FIVE YEARS OF THE PETROLEUM INDUSTRY ACT

Five years after the Petroleum Industry Act (PIA) came into effect in Nigeria, its impact remains a subject of debate. The Act, which was signed into law in August 2021, aimed to de-regulate the hydrocarbons sector and transition the country's petroleum industry towards global competitiveness. This landmark legislation comprises 319 sections and eight schedules, making it one of the most complex pieces of legislation in the nation.

Under the PIA, the Nigeria National Petroleum Company (NNPC) was unbundled into distinct entities, separating its regulatory functions from its operations. This resulted in the creation of two new regulatory institutions: the Nigeria Upstream Regulatory Commission (NUPRC) and the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Additionally, the NNPC was transformed into a Limited Liability Company, with the Ministries of Finance and Petroleum as its authorized shareholders.

One of the key objectives of the PIA was to promote energy security and investment in renewables. To achieve this, the Act mandates the new NNPC and its subsidiaries to invest in renewables, act as downstream supplier of last resort, and ensure national energy security. The newly commercialized NNPC Group is now composed of 21 subsidiaries, covering various areas such as upstream and exploration, downstream and trading, gas and power, engineering and shipping, and services and investment.

In order to adapt to the rapidly evolving global energy ecosystem, the new NNPC Group must simultaneously retain indigenous talent and attract international expertise where necessary. The recently appointed Chief Executive of the NNPC Exploration and Production Limited (NEPL) exemplifies this approach, as he leads a management team comprising both Nigerians and internationally recruited professionals.

While the PIA's implementation has yielded some positive results, such as a 75% growth in average daily production for NEPL, there are still challenges that need to be addressed. These include the need for improved protocols in oilfield practice, sustainable investment in energy diversification, and greater transparency in compliance with the Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN).

Additionally, the Act must also address the needs of host communities affected by the un-bundling of NNPC.

As Nigeria enters the final stretch of its election season, dominated by issues of electoral integrity, insecurity, and affordability, it remains to be seen how the newly commercialized NNPC Group will be perceived in the broader context of structural issues that underpin the country's development.