Legal Enablers

A review of the relevant infrastructure-related legislations in the Energy sector revealed 24 principal legislations, 16 amendments and 10 sub-legislations governing the oil and gas industry in Nigeria. The key ones are NNPC Act, the Petroleum Act, and the Petroleum Control Act which were found not to be investor-friendly.

Furthermore, it was identified that the provisions of Sections 7(4), 11(2) and 12 of the NNPC Act are all in breach of the provisions of Section 162 of the Constitution which requires that revenues collected by the government be paid into an account called the Federation Account. In addition, Paragraph 2 of the Deep Water Block Allocation (back-in rights) regulation 2003 (a subsidiary legislation under the Petroleum Act) that gives the Federal Government the right to acquire five-sixths of an OPL (Oil Prospecting License) or OML (Oil Mining Lease) interest is invalid to the extent that it is inconsistent with paragraph 35, First Schedule to the Petroleum Act which provides that such participation must be made on terms to be negotiated between the Federal Government and the holder of the OPL or OML.

The laws in the sector cannot be said to be state-friendly as minerals, gas, and oil rights are all vested in the Federal Government of Nigeria.

Furthermore, most of these laws are out-of-date as they are not in line with modern practice. These inform the need to bring this multiplicity of laws into one document in the form of Petroleum Industry Bill (PIB) which is currently before the National Assembly.