By Williams Emmanuel Ukpoju
In August 2021, after two decades of legislative slog and intense debate, Nigeria’s Petroleum Industry Act (PIA) was signed into law—a landmark reform widely welcomed as a turning point for the nation’s oil and gas sector. Promising increased transparency, improved governance, investor-friendly fiscal terms, and measurable benefits for host communities, the PIA aimed to modernise an industry deeply entrenched in inefficiency, environmental degradation, and regulatory opacity.
Yet, barely four years on, signs have emerged that the Act may be in urgent need of recalibration. Leading oil and gas executives have lamented that the PIA “was outdated on arrival,” highlighting how rapid technological advances, global energy transition trends, and evolving market dynamics have already rendered key provisions of the law obsolete. Meanwhile, public forums and expert roundtables convened in 2025 have exposed a growing chorus of disillusionment: from host communities, civil society advocates, and subnational leaders, each raising pointed criticisms and demanding decisive action.
Host communities in the Niger Delta—ostensibly protected by a mandatory Host Communities Development Trust (HCDT)—have repeatedly complained that the 3 per cent revenue allocation is both inadequate and poorly administered. Reports indicate that as of June 2025, nearly 30 per cent of mineral license holders had still not established their required Trust, and over half of the funds meant for these communities remained unspent or inaccessible. Simultaneously, Bayelsa State Governor Douye Diri has urged the National Assembly to amend the PIA, insisting state governments in oil-producing regions should play statutory roles in development oversight—an appeal echoed during the 2025 Nigeria Oil & Gas Opportunities Fair (NOGOF).
On the corporate side, CEOs of indigenous oil firms have joined the debate, urging a comprehensive legislative review to keep pace with AI-driven operational models, digitalisation, and sectoral shifts toward cleaner energy. They argue that regulatory overlaps—especially between the upstream NUPRC and downstream NMDPRA—and ambiguous fiscal incentives are stifling investment. Meanwhile, a recent panellist at BusinessDay’s CEO Forum described the Act’s frameworks as “outdated provisions that fail to align with global trends, evolving technology, and current industry challenges.”
Crucially, environmental concerns loom large over the PIA’s perceived failures. Despite guaranteeing gas flaring reduction programmes, communities continue to suffer from polluted ecosystems and insufficient enforcement. Niger Delta residents now question whether instruments like the National Oil Spill Detection and Response Agency (NOSDRA) are effectively safeguarding their livelihoods, or if amended provisions with stronger sanctions and clearer accountability are sorely needed.
Putting all these voices together, a clear picture emerges: the PIA—once hailed as a golden ticket to reform—is showing cracks less than half a decade after enactment. Critics argue that its shortcomings lie not only in implementation, but in its outdated design—an ill fit for a world transitioning away from fossil fuels and toward environmental sustainability.
The urgency behind calls for review is more than academic. With Nigeria having removed fuel subsidies, endured currency volatility, and faced escalating security threats—especially in oil-bearing regions—the current framework is under immense pressure. A responsive review, stakeholders contend, is not an admission of failure. Rather, it is a strategic necessity: to recalibrate the law, restore public faith, fortify environmental protections, and reinvigorate investor confidence within an industry in flux.
The Broken Promises to Host Communities
Acentral feature of the PIA is the 3% Host Communities Development Trust Fund, designed to bring tangible benefits to communities in the oil producing Niger Delta. However, the implementation has been widely criticised as slow, unstructured, and unfair.
In Akwa Ibom, community leaders have lamented the delays and irregularities in the establishment of Trusts. Some development plans remain stuck in limbo, while others are yet to receive any funding. Despite legal provisions, many host communities still do not have functioning Trusts, years after the law came into force.
Stakeholders, including the Host Communities of Nigeria Producing Oil and Gas (HOSTCOM), have repeatedly demanded that the current 3% contribution be increased to 10–15% of companies’ operating expenditure. They argue that the current rate fails to address the legacy of environmental degradation and underdevelopment that has plagued the region for decades.
At a town hall meeting in Yenagoa, Dr. Mike Emuh, a national leader of HOSTCOM, stated:
“We want to make sure that the wrong implementation of the 3% oil derivation to host communities is corrected, else crisis will loom.”
His warning reflects widespread frustration across the Niger Delta, where hopes raised by the PIA have been met with disappointment.
Regulatory Overlaps and Structural Confusion
The PIA created two main regulators: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). While this separation was intended to clarify roles and improve efficiency, the reality has been far messier.
There have been reports of overlapping functions, conflicting directives, and bureaucratic turf wars. Industry operators frequently complain about duplicative processes, unclear responsibilities, and regulatory inconsistencies that stifle investment and delay projects.
Additionally, community leaders accuse some oil firms of exploiting regulatory ambiguities to sideline local voices in selecting members of the Host Community Trust Boards. The PIA clearly mandates community representation, but the dominance of oil companies in Trust Fund operations undermines this intent.
Transparency, Accountability, and NNPC’s Transformation
Section 83 of the PIA mandates full disclosure of oil and gas contracts to promote transparency. Yet, nearly four years on, Nigeria has no standard framework to ensure public access to these documents. Civil society groups like Spaces for Change and BudgIT have called for increased oversight, but progress remains slow.
One of the most anticipated reforms under the PIA was the transformation of the Nigerian National Petroleum Corporation (NNPC) into a commercially driven entity—NNPC Limited. While the rebranding has taken place, critics argue that NNPC Ltd continues to operate without sufficient transparency or parliamentary oversight.
Lawmakers have raised concerns about how the company disburses revenues and enters into joint ventures without adequate legislative review. The opacity undermines the PIA’s goal of making NNPC a competitive, accountable enterprise.
Environmental Protection and Gas Flaring Still an Issue
The PIA includes provisions aimed at reducing gas flaring and ensuring environmental protection through regulatory bodies such as NOSDRA (National Oil Spill Detection and Response Agency). However, pollution and oil spills remain rampant in the Niger Delta.
Community reports from Bayelsa, Rivers, and Delta States indicate persistent environmental degradation with little or no remediation. Stakeholders believe that NOSDRA lacks the enforcement powers and resources to hold multinational oil companies accountable.
Despite the law’s good intentions, critics say the environmental safeguards are weak, underfunded, and inadequately enforced.
Legal Ambiguities and Fiscal Concerns
Legal analysts have flagged the vagueness of several PIA terms—notably “host community” and “frontier basin.” These ambiguities have led to differing interpretations around revenue sharing, project siting, and investment priorities, fueling fresh tension in oil producing areas.
Furthermore, energy economists argue that the fiscal terms, though improved, are not competitive enough to attract new investments in a global market that is rapidly transitioning to renewables.
In the face of dwindling oil production, rising insecurity, and a volatile exchange rate, experts say a recalibration of the PIA’s fiscal incentives is necessary to match Nigeria’s evolving economic realities.
New Tax Act May Threaten PIA Gains, Warns Iledare
Amid growing concerns over implementation, an additional warning has emerged from one of Nigeria’s most respected voices in petroleum economics.
Professor Wumi Iledare, a globally recognised oil policy expert, has cautioned that the rollout of Nigeria’s new Tax Act—scheduled for implementation in 2026—could inadvertently undermine the integrity of the PIA.
“The Tax Act must align with the provisions of the Petroleum Industry Act,” Iledare said in a statement issued in Abuja recently. “Conflicting policies will only undermine one of the country’s most significant energy reform achievements.”
He warned that tax proposals that contradict the PIA framework would erode investor confidence and destabilise the regulatory clarity the country has worked hard to achieve.
Of particular concern, Iledare noted, are proposals to centralise or reduce the operational budgets of NUPRC and NMDPRA—the two critical regulatory agencies created by the PIA.
“Efforts to weaken the financial independence of these agencies risk eroding their operational effectiveness and autonomy,” he stated. “As the Tax Act becomes operational in 2026, the government must prioritise institutional stability and policy coherence.”
He concluded with a broader appeal to pragmatism:
“The law exists, but its implementation requires common sense. Tax policy must be harmonised with the PIA framework to sustain Nigeria’s competitiveness in the global oil and gas industry.”
The Big Question: Why So Soon?
The big question now looms: Why is a law designed for long term reform already under scrutiny so soon?
According to industry insiders, the issue is less about the intention of the law and more about its execution. Implementation has been slow, fragmented, and uneven. Key institutions remain under-capacitated, and the gap between what the law says and what actually happens on the ground continues to widen.
The call for a review is therefore not a rejection of the PIA itself, but a demand for its evolution—one that aligns it better with current economic, environmental, and social challenges.
Reforming the Reform
As Nigeria faces a challenging energy future marked by falling production, insecurity in the Niger Delta, and the global push toward energy transition, the PIA remains a crucial tool. However, to unlock its full potential, the Act must be revisited, reinterpreted, and retooled to address gaps in implementation, funding mechanisms, and community engagement.
Stakeholders agree that the PIA holds promise, but only if its provisions are faithfully implemented and fairly revised where needed. A mid term review—four years after its passage—may be the responsible step needed to keep Nigeria’s oil and gas sector on the path of reform.
