Nigeria is splitting its oil corporation the Nigerian National Petroleum Corporation (NNPC) into two, as it splits the Petroleum Industry Bill (PIB) that has been stuck in parliament for years.
The first new bill, drafted by the Senate and overseen by the oil ministry, is entitled “Petroleum Industry Governance and Institutional Framework Bill 2015”. Its goal is to create “commercially oriented and profit driven petroleum entities”.
The NNPC oil corporation through which Nigeria regulates and participates in the country’s petroleum industry will be split in two as against a series of units envisaged by the stalled 2012 bill. The two new entities would be the Nigeria Petroleum Assets Management Company (NPAM) and a National Oil Company (NOC) that will be run on commercial lines and partly privatised.
The 200-page PIB whose long title is “An Act to establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry, to establish guidelines for the operation of the upstream and downstream sectors, and for purposes connected with the same” has been in parliament for years, with the first draft (HB 159) submitted in 2008 but lawmakers have never agreed on every aspect of the bill.
The inability of the Nigerian parliament to pass a law and uncertainty around taxation has stunted investment in the west African nation, particularly in deep-water oil and gas fields which is the toast of most foreign players in the industry.
Petroleum Minister Emmanuel Kachikwu, in October, said the country was losing $15 billion annually due to non-passage of the PIB.
“The average source of volumes in investments that we are losing on an annual basis because of the lack of PIB is in excess of $15 billion,” he said when he appeared before the Nigerian Senate.
“The non-passage of the bill in whatever form over the years has created a level of uncertainty that no international investor wants to grapple with.”
He stressed the need for the National Assembly to work with the petroleum ministry to pass soem elements of the PIB where there is no much contention.
“As long as we continue to want to pass a holistic PIB, it’s going to be a major challenge. Once you begin to break it up into critical aspects, you begin to make a faster run to passing the PIB,” Kachikwu said.
Now the government hopes that breaking up the PIB into a series of bills will give a better chance of getting parliamentary approval and reforming the sector.
If passed, the law would in addition to NPAM and NOC, also create a Nigeria Petroleum Regulatory Commission (NPRC) that will oversee oil licence bid rounds, fuel prices, among others.
The NPRC will also be able to set up a Special Investigation Unit, armed with the powers to seize items and make arrests without a warrant.
The new bill is expected to be presented to senators this week.