Nigerian Senate OKs bill to attract investment in oil sector

Nigerian Senate in Session

Nigeria‘s senate approved a reconciled version of a bill on Thursday aimed at attracting billions in investment to its aging oil sector, capping a two-decade bid for reforms, just as investors begin to look beyond fossil fuels.

The overhaul governs all aspects of petroleum in Africa’s largest oil exporter – from oil drilling to gasoline prices, and now faces one final hurdle – house approval – before it can go to President Muhammadu Buhari for signature into law.

Each parliamentary chamber passed the bill this month, but approved different amendments, which required harmonization between lawmakers from the two chambers.

While the order paper was not yet available in the house, both chambers were expected to vote as soon as it arrives.

Further amendments are barred and legislators can only vote yes or no. Approval by both would send the package to President Buhari to sign into law.

The reconciled bill included sending a 3% share of the annual operating expenditure of oil companies to communities where petroleum is produced. The house had approved a 5% share, and the difference was a key sticking point in the reconciliation process.

Other last major points of disagreement in the legislation centered on who is allowed to import fuel and what amount of money should be directed to developing “frontier” fields, which are mostly located in northern Nigeria. 

NNPC’s 20% stake in Dangote Refinery: A match made in oil

Meanwhile It is no longer news that the Nigerian National Petroleum Company (NNPC) intends to take up 20% equity in the 650,000 barrel-per-day Dangote Refinery under construction in Lagos.

The refinery, roughly valued at $19 billion is set to be the largest single-train refinery in the world and is expected to transform Nigeria from a net importer of refined petroleum products to a net exporter, increase its foreign exchange earnings, and help the country meet rising domestic fuel demand.

Is NNPC the right partner for Dangote?

Still, the announcement by NNPC that it would be taking up equity in the refinery has generated much controversy, and for various reasons too. Topmost is the fact that the NNPC has a history of ineffectiveness and has come to be associated with corruption and financial malfeasance.

The 2014 report of $20 billion unaccounted for by the NNPC as well as the various subsidy scandals that have rocked the Corporation has wrecked its credibility. In 2020, the Corporation reported $154 billion losses from the Port Harcourt, Warri and Kaduna refineries, and according to its 2019 published audited statements, it had an accumulated loss of N474 billion. These disturbing numbers have engendered questions about the move by the national oil company to acquire equity stakes in what seems to be a potential road to prosperity.

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