence from regulated entities.
- Unbundling of NNPC. Unlike the restructuring exercise recently carried out by the Honorable Minister of State for Petroleum, Dr. Ibe Kachikwu, the PIGB is expected to break up the NNPC with the emergence of at least two limited liability companies to absorb the assets and liabilities of the Corporation.
The Petroleum Industry Governance Bill as well as analysis of its contents will be published on www.petroleumindustrybill.com once it is published by the National Assembly.