On August 16, 2021, the Petroleum Industry Act (PIA) was signed into law by the former president of Nigeria, Muhammadu Buhari. The then newly signed law received different reactions from Nigerians, local and foreign investors, and some global energy industry analysts. Through this Act, conversion of the existing interests of holders of Oil Prospecting Licenses (OPL) and Oil Mining Licenses (OML) into Petroleum Mining Leases (PML) or Petroleum Prospecting Licence (PPL) is enabled through Conversion Contracts.
Conversion and Renewal (Oil Prospecting License and Oil Mining Leases) Regulations was also introduced. The PIA caused dispute within the country’s petroleum sector, majorly as a result of the jurisdictional opacity that exists between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). The dispute has raised questions on clarity and efficiency as no precise framework bears a resolution for the two regulatory bodies. President Bola Tinubu has issued directives to both NUPRC and NMDPRA for operational stability and clarification of their roles until necessary amendments are made to the PIA.
Digital application portal system for MDOGISPs through the NMDPRA.
The Nigerian National Petroleum Company Limited (NNPC) is solely responsible for the issuance of licenses to entities to begin importation of crude oil and petroleum products. To make this happen, the Midstream and Downstream Petroleum Operations Regulations was issued by the Authority for provision of procedures for the grant of permits, licenses, authorizations for exportation, importation, shipping and landing of petroleum products. By doing so, the monopoly of the NNPC as the sole importer of petroleum products into the country ended.
Also, the PIA has introduced a digital application portal system for Midstream and Downstream Industry Oil and Gas Service Permits (MDOGISP) through the NMDPRA. For entities involved in activities of the midstream and downstream industry such as petroleum liquid transporters, gas suppliers, and bulk gas storage companies, the permits are compulsory. The practice eases the permit application process, promotes transparency, as it strengthens regulatory monitoring. The introduction of this system is in alignment with the objectives of the PIA.
Fuel subsidy removal and its economic impact on the populace.
In May 2023, President Bola Tinubu, on the day of his inauguration, officially put an end to the Nigerian petrol subsidy regime. This move was considered a significant one, under the Petroleum Industry Act (PIA), in the energy sector. Although well commended by some citizens, this decision by the President got different reactions from Nigerians. The reactions of the citizens of Nigeria was based on the efforts of the government to ameliorate the economic impact of this decision on the populace.
Petroleum product pricing, under the PIA, is completely market-driven, indicating an apparent shift. There have been issuance of new licenses for facilitation of product importation and distribution within Nigeria. Nevertheless, the slow pace of implementing mitigating measures to tackle difficulties attached to subsidy removal has raised questions about the sustainability of the decision and its ability to enable maintenance of required support, as stated in the PIA. There was also an introduction of a comprehensive framework that would change Nigeria approach to the utilization of its natural gas resources, promoting economic growth and energy sustainability.
Funds set to improve investments in gas infrastructure.
Additionally, the Act established the Midstream and Downstream Gas Infrastructure Fund as a means of accelerating the growth of gas infrastructure. The aim of the fund is to serve as an incentive for investments in essential gas infrastructure projects, facilitate the expansion of infrastructure for other fuel sources like Compressed Natural Gas (CNG), and position natural gas as a suitable alternative to petroleum products. The Domestic Gas Delivery Obligation was also introduced by the Act, mandating upstream gas manufacturers to designate a portion of their production for local consumption.