PIB Passes 2nd Reading at House of Reps

The effort to renovate the regulatory framework of the Nigerian oil and gas industry (“Industry”) which has false-started for years in the legislative houses of the National Assembly has been given fresh impetus with the latest iteration of the Petroleum Industry Bill 2020 (“the Bill”) which has passed second reading at the Nigerian House of Representatives and has now been referred to the House’s Ad Hoc Committee on the Petroleum Industry Bill. This comes a few weeks after the Senate passed the same Bill through second reading.

The journey towards purposive reform in the Industry has been a long and arduous one and comes at the heels of massive losses in the Industry. Nigeria has one of the highest costs of extraction amongst oil provinces in the world and this coupled with the nation’s difficult and often opaque business environment is a disincentive to foreign and domestic investors alike. Investors want to be certain about the provisions of the law that are applicable to their business as it enables them to adequately plan and strategise on a day-to-day basis in a terrain that many wrongly or rightly have already characterised as unstable. The uncertainty that has clouded the Industry due to the failure to pass the Bill has stalled impactful growth in the Industry for a prolonged period of time. According to a recent executive survey by PricewaterhouseCoopers, oil and gas firms found Nigeria’s uncertain legal framework to be an issue of most concern (apparently more concerning than corruption, security and poor physical infrastructure).

Hopefully, the latest iteration of the Bill will succeed where its predecessors have failed. If it manages to do so, then it could prove to be a game-changer for the Industry and the wider economy in Nigeria.