Lawmakers in Africa’s most populous country, Nigeria, passed the Petroleum Industry Bill on July 1 after considering the report of the Joint Committees on Petroleum (Upstream and Downstream) and Gas Resources.
Consultancy group Wood Mackenzie said this is a significant milestone for the Nigerian petroleum industry since it has been in the making for nearly 2 decades.
“The Senate and House each passed different versions of the bill, which will now require reconciliation before it is sent to the president for assent into law. So, there is still outstanding work to do before the PIB becomes law, but we see momentum behind the bill,” said Mansur Mohammed, head of West Africa content on Wood Mackenzie’s sub-Saharan Africa upstream research team.
The bill aims to reposition the country’s petroleum sector as an attractive investment destination as the energy transition intensifies competition for capital.
“Although the bill is on the final stretch, Nigeria’s petroleum industry faces significant threats to long-term oil demand. It is, therefore, necessary for the government to move at pace to attract investors,” Mohammed said.
If passed, the fiscal uncertainty deterring investment across upstream, gas, midstream and downstream will be alleviated, WoodMac said, pointing out that the latest version of the bill offers incentives and concessions made to assuage stakeholder concerns.
“Lower royalty and tax rates are proposed. Marginal fields and indigenous producers are expected to benefit more from favourable terms,” the consultancy group said. “The impact of the fiscal terms will need to be fully assessed before investors can take decisions, and the degree of change will be dependent on terrain and the type of project.”
