When he ran for the office of president on the platform of the Peoples’ Democratic Party (PDP) in Nigeria’s 2019 general elections, Nigeria’s former Vice-President, Atiku Abubakar, famously promised to privatise Nigeria’s hydrocarbons and energy assets. Taking aim at the Nigeria National Petroleum Company (NNPC), he argued, “privatising NNPC would be to our advantage. We are not going to lose anything, but we will rather gain a lot.”
The ruling All Progressives Congress (APC) at the time mocked the idea, accusing him of harbouring an undisguised desire to dispose of the nation’s crown jewels to himself and his friends. Two and a half years later, in August 2021, President Muhammadu Buhari assented to the Petroleum Industry Act (PIA), substantially implementing the idea of de-regulating the hydrocarbons sector in the country and enacting a vision for transitioning Nigeria’s petroleum industry onto a globally competitive footing.
Five years after the adoption of the Act, this vision confronts a rapidly evolving global context in a domestic election season.
Comprising 319 sections and eight schedules, the PIA is one of the most complex pieces of legislation on the books in Nigeria. Most professionals, not to speak of less-informed citizens, will not read or access it.
Essentially, the Act unbundles the NNPC as a state-owned enterprise separating into distinct entities its regulatory functions from its operations, and providing for the protection of the interests of host communities together with a framework for managing investments in renewables and in energy transition.
The PIA creates two new regulatory institutions. One is the Nigeria Upstream Regulatory Commission (NUPRC). The other is the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
Separately, the Act requires the NNPC to be unbundled into a Limited Liability Company under the Companies and Allied Matters Act. The authorized shareholders of the new NNPC Limited are the Ministry of Finance Incorporated (MOFI) and the Ministry of Petroleum Incorporated (MOPI).
Additionally, the Act mandates the new NNPC to prepare the country for energy transition by investing in renewables, act as downstream supplier of last resort “for security reasons”, and “engage in activities that ensure national energy security.”
Relaunched in July 2022 as NNPC Limited, the business model of the new commercial entity created by the PIA is neither fully private nor a traditional state-owned enterprise. The beneficial interest in the company is in the Nigerian State and the political presence of the president, who also is the Minister of Petroleum, is never too far from it. So, the Act empowers the president to appoint its management and Board of Directors. However, it also makes provision for the possibility of competitive investment in the company at a future time when the Board may be re-constituted to take account of the interests of other shareholders.
In undertaking all these, the Act requires the new NNPC and its subsidiaries to “carry out petroleum operations on a commercial basis, comparable to private companies in Nigeria carrying out similar activities” and to do so “in a profitable and efficient manner without recourse to government funds” so as to “encourage and facilitate both local and foreign investment in the petroleum industry.” In other words, the new NNPC Limited under the PIA should be able to compete with its peers both in Nigeria and beyond.2022
In pursuit of these goals, the new NNPC Group now includes 21 subsidiaries covering a vast stream of interests, including upstream and exploration; downstream and trading; gas and power; engineering and shipping; as well as services and investment.
To adapt to the rapidly evolving global energy ecosystem, the company has to simultaneously retain indigenous talent while being open to attracting internationals where necessary. The PIA is not the only law applicable in this context. The 1999 Constitution, for instance, requires government to “harness the resources of the nation and promote national prosperity and an efficient, a dynamic, and self- reliant economy.” The Nigerian Oil and Gas Industry Content Development Act of 2010 equally mandates the promotion of Nigerian human capital in the sector.
One of the subsidiaries of the NNPC illustrates how the company tried to reconcile these obligations. The NNPC Exploration and Production Limited (NEPL) is the flagship upstream subsidiary in the NNPC Group. In existence since 1988, the NEPL holds the NNPC’s interests in operating and exploration licenses. In November 2023, the transitional management of the NNPC Group under Mele Kyari recruited internationally to fill the position of the Chief Executive of the NEPL. He leads a management team that includes nine Nigerians. By the end of 2025, the company had reportedly achieved about 75% growth in average daily production from 203,000 barrels per day in 2023 to 355,000 barrels.
This performance ordinarily means more revenue for the country and could provide tentative evidence of the potential yield in pursuit of value optimization by the newly commercialized NNPC Group.
However, that conclusion must await further evidence of improved protocols in oilfield practice, sustainable investment in energy diversification, and greater transparency on compliance with the Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN). This extends to the remediation of legacy deficits in oilfield practice preceding the transition to the un-bundled NNPC. Better attention is also required to the needs of host communities. The jury is still out on this package.
In an election season dominated by issues in the triangle of electoral integrity, insecurity, and affordability, it is easy to lose sight of structural issues that underpin either directly or indirectly the performance of the country on all three. Yet, there is a particular salience to the PIA in Nigeria’s current election season for at least three reasons.
First, when the country originally created the NNPC in 1977, it was on the cusp of a generational energy crisis and economic bust that accompanied the Arab-Israeli war in 1973. Muhammadu Buhari, then an army colonel, was the Petroleum Minister. Nigeria’s management of petroleum earnings over the half century of the existence of the NNPC since then has been notoriously beset by tales of what the London’s Guardian newspaper memorably described not too long ago as a “wealth of sorrow.” There was, therefore, an almost poetic symmetry to the fact that Buhari was back in the same position 44 years later to end the monopoly and re-structure it under the PIA. The competing candidates and political parties in January 2027 need to set out how they will optimize this framework.
Second, petroleum is the country’s most strategic natural resource and the main driver of economic activity. It accounts for about 90% of Nigeria’s foreign exchange earnings, over 60% of budget revenue, and up to 5.5% of the Gross Domestic Product (GDP). On-going events in the Middle East suggest that the obituary of dirty energy may be premature at this time. However, energy transition is a fact, and the country needs to know how the parties propose to prepare the country and host communities for that eventuality.
Third, the PIA represents arguably the single most constructive achievement of President Buhari’s eight years in office as Nigeria’s fifth elected president. Irrespective of who secures the mandate to lead the country after the elections in the New Year, the objective of achieving national energy security established in section 64(k) of the PIA remains a pressing priority and the country deserves to know how the competing parties propose to pursue and achieve that.
It is fitting that the fifth anniversary of the Act coincides with an election season defined by cost of living, including cost of petroleum products as well as the perennial question of realizing a just statutory settlement for host communities. Nigeria’s fate is inextricably tied to the success or failure of the promise of the PIA. The vision of the Act is clear: maximizing public benefits through sustainable hydrocarbons governance of an internationally competitive industry. It permeates all the major disputes at issue ahead of 2027
