Africa’s largest oil producer is considering a transfer control of the country’s existing oil contracts from the state oil company (NNPCL) to the state regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) according to a legislative draft amendment reported by Reuters on Friday.
The draft legislative amendment in Nigeria would specifically change the Petroleum Industry Act (PIA) of 2021. The most significant part of this proposed amendment is the overhaul of Section 8, which currently defines the commercial regulatory functions of the NUPRC.
Under the amendment, the NUPRC would be designated as the government representative for all model contracts related to oil licenses and leases. This would effectively replace the Nigerian National Petroleum Company Limited (NNPCL) as the concessionaire in existing Production Sharing Contracts (PSCs) and Risk Service Contracts.
As the concessionaire, the NUPRC would then be responsible for evaluating and approving work programs and verifying all contractor costs, a duty currently held by NNPCL.
The Attorney General of the Federation Lateef Fagbemi blames the recent decline in oil revenues on NNPCL, stating that the current PIA structure gives room for “diversion” of revenues from the federation account by the state owned oil company NNPCL.
According to a letter from the Attorney General to the minister in charge of gas, said the amendment was necessary because “some provisions of the PIA have created structural and legal channels through which substantial revenues of the Federation are being diverted away from the Federation account”.
