Four years of PIA implementation: How far, so far!, By Akpandem James

On 16 August, 2021, the then President of Nigeria, Muhammadu Buhari, signed the Petroleum Industry Bill (PIB) into law. He described the resulting Petroleum Industry Act (PIA) 2021 as Nigeria’s second-largest achievement in the energy sector. He believed that the Act had the potential to address longstanding challenges and drive significant reforms in the oil and gas sector. Four years down the line, there remains no doubt the former helmsman was right.

It is indisputable that the PIA has driven significant advancements in Nigeria’s oil and gas sector through the effective functioning of regulatory bodies. Now approaching four years since its enactment, the Act has transformed the regulatory framework, catalysing a series of pivotal reforms and operational achievements. These developments have enhanced transparency, improved efficiency and attracted substantial investment, collectively propelling the sector toward sustainable growth and long-term stability.

During the review period, the Act restructured the regulatory framework of the petroleum sector by dividing oversight responsibilities between two distinct agencies: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Each agency has clearly defined roles aligned with their respective segments of the industry.

The Act has also reformed acreage management by introducing effective policies on voluntary conversion and relinquishment. Additionally, it established critical funding mechanisms, including the Frontier Exploration Fund and the Host Community Trust Fund, aimed at promoting exploration, infrastructure development, environmental remediation and the socio-economic advancement of host communities.

The transformation of the Nigerian National Petroleum Corporation (NNPC) into a limited liability company, Nigerian National Petroleum Company Limited, marks a pivotal shift, while streamlined licensing processes have significantly enhanced industry transparency and efficiency.

The PIA also introduced mechanisms for the development of petroleum host communities, fostered a business environment conducive to investment and deepened local content participation. By repealing outdated laws and consolidating regulatory oversight, the Act has provided the basis for the modernisation of Nigeria’s oil and gas industry, attracting investment and ensuring sustainable economic benefits for the country.

Building on these foundational reforms, recent executive orders by President Bola Ahmed Tinubu, issued between 2024 and 2025, have further strengthened the sector. Tinubu signed four executive orders that introduced targeted tax incentives for gas and oil projects, streamlined contracting processes to reduce timelines and costs, aligned local content requirements with investment and cost efficiency, and fostered performance-based incentives to reward cost savings in upstream operations. Together, these measures aim to position Nigeria as a preferred investment destination within Africa’s petroleum sector while enhancing fiscal sustainability and operational efficiency.

The ongoing reforms, increased production and substantial investments are expected to enhance the sector’s contribution, supporting Nigeria’s broader economic goals of growth, stability and diversification in 2025 and beyond.

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During this period, the PIA made significant strides in several key areas, including regulatory restructuring, which has improved the framework for the industry. The commercialisation of NNPC has paved the way for enhanced operational efficiency. Additionally, the establishment of Host Community Development Trusts (HCDTs) demonstrates a commitment to fostering positive relationships with local communities.

There has also been a notable impact on investments and the exploration of deepwater projects, which bodes well for future growth. Fiscal and contractual reforms have streamlined processes and created a more inviting environment for stakeholders. And, the transformation of the gas sector reflects a forward-thinking approach aimed at maximising resources and meeting demand. Overall, these achievements position the industry for a sustainable and prosperous future.

The restructuring of the regulatory bodies focused on enhancing governance and operational efficiency within the sector, with the NUPRC for upstream activities and the NMDPRA for midstream and downstream operations. The commercialisation of NNPC transformed the former behemoth into a limited liability company, marking a fundamental shift towards an independent operation that promotes accountability and efficiency.

The introduction of development trusts for host communities was to ensure that socio-economic benefits from oil and gas activities are directed towards the local populations, thereby fostering goodwill and reducing community tensions. The Act mandates the establishment of Host Community Development Trusts (HCDT) funded by 3 per cent of the operating expenditure of oil companies, aimed at ensuring sustainable development for communities impacted by petroleum operations. Although there still exist murmurs in certain quarters, the quietness in oil-bearing communities is loud enough to indicate that the Trust committees are already at work.

There have been noticeable investments and exploration of deepwater resources, as activities have significantly increased due to the clearer and more appealing fiscal terms included in the PIA. This has resolved contractual uncertainties and instilled confidence among international oil companies. As a result, Nigeria is better positioned to access vast offshore reserves and enhance its long-term oil production capacity. The issuance of the first exploration license under the new legal framework marks a pivotal step in revitalising exploration efforts.

The fiscal reforms brought about by the Act have established a transparent and accountable regulatory regime. Apart from creating new regulatory bodies, it has improved corporate governance and introduced effective dispute-resolution mechanisms, which together have enhanced investor confidence, reduced corruption and promoted sustainable development. The transition from the former Directorate of Petroleum Resources (DPR) to the NUPRC and NMDPRA clarified roles and minimised conflicts of interest in regulation duties, thereby improving regulatory oversight.

More fundamentally, the country’s oil and gas sector has been profoundly reshaped by the replacement of the Joint Venture (JV) model with a Production Sharing Contract (PSC) for frontier projects; a development which has enforced acreage management policies, resolved legacy disputes through contract renewals and introduced transparent fiscal and reporting frameworks.

This contractual reform is perhaps one of the most significant strategies that has most critically impacted the sector. The key changes in this direction include the move to PSCs, provisions for contractual stability and simplified fiscal terms, which are designed to attract investment and enhance operational efficiency. By implementing a dual tax system: Hydrocarbon Tax and Company Income Tax, and streamlining royalty rates from 5 per cent to 15 per cent, the PIA aimed at substantial investment in frontier exploration, thus facilitating growth in the upstream segment.

There have also been some significant advancements in gas infrastructure, policy reforms and utilisation initiatives which have supported Nigeria’s energy security and economic growth goals in the last three years. Under the gas sector transformation, the Act introduced favourable fiscal terms for gas projects to stimulate investment and reduce gas flaring, contributing to Nigeria’s energy security and economic diversification goals.
Most of these reforms and transformations were driven by the NUPRC in collaboration with other industry stakeholders. The Commission played a pivotal role in steering the successful implementation of the PIA by enhancing regulatory transparency and accountability, which have restored investor confidence and mitigated previous uncertainties. Some of its key contributions include:

Effective Regulation and Stakeholder Engagement: NUPRC has been central in enforcing the PIA with transparency and accountability, which has restored investor confidence and reversed previous regulatory uncertainties and capital flight in the upstream sector. By actively engaging stakeholders, particularly regarding compliance with crucial provisions such as Section 94 related to marginal fields, the NUPRC ensures optimal resource utilisation while promoting local content and Indigenous participation.

Digitalisation and Anti-Corruption Initiatives: The introduction of digital platforms for processes such as licensing, reporting and monitoring has significantly reduced corruption and improved operational efficiency in the oil and gas sector.

Strengthening Host Community Relations: The Commission has strengthened engagement with host communities, ensuring that they fully benefit from oil production, which fosters socio-economic development and minimises conflicts.

Strategic Planning for Investment Attraction: The Commission has developed a comprehensive 10-year strategic plan (2023-2033) aimed at attracting investment, enhancing production capacity and increasing reserves, complemented by transparent licensing rounds.

Driving the Gas Commercialisation Programme: Through initiatives like the Nigeria Gas Flare Commercialisation Programme (NGFCP), the Commission is a key driver of the Federal Government’s Decade of Gas Programme, aimed at maximising gas development and reducing environmental impacts from flaring.

Promotion of Local Content and Indigenous Participation: NUPRC has initiated policies that empower indigenous operators, increasing Nigerian companies’ active participation in upstream activities, thus promoting broad-based economic development. This was exemplified during the 2024 oil bid round.

One of the most concerning issues in the country’s oil operations was the relationship between sector operators and host communities that endured the negative impacts of these activities. The introduction of HCDT was therefore viewed as a catalyst for structured and transparent community development, building on previous frameworks such as the Global Memorandum of Understanding (GMoU) and the Offshore Memorandum of Understanding (OMoU).

For rather obvious reasons, vested interests, including youth groups and civil society organisations, are not comfortable with the aspect that allows deductions from the 3 per cent host community fund if communities fail to protect oil infrastructure from vandalism or unrest. They see this provision as punitive. Despite the other provisions in the Act aimed at addressing safety and environmental issues the oil-bearing region, critics argue that they still do not meet expectations for environmental restoration and community empowerment. They claim the law does not adequately address environmental degradation, gas flaring (as a health hazard) and the socio-economic marginalisation of the Niger Delta people. Following up on these contentions, they have called for a considerable review of the Act to fundamentally protect the livelihoods, environment and rights of oil-bearing communities.

Notwithstanding, there is no doubt that the PIA 2021 has significantly transformed Nigeria’s oil and gas industry by modernising its regulatory, fiscal and contractual frameworks to attract investment and improve governance. Thus, the four years following the PIA’s enactment have witnessed foundational reforms that have reshaped Nigeria’s upstream petroleum sector into a more transparent, investor-friendly and growth-oriented industry.
NUPRC’s dedication to regulatory enforcement and stakeholder engagement has garnered acclaim from industry stakeholders, positioning Nigeria to regain competitiveness in the global oil and gas market. The future thus looks bright, if the momentum is sustained, or surpassed.

Akpandem James, a Fellow of the Nigerian Guild of Editors, lives in Abuja.