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President Muhammadu Buhari’s administration is set to overhaul Nigeria’s oil sector, according to a bill sent to the National Assembly.
The Petroleum Industry Bill, long awaited, if passed into law provides for the privatisation of the Nigerian National Petroleum Company (NNPC) and the scrapping of the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Petroleum Equalisation Fund.
The bill also amends changes to deepwater royalties made late last year.
The legislation has been in the works for the past 20 years and looks to revise laws governing Nigeria’s oil and gas exploration not fully updated since the 1960s because of the contentious nature of any change to oil taxes, terms and revenue-sharing.
The bill proposes creating a limited liability corporation into which the ministers of finance and petroleum would transfer NNPC assets.
The government would then pay cash for shares of the company and it would operate as a commercial entity without access to state funds.
The changes would in theory make it easier for the struggling company to raise funds.
The legislation would also amend controversial changes to deep offshore royalties made late last year by cutting the royalty that companies pay the government for offshore fields producing less than 15,000 barrels per day to 7.5% from 10%.
It would change a price-based royalty too, so that it kicked in when oil prices climbed above $50 per barrel, rather than $35.
The bill provides for the scrapping of the Petroleum Equalisation Fund, which used to distribute cash to keep nationwide petrol prices uniform, and transfer remaining money to a midstream gas infrastructure fund.
Also the work of PPPRA, when scrapped, would be transferred to a new commission, which will handle many of tasks being done by the Department of Petroleum Resources (DPR).
President Buhari is also Nigeria’s minister of petroleum.