PIA to Unlock Investments in Nigeria’s Oil and Gas Sector

In a bid to bring to a close a 20-year effort to reform Nigeria’s oil and gas sector, the Petroleum Industry Act (PIA) was enacted with the aim of creating an environment more conducive for growth of the sector, and addressing legitimate grievances of communities most impacted by extractive industries.

At full proper and vigorous implementation, the Petroleum Industry Act (PIA) is expected to create massive investment opportunities, improve transparency, attract investors, and reposition the Nigerian Oil and Gas industry for sustainable growth, urging investors to capitalize on the sustainable incentives provided by the PIA 2021 to invest in the oil and gas industry in Nigeria with no future regret.

This article by Brickstone reviews some institutional publications on the opportunities and potential of the Petroleum Industry Act (PIA) in unlocking investments in Nigeria’s Oil and Gas Sector.

PIA in Unlocking Investments in Nigeria’s Oil and Gas Sector 

On 16 August 2021, the President of the Federal Republic of Nigeria passed the Petroleum Industry Act, 2021, with the key objective to restructure and transform the Nigerian oil and gas industry. The PIA provides legal, governance, regulatory and fiscal frameworks for the Nigerian oil and gas industry, development of petroleum host communities, and associated matters. Download the complete PIA here.

The country has now more than one year on from the Petroleum Industry Act (PIA) hitting the statute books. The Minister of State Petroleum Resources, Chief Timipre Sylva, spoke at the recently held Nigeria International Economic Partnership Forum, in New York, with the theme: “Nigeria’s Oil and Gas Sector. According to him, the desire to surmount the challenges bedeviling the oil and gas sector led to the enactment of the Petroleum Industry Act (PIA).

The enactment of the PIA was a watershed moment for the nation, the industry and all stakeholders, signaling the beginning of a more conducive environment for investment, output, industrial and national growth, while also addressing legitimate grievances of resource host-communities most impacted by resource extraction operations.

He further stated that the Petroleum Industry Act provides fiscal certainty, improves regulations and incentives for investment, including up to ten-year tax vacations, while guaranteeing better take for both government and private investors, thereby balancing rewards with risk. It also set the foundation for a sustainable growth in the sector with the establishment of the Nigerian National Petroleum Company Limited (NNPCL), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and Nigerian Upstream Petroleum Regulatory Commission (NUPRC). 

He also asserted that the current administration remains committed to ensuring full implementation of these carefully conceived reforms to foster efficiency and attract investments and development of supporting infrastructure along the oil and gas value chain as embedded in our policy aspirations for the sector. The government has also taken the necessary steps to sustainably implement and operationalize the Petroleum Industry Act (PIA) within the timelines stipulated in the Act. “To this end, the government has inaugurated the steering committee, which I chair, responsible for PIA implementation immediately after the PIA was signed into law.”

However, there is still much to do. According to the African Business, Petroleum Industry Act, even one year on, remains in a transition phase, with committees seeking to thrash out what it means in practice. One experienced Nigerian analyst contacted by African Business questioned how much NNPC will change as a result of its transformation into a limited company, and yet tantalizing evidence indicates that, post-PIA, things may finally be changing for the better.

Read more here.