Nigeria’s Attorney General has notified several of the country’s Federal agencies, of President Ahmed Tinubu’s approval of the proposed amendment to the Petroleum Industry Act (PIA).
The proposed legislation is titled ‘The Petroleum Industry Act (Amendment) Act 2025’.
The planned amendment was originated by the Minister of Finance, with the stated goal of addressing the “escalating fiscal leakage and revenue loss confronting the Federation.
“The AG called for a meeting to “deliberate on the early implementation of the President’s directives”.
Key Changes in the Amendment
Regulatory Revamp
The most consequential part of the proposed amendment is the overhaul of Section 8, which currently outlines the commercial regulatory functions of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
In addition to its existing roles of reviewing and approving the commercial aspects of field development plans in upstream petroleum operations and developing cost studies and benchmarks for evaluating upstream petroleum operations, the amendment proposes that:
- The NUPRC will act as the government representative in all model contracts attached to licenses and leases contemplated in Section 85.
- The NUPRC will replace the Nigerian National Petroleum Company Limited (NNPCL) as the concessionaire in all subsisting Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts.
- In this role, the NUPRC will be responsible for evaluating and approving all relevant work programs and verifying and approving all contractor costs to determine cost-recoverable expenditure under these contracts.
Ownership Structure Changes
The amendment also seeks to oust the Ministry of Petroleum Incorporated (MOPI) as a co-equal shareholder of NNPCL with the Ministry of Finance Incorporated (MOFI). To achieve this, Section 53 of the PIA will be amended to read:
“Ownership of all shares in NNPC Limited shall be vested in the Federation at Incorporation and held by the Ministry of Finance Incorporated as the sole bare agent of the Federation.”
Changes to Integrated Operations
The amendment calls for a reversal of a settlement from the early days of the Tinubu administration, regarding the delineation of duties between the NUPRC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on integrated joint operations.
The current law states that “where in situ facilities or fixed or floating platforms or vessels provide for fully integrated upstream and midstream petroleum operations, the Commission shall consider and the Commission shall be in charge of such integrated operations and petroleum operations may be considered integrated where there is a joint use of utilities used exclusively for the upstream and midstream operations.”
The amendment proposes a deletion of this provision and instead proposes the constituting of a joint project team of NUPRC and NMDPRA to be responsible for the technical regulation of integrated operations.
Concerns Over Governance and Strategic Direction
The amendment introduces significant changes to the governance structure of the NNPCL, raising serious concerns about its operational autonomy and strategic direction.
By transferring the responsibility of setting the strategic direction and objectives of the NNPCL board and corporation to the Ministry of Finance Incorporated (MOFI) as a single agent, the amendment risks undermining the principles of modern corporate governance.
This shift positions MOFI as a “bare agent” of the Federation, effectively weakening the NNPCL Board’s autonomy in steering the corporation.
Such a move could open the door to excessive political influence over corporate priorities, eroding the separation of ownership from management that is critical for effective governance.
Moreover, this restructuring reduces NNPCL’s commercial independence, as the Board would primarily serve as an executor of MOFI’s directives. This could severely limit NNPCL’s ability to make agile, commercially responsive decisions, particularly in the fast-paced global energy markets.
As a finance-focused entity, MOFI may prioritize fiscal or political considerations over operational efficiency, competitiveness, and long-term sustainability, potentially distorting investment priorities and stifling innovation or partnerships.
The amendment also poses risks to investor confidence, as it appears to reverse the PIA’s original intent to professionalize and commercialize NNPCL. Potential investors may perceive this shift as a re-politicization of the corporation, undermining trust in its governance and reducing interest in partnerships or capital inflows. Additionally, with MOFI driving strategy, the NNPCL Board’s role in accountability and performance management will weaken, creating ambiguity over who bears ultimate responsibility for the corporation’s operational and financial outcomes.
CREDIT: Africa Oil + Gas Report
