Nigerian lawmakers passed long-awaited legislation to overhaul the oil and gas industry, after rowdy scenes in the lower chamber of parliament.
The House of Representatives on Friday voted for the bill that the Senate had approved a day earlier, almost bringing to a conclusion a process that began more than a decade ago. The Nigerian government is banking that the law will attract a greater share of global capital into Africa’s largest crude producer at a time when investors are looking to transition away from fossil fuels.
The House opted to postpone a vote on the so-called Petroleum Industry Bill on Jul. 15, which was supposed to be the last day of the current parliamentary session, following protests by members from the southern oil-producing region arguing that oil companies should pay more to communities where exploration and production activities take place. A two-month hiatus was averted when lawmakers returned on Friday and a majority voted to pass the bill.
Despite the disagreements, the lower chamber “was left with no option” other than to put the bill to a vote, according to an account of proceedings from the office of the House’s Speaker, Femi Gbajabiamila.
The chief sticking point was over how much money oil producers should allocate to funds set up to develop the communities hosting their activities. Southern lawmakers in the House had opposed a clause fixing the contribution at 3% of companies’ operating expenses, calling for 5% instead, which led to the last minute delay. A body representing Nigeria’s southern crude-producing region, the Pan-Niger Delta Forum, demanded 10%.
Fuel wholesalers and retailers have also expressed concerns about a clause in the bill that defines which companies can import petroleum products to make up any shortfall that domestic refineries are unable to meet. The provision proposes linking an importer’s quota to its refining output, potentially handing a dominant position to the Dangote Group, which is building a giant 650,000 barrel-per-day facility.
“Major players across the supply chain” should be able to import refined petroleum products to “guarantee a free and open market,” said a joint statement by two organizations representing the country’s largest fuel marketers on Jul. 13.
After both chambers passed bills that diverged on several issues at the start of July, a joint committee drafted the harmonized document that lawmakers ultimately adopted.
The reforms – first submitted to parliament in 2008 and conceived at the start of the millennium – are intended to remove legal and regulatory uncertainty that has held back progress on numerous deferred oil and gas projects. The bill now requires only President Muhammadu Buhari’s signature to become law. Wrangling between politicians and complaints by oil companies scuppered previous efforts to finalize the legislation.
Oil companies active in Nigeria, which include Royal Dutch Shell Plc, TotalEnergies SA and Chevron Corp, secured some concessions after objecting to parts of the current bill that was sent to parliament in September. Lawmakers lowered the level of taxes and royalties originally proposed and determined that a “hydrocarbons tax” should not apply to deep offshore production.