Home Brief The draft Nigerian Petroleum Industry Bill 2020: an analysis of environmental and host community matters

The draft Nigerian Petroleum Industry Bill 2020: an analysis of environmental and host community matters

Summary

The latest iteration of Nigeria’s Petroleum Industry Bill (PIB) was forwarded to the National Assembly in September 2020. It has gone through first reading at both the Senate and House of Representatives but full deliberation and public hearing is expected to take place in the first quarter of 2021. The new draft sees the four components of the bill (governance, administration, host communities, and finance) brought back together under one bill; the scrapping of a number of bodies to be replaced by two regulators (the Nigerian Upstream Regulatory Commission—NURC, and the Nigerian Mid and Downstream Petroleum Regulatory Authority—NMDPRA); the privatisation of NNPC; and a number of other significant changes to the way the industry will be governed.

Key messages

  • Clarity is needed on how current provisions in the bill relate to the National Oil Spill Detection and Response Agency (NOSDRA) and several key pieces of existing legislation to avoid weakening or confusing the existing environmental regulatory framework.
  • The creation of Environmental Remediation Funds could be a very positive step, but the bill should clearly place responsibility for environmental regulation under the Ministry of Environment and NOSDRA, to avoid a conflict of interest for the two proposed new regulators who will be responsible for expanding and maximising returns from the industry.
  • The bill does contain several positive provisions, which if developed further could help provide a much more robust framework for environmental regulation. This includes remediation funds and stronger provisions on decommissioning.
  • This bill should be amended to support Nigeria’s climate commitments and a transition to clean energy. This could be done, for example, through the creation of a Clean Energy Development Fund financed by a levy on oil and gas sales.
  • Host community development considerations are limited to the creation of trust funds by oil and gas companies without strong representation and decision making by host communities. Ideally the bill would provide a much more holistic framework for host community development beyond only trust funds.
  • The bill also places too much onus on communities to prevent third-party damage to infrastructure, and punishes whole communities by reducing their trust fund allocation if damage occurs.

Published: 16.12.2020

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