By NIyi Jacobs
Nigeria is on the brink of a far-reaching restructuring of its petroleum sector as President Bola Tinubu pushes amendments to the landmark Petroleum Industry Act (PIA) of 2021. The draft amendment bill, now before government agencies for early consultations, proposes to tilt the balance of power in the oil industry away from the Nigerian National Petroleum Company Limited (NNPC Ltd) and towards the Ministry of Finance Incorporated (MOFI) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The proposed law is framed as a measure to curb leakages, boost transparency, and improve fiscal discipline. Yet, it risks re-politicising NNPC and undoing some of the central reforms the PIA was designed to achieve—namely, the insulation of NNPC from government interference and the clear separation of commercial and regulatory roles. Analysts, investors, and industry stakeholders are already weighing in on the implications, as Nigeria’s most consequential oil law in decades faces a potentially game-changing rewrite.
The PIA’s Original Vision
When the PIA was signed into law in August 2021 after nearly two decades of debate, it was hailed as a watershed moment. Its provisions transformed the corruption-ridden, opaque state oil company into NNPC Ltd, a commercially oriented limited liability company, with the Federal Government as shareholder through both the Ministry of Petroleum Incorporated (MOPI) and MOFI.
The act also sought to restore investor confidence by separating regulation from commercial activity. NUPRC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) were created to provide independent oversight, while NNPC was expected to compete like a private oil company. With a new governance framework, the company was encouraged to prepare for a possible initial public offering (IPO) by 2028, a step that would have opened Nigeria’s oil giant to global investors and increased accountability.
At its core, the PIA was about modernisation, depoliticisation, and efficiency. But less than five years later, Nigeria is already moving to amend it.
What the Amendment Proposes
The draft Petroleum Industry Act (Amendment) Bill 2025 makes two pivotal shifts. First, it would vest all NNPC Ltd shares exclusively in MOFI, effectively sidelining MOPI as a shareholder. This would consolidate control of NNPC under the finance ministry, giving MOFI sweeping authority to set strategy, objectives, and governance direction.
Second, the amendment proposes that NUPRC, rather than NNPC Ltd, act as the government’s concessionaire in upstream petroleum contracts. In effect, NUPRC would become both referee and player: overseeing regulation while also representing the state in profit-sharing and risk-service contracts. It would verify work programmes, approve cost-recovery claims, and stand as counterparty in model contracts.
Other adjustments include removing provisions that placed integrated upstream-midstream projects solely under NUPRC’s purview. Instead, these would be jointly supervised by NUPRC and NMDPRA, formalising an uneasy compromise after turf wars between the two regulators.
The changes, on paper, are justified as necessary to reduce fiscal leakages and strengthen government oversight of oil revenues. But in practice, they represent a decisive shift in Nigeria’s oil governance architecture, raising questions about autonomy, conflicts of interest, and investor confidence.
Governance Risks and Investor Anxiety
By concentrating ownership of NNPC Ltd in MOFI, the amendment risks weakening the autonomy of the company’s board and management. NNPC would cease to act with the commercial independence envisioned by the PIA, instead becoming an arm of the finance ministry.
The editorial board of Africa Oil and Gas Report has already warned that this shift could politicise strategic decisions—from portfolio pruning to refinery investments—by giving the treasury outsized influence. Nigeria’s Vanguard newspaper similarly noted that if MOFI dictates NNPC’s strategy, its board risks becoming redundant, a ceremonial structure with little practical authority.
The biggest concern is that such politicisation could undermine NNPC’s IPO ambitions. In March, NNPC officials claimed they were in the “final” stages of IPO preparation, with 2028 floated as a possible target. But rewriting ownership structures and governance arrangements just as global investors scrutinise the company complicates its credibility. Investors prize corporate independence, transparency, and protection of minority shareholders. A state-controlled, finance-ministry-directed NNPC looks less like a commercially independent company and more like a political instrument of fiscal policy.
Clementine Wallop, an analyst at Horizon Engage, told The Africa Report that the amendment sends a troubling signal. If the purpose of the PIA was to separate NNPC from direct government interference, she said, these amendments underscore just how close the company remains to the political centre. Emerging-market investors are familiar with all-powerful state shareholders, she added, but they will inevitably ask harder questions about disclosure, governance, and minority protection.
The Regulator as Counterparty
Perhaps even more contentious is the proposal to make NUPRC the concessionaire in oil contracts. This means the regulator would no longer be a neutral arbiter but also a commercial counterparty. It would sit across the table from oil companies in contract negotiations while simultaneously policing compliance and approving cost recovery.
Such an arrangement risks conflicts of interest. Operators are already uneasy about how appeals and disputes would be handled if the regulator’s commercial interests clashed with its oversight responsibilities. Critics argue that the integrity of regulatory oversight depends on maintaining independence, which this change would erode.
Defenders of the amendment say centralising concessionaire functions in NUPRC will plug fiscal leakages and prevent inflated cost claims by operators. By monitoring both regulatory and commercial aspects, they argue, NUPRC can enforce discipline and ensure maximum returns to the state. But analysts expect strong pushback once the bill is formally introduced in parliament, and litigation is a real possibility.
Winners and Losers
The immediate winners from the amendment are MOFI and the finance ministry. Finance minister Wale Edun would emerge as the single most powerful figure in Nigeria’s oil industry, controlling state equity and directing NNPC’s strategic course. NUPRC, too, would gain contractual authority to match its regulatory powers, enhancing its influence over operators and projects.
The likely losers are NNPC’s board and management, whose authority shrinks under MOFI’s dominance. For years, executives have tried to cast NNPC as a modern commercial oil company, distancing it from its political past. This amendment risks reversing that narrative, reducing management autonomy and reshaping NNPC into an agency under the finance ministry’s heavy hand.
For oil operators, the picture is mixed. Some may welcome tighter fiscal oversight as a guard against cost-padding by competitors. Others will fear uncertainty, prolonged contract negotiations, and potential litigation if disputes arise with a regulator-turned-counterparty.
The Politics and Timing
The political backdrop is crucial. NNPC has endured a turbulent year, marked by protests, corruption allegations, and scrutiny of its new chief executive, Bayo Ojulari, appointed in April. The government has been under pressure to demonstrate tighter control and accountability in the sector, especially with oil revenues critical to Nigeria’s fiscal stability.
By moving power to MOFI and NUPRC, Tinubu’s administration can argue that it is centralising authority, plugging leakages, and strengthening fiscal discipline. But the timing also suggests political calculation. The president’s allies may be seeking to reassert control over NNPC just as its board and management struggle with credibility crises.
The risk is that by prioritising short-term political control, Nigeria jeopardises the long-term credibility of its flagship oil reforms. The PIA was celebrated internationally as a signal that Nigeria was ready to align with global governance standards. Weakening its provisions within four years sends the opposite message.
Comparative Lessons
Nigeria is not alone in this struggle. In Angola, Sonangol long combined regulatory and commercial roles, leading to accusations of corruption and inefficiency before reforms separated functions. In Malaysia, Petronas operates as a state-owned but commercially independent oil giant, with governance safeguards that reassure investors.
Nigeria’s challenge is finding a balance. Too much independence for NNPC risks fiscal leakages and weak accountability. Too much political control, however, deters investors, undermines efficiency, and discourages innovation. The PIA attempted to strike this balance; the amendments could upset it.
What Comes Next
The draft amendment is still at the consultation stage, and legislation will be required to bring it into force. Lawmakers may alter its provisions, especially if industry lobbying intensifies. Oil operators, wary of regulatory overreach, may mount legal challenges once the bill is tabled. Investors, meanwhile, will watch closely to see whether Nigeria sticks to its IPO timetable or quietly shelves it.
Whatever the outcome, the direction of travel is clear: Nigeria’s oil governance is moving towards a finance-led model, with MOFI and NUPRC at the centre. This concentration of power could yield stronger fiscal oversight in the short term, but it risks undermining the reforms that the PIA was designed to entrench.
Conclusion
Nigeria’s Petroleum Industry Act was supposed to herald a new era of transparency, efficiency, and investor confidence in the oil sector. Four years later, the government is rewriting the rules, shifting control back to the political centre.
Supporters argue that the amendment will curb leakages and improve fiscal discipline. Critics warn it will politicise NNPC, blur regulatory lines, and derail investor confidence ahead of an IPO. At stake is not only the governance of NNPC but also Nigeria’s ability to attract investment and sustain its oil-dependent economy in an era of global energy transition.
As the draft amendment makes its way through consultations and eventually the legislature, the world will be watching whether Nigeria strengthens its oil sector or slips back into old habits of politicisation and opacity
