From shrinking the frontier fund to giving the Finance Ministry control of NNPC, the rumoured changes have ignited industry debate on governance, regulation, and the future of petroleum policy
By Gideon Osaka
When Nigeria passed the Petroleum Industry Act (PIA) in 2021, it was celebrated as a once-in-a-generation reform, ending nearly two decades of stalled legislation. Designed to overhaul the governance, fiscal, and administrative frameworks of the oil and gas sector, the PIA promised efficiency, transparency, and renewed investor confidence.
But less than five years later, speculation is rife that the Federal Government may soon amend key provisions of the Act. If these amendments materialise, three major changes are expected:
The share of oil revenue earmarked for the Frontier Exploration Fund would drop from 30% to 5%.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) would assume responsibility for handling Nigerian National Petroleum Company Limited (NNPC) contracts.
The Federal Ministry of Finance, not the Petroleum Ministry, would become the sole manager of NNPC.
These proposals remain speculative, with no official confirmation from government spokespeople. Yet, they have already stirred fierce debate among stakeholders. Industry experts, unions, and civil society actors are weighing in on what these potential changes could mean for Nigeria’s oil future.
The PIA’s Promise: A Brief Background
Signed into law by former President Muhammadu Buhari in August 2021, the PIA consolidated fragmented oil and gas laws into a unified framework. Its central objectives included:
Commercialising NNPC into NNPC Ltd, a profit-driven limited liability company.Separating regulators from operators, giving NUPRC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) distinct oversight roles.
Establishing clearer fiscal terms to attract foreign investment.
Creating the Host Communities Development Trust Fund, ensuring host communities receive 3% of oil companies’ operating expenditures.
Allocating 30% of NNPC’s profit oil and gas to a Frontier Exploration Fund, aimed at exploring untapped basins.
The Act sought to balance investor-friendly policies with national interests. Yet from the start, it faced criticism: the frontier exploration allocation was deemed excessive by some, while host communities complained their share was too small.
Frontier Exploration Fund: From 30% to 5%?
One of the most controversial elements of the PIA was the allocation of 30% of NNPC’s profit from oil and gas to frontier exploration. The aim was to fund exploration in basins like Anambra, Benue Trough, Sokoto, Chad, and others in northern Nigeria. Proponents argued it would diversify Nigeria’s oil map beyond the Niger Delta, while critics saw it as politically motivated.
Now, speculation suggests that the government is considering slashing this allocation to 5%.
Arguments for Reduction
Economists argue that 30% was unsustainable. “At a time when Nigeria struggles with low oil output, high subsidy costs, and forex scarcity, dedicating nearly a third of profit to speculative frontier exploration was never logical,” says Dr Bamidele Ogunleye, an energy economist.
Arguments Against Reduction
Northern leaders, who championed the 30% allocation, may see this as a political setback. “Exploration in frontier basins has always been about energy security and inclusivity. Cutting funding sends the wrong message,” argues Professor Ibrahim Modibbo, a petroleum geologist.
Industry players also note that frontier basins require heavy investment due to their uncertain reserves. A 5% allocation may not be enough to sustain exploration.
NUPRC to Handle NNPC Contracts: Blurring the Lines
Another rumoured amendment is that the NUPRC would take over responsibility for managing NNPC’s contracts.
The PIA deliberately separated roles: NNPC as a commercial operator, and NUPRC as a regulator. If NUPRC begins handling contracts, that separation could collapse.
“You can’t be a referee and player at the same time. A regulator managing contracts of the national oil company is a conflict of interest,” warns Mrs Patience Alabi, a legal expert in oil governance.
Labour unions echo this sentiment, warning of accountability risks. Investors, too, may be alarmed: regulatory independence is a bedrock of global oil investment.
Finance Ministry as Sole Manager of NNPC: Efficiency or Technocratic Bypass?
Currently, both the Petroleum and Finance Ministries oversee NNPC. Petroleum provides technical expertise, while Finance ensures fiscal accountability.
Placing NNPC solely under Finance would tilt oversight toward financial management, potentially sidelining technical considerations.
“The Petroleum Ministry houses the technocrats, the geologists, the engineers. How can you run NNPC without that expertise?” asks Dr Uche Okonkwo, an oil and gas consultant.
Critics also worry the Finance Ministry may treat NNPC primarily as a revenue generator, rather than a strategic national oil company. Still, proponents argue it could streamline decision-making and align NNPC more closely with national fiscal priorities.
Professor Wumi Iledare: Caution, Credibility, and Governance
Few voices carry as much weight in Nigeria’s petroleum policy debates as Professor Wumi Iledare, of FUPRE Energy Business School. For him, the current discourse around both PIA amendments and federal divestment of Joint Venture (JV) equities raises fundamental questions of governance and stability.
On JV divestments, he warns:
“The divestment of Federation stakes from majority levels could potentially diminish direct dividend revenues, weaken governmental influence over production and local content, and pose risks of mismanagement if assets are transferred to unqualified buyers. Such actions could undermine Nigeria’s economic sovereignty and revenue stability.”
Still, he acknowledges the case for reform:
“The Nigerian National Petroleum Company Limited (NNPC), as the majority owner, has been identified as a bottleneck due to bureaucratic delays and cash call burdens. The sale of equity could provide fiscal relief, provided that the proceeds are allocated transparently for debt reduction or infrastructure development.”
On the PIA amendments, Iledare’s stance is clear:
“Amending the PIA shortly after its enactment may lead to policy instability, discourage long-term investment, and be perceived as benefiting select interests, thereby undermining the Act’s original objectives of stability and investor confidence.”
He further highlights the importance of regulatory credibility:
“The Energy Governance Alliance is right to commend the NUPRC for the steps taken under Gbenga Komolafe to restore investor confidence. Regulatory clarity is critical, and we can already see encouraging signs with renewed IOC interest. However, true credibility requires reforms to be anchored in law. Operating without a governing board, as stipulated by the PIA, raises questions of institutional legitimacy.”For Iledare, durable structures, not political personalities, are the only foundation for lasting reforms.
What Is at Stake?
If the speculated amendments materialise, the stakes are enormous:
Revenue flows: Cutting the frontier fund could release billions for other uses.
Governance: NUPRC’s expanded role could compromise regulatory independence.
Investment climate: Policy inconsistency could deter foreign capital.
Technocratic input: Excluding the Petroleum Ministry could weaken operational expertise.
Regional politics: Northern stakeholders may resist cuts in frontier exploration funding.
Reform or Stability?
Nigeria faces a delicate balancing act. On one hand, reform may be necessary to correct flaws in the PIA. On the other hand, too many amendments too soon risk destabilising the sector.
Experts recommend a cautious approach:
Stakeholder engagement: Consult unions, operators, host communities, and investors before any amendment.
Regulatory clarity: NUPRC must remain a regulator, not a contract manager.
Balanced oversight: Retain joint Finance–Petroleum supervision of NNPC.
Targeted frontier funding: If reduced, ensure sufficient resources for high-potential basins.
Transparency guarantees: Embed accountability into any amendment process.
A Law in Flux
The Petroleum Industry Act was intended to provide Nigeria with long-term stability in its oil and gas sector. But less than half a decade into its life, speculation about amendments is already stirring uncertainty.
As Professor Iledare reminds us, true reform must be anchored in law and credibility, not expediency. Whether Nigeria chooses to amend or preserve the PIA, the outcome must balance fiscal needs, investor confidence, and national interest. The credibility of Nigeria’s energy sector, and its ability to thrive in a rapidly changing global landscape, depends on it.