Nigeria Prepares Major Reform of its Oil Sector
Nigeria is preparing a significant reform of its oil sector by removing the management of oil contracts from the national company NNPC and transferring it to the Nigeria Upstream Petroleum Regulatory Commission (NUPRC). This measure is currently being discussed in Parliament and aims to address the loss of several billion dollars due to "statutory leaks and opaque deductions," according to Justice Minister Lateef Fagbemi.
Background
Until now, NNPC has held both a commercial operating role and contract management responsibilities, a position criticized for creating conflicts of interest and irregularities. The 2021 Petroleum Industry Act attempted to clarify responsibilities, but many gray areas persisted. By transferring this function to the regulator, Abuja hopes to strengthen transparency, improve revenue tracking, and consolidate reforms initiated since President Bola Tinubu took office in May 2023.
Ongoing Reforms
These reforms include:
- Eliminating fuel subsidies
- Implementing the Petroleum Industry Act
- Appointing new leadership to NNPC
- Adopting a more attractive fiscal framework for major oil companies
These changes have already attracted over $8 billion in investment commitments, including $5 billion for the Bonga North project.
Challenges Ahead
However, several sources warn that the effectiveness of this reform will depend on the government's ability to ensure the regulator's independence, preventing it from becoming a judge and jury in its own right. The success of this project could enhance Nigeria's competitiveness against other African oil producers and provide the state with crucial additional revenue for its economy.
