Nigeria moves to rewrite oil law PIA, stripping NNPC of contract control

The Nigerian government is preparing its first major overhaul of the Petroleum Industry Act (PIA) just four years after the landmark legislation was signed, with a draft amendment that would strip the state oil company, NNPC Ltd, of its role as concessionaire or representative in government oil contracts and hand it to the industry regulator.

The proposal, approved in draft form by President Bola Tinubu and sent to government agencies by Attorney General Lateef Fagbemi, would give the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) sweeping new powers over production-sharing, profit-sharing and service contracts.

Why it matters

The shift would make NUPRC both referee and player: the body that polices costs and compliance would also represent the state across the table in negotiations with oil companies. That fusion of roles is a sharp break from the PIA’s original design, which sought to separate regulatory oversight from commercial participation.

Fagbemi argued in a letter reported by multiple media outlets that the changes are needed to close fiscal “leakages.” “The observed decline in net oil revenue inflows is largely attributable to statutory leakages and opaque deductions under the current PIA architecture,” he wrote.

Supporters say placing contracts under NUPRC will tighten control of cost recovery and boost inflows to the Federation Account. But critics warn of conflict of interest and weakened corporate governance.

Operators may worry about appeals and due process if the regulator’s commercial and arbitral incentives collide.

Risks to governance

The editorial board of Africa Oil & Gas Report described the proposal as a fundamental risk to NNPC’s autonomy. By vesting all NNPC shares in the Federation but giving sole custodianship to the Ministry of Finance Incorporated (MOFI), the amendment effectively reduces NNPC’s board to an executor of MOFI’s directives.

“The amendment risks undermining the principles of modern corporate governance,” the board said. “This shift positions MOFI as a ‘bare agent’ of the Federation, effectively weakening the NNPCL Board’s autonomy in steering the corporation.”

The critique warned that excessive political influence could seep into corporate priorities, eroding the separation of ownership from management. A finance-focused entity like MOFI might prioritise fiscal or political considerations over operational efficiency, competitiveness, and long-term sustainability. This could distort investment priorities, stifle innovation, and dampen partnerships.

Investor confidence may also suffer. The restructuring appears to reverse the PIA’s intent of professionalising and commercialising NNPC, instead signalling a re-politicisation of the company. “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,” the board warned.

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The push comes after a turbulent summer for NNPC, marked by protests, media scrutiny and the appointment of new chief executive Bayo Ojulari in April. Observers say the controversies may have emboldened those arguing for greater treasury and regulatory control.

It also lands as NNPC courts investors for a long-discussed initial public offering. Re-wiring ownership and stripping strategic powers, analysts say, could unsettle book-runners and complicate governance assurances.

“If the point of the PIA was to set NNPC up as distinct from government, this seems to send the opposite signal,” said Clementine Wallop of Horizon Engage to The Africa Report.

The bill requires National Assembly approval. How lawmakers handle the transition of existing contracts from NNPC to NUPRC will be closely watched by operators and lenders. For investors, guardrails around governance will be key. Without them, Nigeria risks trading fiscal discipline for regulatory overreach.