Nigeria Energy Overhaul Nears as Lawmakers Aim for December

LAGOS (Capital Markets in Africa) – After years of delays, Nigeria may finally be about to overhaul its oil and gas industry.

Senators on May 25 passed the Petroleum Industry Governance Bill. By December, they should have enacted two more pieces of legislation, completing an overhaul that will replace current laws, Senate President Bukola Saraki said in an interview in Abuja, the capital. The goal of reforming the industry was first set out at the end of 2008.

“That’s the target and I think we will pass them,” he said of the December deadline. “If we can agree as soon as possible, good. If it is transparent enough and everybody can see that these bills will bring more investments, it will not be difficult to pass.”

Proposals on new oil taxes and another seeking to address longstanding grievances by oil-producing communities in the Niger River delta will pass a second reading within the next three to four weeks, he said. There will then be a final vote.

The package of bills are designed to address the state oil company’s funding needs, create a new regulatory agency, set new taxes, and form a fund to develop oil communities. Multiple deadlines for revised bills have previously been missed.

Roiled by low oil prices and a resurgence of violence last year in the oil-rich delta, Africa’s biggest oil producer suffered its worst economic slump in a quarter-century as revenue from oil fell. Delays in passing the bill created a climate of uncertainty that cost the country as much as $15 billion a year in lost investment, according to the Petroleum Ministry.

Nigeria holds an average 55 percent stake in joint ventures run by Royal Dutch Shell Plc, Exxon Mobil Corp, Chevron Corp., Total SA and Eni SpA. These account for more than 80 percent of total oil production, which generates at least two-thirds of government revenue.