President Mohammed Buhari is to receive from the federal ministry of petroleum resources the oil and gas reform bill in the quest to boost output and attract foreign investment.
The oil and gas reform bill is critical this time as the shift in the market that favours renewable energy has made it tough for Nigeria to lure in investments from major oil players.
Consequently, uncertainty about governmental policies has affected some decisions by major players in the market. For example, Royal Dutch Shell has delayed its multi-billion expansion plan while other major players like ExxonMobil, Chevron, and Total are selling off some of their assets in Nigeria.
Royal Dutch Shell, Nigeria’s biggest international operator has warned that a poor reform plan would be doing more harm than good. According to them, it would be “putting at risk and making unviable most of the planned projects”.
“We hope that the final bill would be one that would unlock potential investments that Nigeria’s rich resource base truly deserves,” a company spokesman said.
Some African countries are trying to cut red tape and taxes to make developing their oil and gas reserves attractive to firms.
The reform bill seeks to better the monies that companies pay to host communities and the amounts paid for environmental cleanings.
The bill would also change the process through which disputes between the government and the oil companies are resolved. Although specifics about the new changes were not shown in the summary report of the bill that was made available to journalists.
It also includes strategies aimed at driving players in the sector to develop a framework for gas discoveries as well as gas tariffs and delivery.
Particularly, commercialising gas, especially for use in local power generation, is a core government priority.
According to sources close to the situation, the bill will be presented in one piece with four chapters.
It was also made known that there was an effort to pass the reforms by breaking them into several bills in 2018 but that effort fell flat as just one portion made it to the president’s desk, and he never signed it.
Once Buhari signs off on the draft, it will go to the National Assembly, which is controlled by his All Progressives Congress (APC) party. The alignment of both the president and the legislature under the same party gives the reform bill the best chance of being passed in years.
The law governing oil in Nigeria, the financial lifeline for Africa’s biggest exporter, has not been revised since it was first passed in the 1960s.