Nigeria begins implementation of the Petroleum Industry Act 2021

The terms of reference of the Committee are to ensure that the new institutions created have the full capability to deliver on their mandate and to approve the roadmap for implementation which will be presented by the IWGCS; to approve or ratify the appointments of Consultants who will support the IWGCS; to approve all recommendations for the institutional design and personnel movements as envisaged by the PIA; to coordinate timely preparation of appropriate model licenses, leases and regulations including reviews and endorsement for presidential approval; to approve all recommendations of actions or outcomes required to implement any provision of the PIA, and to do all such things as may be necessary to give effect to the provisions of the PIA.

The PIA Steering Committee which has 12 months to complete its mandate is headed by the Minister Timipre Sylva, and is also comprised of Dr Sani Gwarzo Permanent Secretary, Petroleum Resources, Mallam Mele Kyari, Group Managing Director, NNPC, Muhammad M. Nami – Executive Chairman, FIRS, Dr Nuhu Habib – Senior Special Assistant to President on Natural Resources, Representative of the Ministry of Finance, Budget and National Planning, Representative of the Ministry of Justice, Olufemi Lijadu – External Legal Adviser, and Dr Bello Aliyu Gusau, the Executive Secretary, PTDF, as Head of the IWGCS.

NNPC becomes a limited liability company

The President, in his capacity as the Minister of Petroleum Resources has approved the incorporation of the Nigerian National Petroleum Company Limited and directed the Group Managing Director of the NNPC to take necessary steps to ensure the incorporation of the NNPC Limited in consonance with the provisions of the PIA 2021.

Also, by virtue of Section 59(2) of the PIA, the President also approved the appointment of a Board of Directors and Management for the NNPC Limited with Sen. Ifeanyi Ararume as the Chairman while Mallam Mele Kyari is retained as the Chief Executive and Umar Ajiya as the Chief Financial Officer. Other members of the board include Dr Tajudeen Umar (Northeast), Mrs Lami O. Ahmed (North Central), Mallam Mohammed Lawal (Northwest), Sen. Margaret Chuba Okadigbo (Southeast), Barrister Constance Harry Marshal (South South), and Chief Pius Akinyelure (Southwest).

Shortly after the President’s approval of the incorporation of NNPC, the Corporate Affairs Commission (CAC) reported that it had completed the incorporation and NNPC is now a limited liability company to operate in accordance with the principles and provisions of the Companies and Allied Matters Act 2020 (CAMA). With this development, the process of transition has taken a bold beginning.

The President and Minister of Petroleum Resources constitutes board of the new Regulatory Institutions

The President has also forwarded the names of members of the board of the Upstream Petroleum Regulatory Commission (Commission) and the Midstream and Downstream Regulatory Authority (Authority) to the National Assembly for confirmation.

For the upstream regulation, the nominees to the board of the Commission include Isa Ibrahim Modibbo as Chairman while Gbenga Komolafe is designated as the Chief Executive Officer, with Hassan Gambo and Rose Ndong as – Executive Commissioner, Finance and Accounts and Exploration and Acreage Management respectively.

The nominees for the Authority comprise of Idaere Gogo Ogan as Chairman, Engr. Sarki Auwalu as Chief Executive Officer, Abiodun A. Adeniyi as Executive Director, Finance and Accounts and Ogbugo Ukoha as Executive Director, Distribution Systems, Storage and Retail Infrastructure.

However, in a letter dated September 28, 2021, read by the Senate President, Ahmad Lawan, on Wednesday September 29, 2021, the President in his capacity as the Minister of Petroleum Resources rescinded the nomination of Engr. Sarki Auwalu as the Chief Executive of the Authority and nominated Engr. Farouk Ahmed as his replacement. The appointments are in accordance with the provisions of Section 11(3) and 34(3) of the PIA.

The President seeks to amend the PIA

Finally, the President is also seeking to make amendments to some sections of the PIA. The proposed amendments are focused on the administrative structure of the Nigerian Upstream Petroleum Regulatory Commission and Nigerian Midstream and Downstream Petroleum Regulatory Authority and was communicated to the National Assembly vide an official letter addressed to its leadership. The letter proposed the following amendments:

  1. Appointment of Non-Executive Board Members
  2. Removal of the Ministries of Petroleum and Finance from the Board of the two institutions
  3. Appointment of Executive Directors.

On the appointment of non-executive board members, the President stated that Section 11(2)(b) and 34(2)(b) which provides for the appointment of two non-executive members for the board of the two regulatory institutions and requested that the position be increased to six to allow for representation from all geopolitical zones.

Another proposed amendment is with respect to Sections 11(2) (f-g) and 34(2) (f-g), to remove the Ministry of Petroleum Resources and Ministry of Finance from the board of the two regulatory institutions. The rationale for the proposed removal is because the two Ministries already have constitutional responsibilities of either supervision or intergovernmental relations that will continue to perform such roles without being in the board and the representatives of the Ministries in the board will be directors in the same rank in the institutions.

The last proposed amendment is in Section 11(3) which deals with the appointment of executive directors. The Act made provisions for seven departmental heads in the authority to be known as executive directors. The appointment will also be subject to Senate’s confirmation. The President noted that this category of officers are civil servants and not political appointees and requires no confirmation from the senate.

The President concluded that the proposed amendment is aimed at laying sound administrative structures governed by simple operational laws that will ensure smooth take-off and consequent growth of the two institutions. The amendment which is now a bill is currently being considered at the National Assembly and has passed second reading at the Senate at its plenary session of Wednesday, 29 September 2021.

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