The year 2016 ended with momentum building around resolving the regulatory uncertainty in the Nigerian oil and gas sector. The Senate concluded a public hearing on the Petroleum Industry Governance Bill (PIGB) and there is now expectation that the bill will be passed before March this year. However, a media report has indicated that the executive has finally submitted its own version of three different draft bills on the petroleum sector.

The bills include: ‘An act of legal and regulatory framework, institutions and regulatory authorities, as well as for the operations of the upstream and downstream sectors of the Nigerian petroleum industry’; ‘An act for legislative framework relating to petroleum producing host community participation, cost and benefit sharing amongst government, petroleum exploration companies and petroleum host communities and matters connected to’; and an ‘Act to establish a fiscal framework that encourages further investment in the petroleum industry whilst increasing accruable revenues to the Federal Government of Nigeria.’

All three bills have been submitted to the House Representatives and are expected to undergo the first reading once the House resumes on 10 January, with expectations that they could be passed by June this year.

Available details show that the Petroleum Host community bill will seek to establish a community fund to which 30% of royalties will be paid by a petroleum producing company on land within the territory of the upstream petroleum community, additionally 20% of an aggregate total royalty accruing to the Federal Government for petroleum production would be evenly divided by the number of local governments with oil facilities. It also provides that 50% of the amount payable to the Federal Government for pipeline rights of way shall be paid to local governments within which pipelines are located, solely for the benefit of these communities. Sources in the oil and gas industry believe that if this host community fund bill is passed, it would significantly reduce pipeline vandalism and agitation in the Niger Delta.