President Muhammadu Buhari, on 16 August 2021, signed the Petroleum Industry Bill (PIB), 2021 into law, following its passage by the National Assembly in July 2021, ending a long wait since the early 2000s. This marks a significant milestone for Nigeria’s oil industry and a historic achievement.
According to the Special Adviser to the President, Mr. Femi Adesina, the ceremonial aspect of the assent of the Petroleum Industry Act, 2021 (“the Act”) will be concluded during the week, after the President’s mandatory isolation upon returning from the United Kingdom.
The Act is expected to replace the obsolete Petroleum Act of 1969. The PIB was first brought to the National Assembly in 2008 but it faced several obstacles while undergoing numerous revisions and debates.
We commend the political will and determination of the National Assembly and Executive for the passage of the Act after two decades of unsuccessful attempts.
The Act provides legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters. It repeals the following existing Acts:
Associated Gas Reinjection Act, 1979 CAP A25 Laws of the Federation (LFN) 2004, and its amendments; Hydrocarbon Oil Refineries Act No. 17 of 1965, CAP H5 LFN 2004; Motor Spirits (Returns) Act, CAP M20 LFN 2004; Nigerian National Petroleum Corporation (Projects) Act No. 94 of 1993, CAP N124 LFN 2004; Nigerian National Petroleum Corporation Act (NNPC) 1977 No, 33 CAP N123 LFN as amended, when NNPC ceases to exist pursuant to section 54(3) of this Act; Petroleum Products Pricing Regulatory Agency (Establishment) Act 2003; Petroleum Equalisation Fund (Management Board etc.) Act No. 9 of 1975, CAP P11 LFN 2004; Petroleum Equalisation Fund (Management Board, etc.) Act, 1975; Petroleum Profit Tax Act Cap P13 LFN 2004, (PPTA); and; Deep Offshore and Inland Basin Production Sharing Contract Act (DOIBPSCA), 1993 CAP D3, LFN 2004 and its 2019 amendment.
However, there are transitional and savings provisions in the Act to deal with cases of licensees that may not want to convert. Consequently, the extant laws, such as the PPTA and the DOIBPSA, will continue to apply until such leases have expired and/ or renewed under the new Act.
It is expected that with the signing of the PIB into law, the objective of achieving 40billion barrels of oil reserve and 4 million barrels per day would be achieved while also drawing on the country’s vast natural gas reserves to provide clean and efficient energy. This is because investors would be coming into the Sector with a clear legal framework in place. The PIA has inaugurated a new era for the oil and gas industry following years of legislative efforts to strengthen the legal, regulatory, fiscal and governance framework of the petroleum sector. It is also expected that the new law will enhance the Nigerian petroleum industry’s reputation, open the door to new investment and ultimately strengthen its position to meet the world’s growing demand for energy.
Furthermore, following the enactment of this law, the Nigerian National Petroleum Corporation (NNPC) will cease to exist within the next six months as specified by the Petroleum Industry Act (PIA). It would be transformed into a private company that would pay taxes and dividends to its shareholders. The new company would be incorporated under the Company Allied Matters Act (CAMA).”
Gabriel Onojason is a Partner in the Firm’s Energy, Oil and Gas Practice Group
