Preamble
In 2025, Nigeria’s oil and gas sector began a shift from legislative reform under the Petroleum Industry Act (PIA) to real governance challenges. While domestic refining and indigenous production grew, governance became the main concern, not infrastructure or investment. The E-QUAD framework (Efficiency, Effectiveness, Equity, and Ethics) showed the sector maturing despite institutional friction and regulatory ambiguity.
The effectiveness of the PIA’s principles, like accountability, faced tests as leadership changes at regulatory agencies created uncertainty and risk. Implementation was inconsistent, with some gains in transparency, but overall regulatory certainty remained low, causing policy fatigue.
The downstream petroleum market adjusted into oligopoly competition, but weak rules politicized business activity, and regulatory effectiveness lagged statutory goals. Issues of equity and ethics persisted among consumers, host communities, and future generations.
Looking toward 2026, Nigeria needs to consolidate its progress—stabilizing policies, formalizing trading frameworks, enforcing neutrality, and sequencing energy transition—to ensure the PIA delivers lasting value. Governance will be central in shaping the country’s energy outlook.
Market Competition and Regulatory Neutrality Under the PIA
Nigeria’s downstream petroleum market by 2025 had become oligopolistic, a development anticipated by the Petroleum Industry Act (PIA). The Act granted the NMDPRA broad powers to foster competition, prevent abuses of dominance, and ensure unrestricted access to infrastructure, with the intention of sustaining competitiveness even in a concentrated market. However, an oligopoly by itself does not necessarily lead to market failure; instead, such failures arise when regulatory neutrality is compromised. It is not the existence of a large refinery or the act of importation that automatically results in exclusivity or damages competition. Rather, the PIA’s core principle of neutrality—requiring equal treatment, transparent pricing, and consistent enforcement—is designed to keep the oligopolistic market functioning efficiently.
Competition tends to break down not because of legislative inadequacy, but because some players enjoy advantageous access to foreign exchange, infrastructure, permits, or possess greater pricing discretion due to inconsistencies in application. Regulatory neutrality therefore, remains essential for ensuring a level playing field. A notable transformation in 2025 was the rise in domestic refining, which was expected to reduce overall costs by minimizing import-related expenses, and these savings were reflected in adjustments at the refinery-gate price level.
It is noteworthy that Nigeria’s downstream sector is defined not by classic price-taking behavior, but by the actions of a few dominant firms and high barriers to entry, with market dynamics shaped by factors such as price leadership, economies of scale, logistics, and regulation. The key challenge facing the sector is not oligopoly itself, but rather the lack of a clear and transparent framework for competition and conduct. In the absence of well-defined rules on pricing, crude oil access, competitive bidding, and protective safeguards, the market risks becoming politicized—a situation that breeds controversy and undermines trust and efficiency instead of bolstering them.
NNPC Commercialization: Impacts, Stakeholders, and the Transparency Dividend
The transformation of Nigeria’s National Petroleum Company (NNPC) into NNPC Limited (NNPC) under the Petroleum Industry Act (PIA) shifted it from state-supported to commercially autonomous. Now governed by the Companies and Allied Matters Act, NNPC operates with financial independence, though it still manages national hydrocarbon assets.
In 2025, NNPC asserted its autonomy by withholding crude supplies from domestic refineries that didn’t meet new credit standards, prioritizing commercial goals over previous supply obligations. This move, though controversial, demonstrated a focus on profitability and market discipline while exposing tensions between commercial success and public supply expectations.
Financial transparency has improved significantly since PIA Sections 54 and 55, with the timely publication of detailed audited statements enhancing trust among government agencies, investors, and citizens. Regular disclosures now help fiscal planning, investor confidence, and accountability to the public.
Key challenges remain in balancing profit with social responsibility. The release of quarterly crude allocation schedules in 2025 helped stabilize fuel supply and prices, benefiting both consumers and investors. However, concerns persist that commercial priorities could undermine social goals like affordable energy. Ongoing efforts are needed to ensure reforms serve Nigeria’s economic and societal interests.
Institutional Effectiveness and Indigenous Producer Dynamics
The effectiveness of Nigeria’s Petroleum Industry Act (PIA) relies on strong regulation, but gaps remain, like delayed decisions due to unstaffed Boards and weak contract enforcement, causing supply issues and price fluctuations. By 2025, Indigenous producers gained a larger share of oil output, bringing both resilience and new governance challenges. Gas contract compliance was low, limiting gas’s potential as a transitional fuel. While the PIA improved local investment, international capital declined, and midstream progress lagged, with investors still concerned about regulatory uncertainty and enforceability. Improved Board appointments, contract enforcement, and stronger governance are needed for lasting sector growth. PEWI asserts that Nigeria’s oil sector would benefit from the appointment of a substantive minister; however, this decision rests solely with the executive president, who holds the relevant authority.
Equity and Ethics in Nigeria’s Petroleum Sector: A Narrative View
Despite significant reforms introduced by the Petroleum Industry Act (PIA), Nigeria’s petroleum sector continues to grapple with deep-rooted challenges related to equity, ethics, regional disparities, environmental harm, and regulatory transparency. These persistent issues have underscored the need for inclusive and effective interventions that genuinely address the concerns of all stakeholders involved in the industry.
Growing up in Nigeria, one cannot help but notice the uneven outcomes from expanded local refining capacity. In 2025, while residents in Lagos paid N650 per liter for PMS, those in the North-East faced much higher costs—N780 per litre—primarily due to inadequate infrastructure and logistical bottlenecks. The rise of dominant market players has squeezed out smaller marketers, which in turn has eroded consumer choices and stifled competition. The hope that increased refining would usher in broader prosperity has not been realized evenly across regions.
This inequity is felt most acutely in the Niger Delta. Oil producing communities continue to suffer from devastating pollution. By 2025, benzene levels in local groundwater exceeded World Health Organization limits by an astonishing nine hundred times. Although the PIA mandated the creation of Host Community Development Trusts (HCDTs) to mitigate these impacts, their effectiveness has been limited. Only 30% of host communities reported any tangible improvements, hindered by weak governance and a lack of transparency. Without strategic investment in education, healthcare, and infrastructure, future generations remain at risk of inheriting entrenched deprivation.
Ethics and trust also weigh heavily on the sector’s reputation. Many marketers perceive favoritism in the allocation of licenses and permits, while regulators often struggle to enforce fair practices. For consumers, especially those in underserved regions, the result is a troubling sense of distrust, exacerbated by opaque pricing mechanisms and unreliable supply chains.
Addressing these multifaceted problems requires action grounded in both evidence and collective engagement. Regulators must strive for transparent, data-driven pricing and allocation formulas that are subject to regular review and stakeholder participation.
Competition rules should be actively enforced to protect small businesses and foster an open market. It is equally vital for governments and civil society to strengthen oversight and capacity-building initiatives for HCDTs, ensuring community development projects are impactful and transparent.
Further, every regulatory decision must be documented and made accessible to the public, accompanied by independent audits. Ongoing dialogue among communities, marketers, regulators, and consumers can create a feedback loop that allows policies to evolve in response to real-world outcomes.
Finally, a dedicated portion of petroleum revenues should be earmarked for investments in human capital, environmental sustainability, and critical infrastructure, securing lasting benefits for present and future Nigerians.
By embracing these recommendations, Nigeria can lay the groundwork for a more equitable, ethical, and sustainable petroleum sector—one that extends its benefits to all, now and in the years to come.
Energy Transition, Natural Gas, and Managing Duality
The path of Nigeria’s energy sector is one marked by ambition, innovation, and significant challenges. At its heart lies the Petroleum Industry Act (PIA), a policy that reimagines natural gas as the centerpiece of the nation’s transition to cleaner energy. The year 2025 saw an unprecedented investment—N200 billion ($440 million) poured into new pipelines and processing plants. As these projects came online, the effects rippled through the economy: electricity generation grew, gas deliveries to industries increased from 1.3 to 1.5 billion cubic feet per day, and hope stirred for genuine diversification away from oil exports.
However, the journey is far from straightforward. With much anticipation, the Dangote Refinery opened in May 2025, instantly elevating domestic refining capacity. Production soared, meeting a greater share of national demand and slashing imports by more than 40%. Yet, the refinery boom was shadowed by persistent pipeline failures that led to fuel shortages and sharp price swings, pointing to infrastructure gaps that stubbornly resisted quick fixes.
Complicating matters further were regulatory ambiguities and the unpredictable naira exchange rate. Disputes over crude supply obligations and fluctuating pricing mechanisms resulted in prolonged delivery delays and stifled investments, which stalled at $350 million—well below projections. The depreciation of the naira pushed input costs up by N120 billion and bumped refined product prices higher, squeezing both producers and consumers.
These technical and economic challenges had profound social consequences. In 2025, Nigerians grappled with volatile pump prices, sometimes fluctuating by 18% each month. Remote regions, especially in the north and along riverbanks, faced repeated fuel shortages. Refineries’ profit margins fell while national inflation edged upwards by 2.4 points. Amid such turbulence, public confidence in sector reforms began to waver.
Still, there is a path forward. Policy experts and industry leaders recommend transparent pricing, aggressive rehabilitation of vital infrastructure, stable currency policies, and ongoing dialogue with all stakeholders. Pilot programs hint at the benefits: steadier supplies, lower costs, and better regulatory responsiveness.
Concluding Remarks
Nigeria’s quest to transform its energy sector is a complex journey, but not an impossible one. Confronting operational and governance issues head-on, and fostering transparency and system upgrades, will help realize the PIA’s vision—a robust petroleum industry that underpins reliable energy and inclusive economic growth for all Nigerians.
Assessing the Petroleum Industry Act (PIA) through the Quad-E framework—efficiency, effectiveness, equity, and ethics—reveals notable progress alongside lingering challenges. Project approvals have become 15% faster thanks to improved coordination between NNPC and regulators, reflecting gains in efficiency. Effectiveness can be seen in the introduction of quarterly NNPC financial reports; however, ongoing issues like supply allocation continue to introduce market volatility.
Equity remains a significant hurdle: despite a 10% rise in refining capacity, rural communities still suffer from fuel shortages and high prices, indicating that the benefits are not evenly distributed. To address this disparity, focused subsidies and investments in infrastructure will be necessary. When considering ethics, improvements in transparent reporting have enhanced procurement processes, yet only 60% of required disclosures meet their deadlines, exposing a clear need for stronger enforcement.
Lessons from 2025 suggest that reinforcing current reforms is more beneficial than introducing entirely new initiatives. Policymakers would be wise to strengthen domestic trading rules, develop governance practices tailored to Nigeria’s energy market, and ensure stable conditions for gas investment. Public reporting, regular audits of the supply chain, and independent compliance monitoring are essential steps forward. Regular reviews using both the Quad-E and PEWI frameworks can help track reform progress and guide policy, ensuring that each approach leads to measurable outcomes and greater accountability.
Moving ahead, strict adherence to legal requirements combined with disciplined execution provides the best path forward. The PEWI framework—focused on policy, execution, welfare, and institutional integrity—ought to measure practical results such as reduced approval times, improved energy affordability, and compliance with transparency standards. Frequent assessments using this framework can help ensure that reforms truly benefit all Nigerians.
While the PIA lays the groundwork for sector reform, progress depends on consistent implementation, equity-focused actions, and regular reviews using Quad-E and PEWI perspectives. Only with these combined efforts can lasting and inclusive development be achieved across Nigeria’s petroleum industry.
HAPPY NEW YEAR!!!
OMOWUMI O. ILEDARE, PhD,
Sr. Fellow USAEE, Fellow NIPetE,
Fellow EI, Professor Emeritus,
Louisiana State University, Baton
Rouge, USA & Executive Director,
Emmanuel Egbogah Foundation,
Abuja, Nigeria
