Just four years after Nigeria finally enacted the long-awaited Petroleum Industry Act (PIA) in 2021, the Federal Government is already proposing significant amendments. At the centre of this review is a controversial plan to transfer concessionaire powers, currently held by the Nigerian National Petroleum Company (NNPC) Limited, to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The government defends this proposed amendment as a way to plug fiscal leakages and enhance transparency. However, many energy stakeholders argue that the move could create a dangerous conflict of interest, undermine contractual stability, and erode the very governance reforms the PIA was enacted to achieve.
“If the regulator becomes too powerful, wielding both commercial and regulatory authority, it risks institutional overreach. Civil servants, not entrepreneurs, would control billions of dollars in petroleum contracts. That is a recipe for delays, indecision, and, worse, corruption.”
The PIA, when passed in 2021, was praised for clearly separating regulatory and commercial roles in the oil and gas sector. It assigned regulatory oversight to the NUPRC and commercial responsibility to NNPC Ltd, an arrangement designed to eliminate conflicts of interest and attract investor confidence.
But the proposed amendment blurs those lines by positioning NUPRC as both regulator and concessionaire, the entity that issues petroleum licences and also signs production agreements with operators.
“This is a classic conflict of interest scenario,” says Ayodele Oni, energy lawyer and partner at Bloomfield Law Practice. “The regulator would now be issuing licences to itself, sanctioning itself, and policing contracts in which it is financially interested.”
Globally, best practices demand that regulators remain neutral and free from commercial entanglements. If the NUPRC becomes both umpire and player, its objectivity will be compromised, and its decisions will be subject to scrutiny or legal challenge.
Equally troubling is the potential disruption of existing Production Sharing Contracts (PSCs) and Joint Venture (JV) agreements, which together account for more than 70 percent of Nigeria’s crude output. PSCs, dominant in deepwater operations, produce over 43 percent of Nigeria’s oil, while JVs account for about 30 percent, according to NUPRC and OPEC data.
These contracts were signed with NNPC as the government counterparty, and transferring concessionaire status to a different entity, NUPRC, without renegotiating those contracts introduces significant legal uncertainty.
According to Babajimi Ayorinde, partner at TNP and an energy law expert, regulators should never be parties to the same contracts they are meant to supervise. “It distorts market competition and undermines the independence required to enforce industry rules,” he notes.
Ayorinde cites operational issues that could arise: “If the NUPRC fails to fulfil its obligations under a PSC, would it sanction itself? Would it sue itself? This arrangement is legally and operationally awkward.”
Beyond legal concerns, the proposed change may slow down operational decisions, particularly in capital-intensive projects like deepwater drilling or gas processing. Investors and operators depend on quick, commercially rational decisions, something a bureaucracy-anchored regulator may be ill-equipped to deliver.
Nigeria is already struggling to meet its OPEC crude oil production quota of 1.5 million barrels per day (bpd). In August 2025, the country averaged only 1.434 million bpd, according to OPEC secondary sources, falling short once again. Any disruption that slows contracting, funding, or project execution would worsen this shortfall, further harming public revenues and FX earnings.
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Jide Pratt, COO of AIONA and country manager of TradeGrid, warns that the amendment undermines the core governance logic of the PIA. “This proposal is an aberration,” he says. “The NUPRC should not hold commercial responsibilities. The path forward should be expanding private-sector participation in JVs, not turning the regulator into a quasi-commercial entity.”
Pratt suggests that rather than transferring concessionaire powers, the government should encourage NNPC to divest JV interests to qualified private players while retaining minority stakes, thus freeing capital and enhancing efficiency.
The proposed amendment comes at a particularly fragile time for Nigeria’s upstream oil industry. Global energy majors Shell, TotalEnergies, and ExxonMobil are scaling back or divesting Nigerian assets. The reasons: rising security risks in the Niger Delta, weak contract enforcement, regulatory unpredictability, and global shifts toward energy transition.
Introducing legal and institutional ambiguity into existing oil contracts could further dampen sentiment. Investors value legal clarity, transparent regulatory frameworks, and predictability. If concessionaire rights are transferred without clear transitional provisions or stakeholder consent, Nigeria may deter the very capital it desperately needs.
As Oni puts it, “Investors will pause, delay, or cancel projects if they sense that Nigeria’s petroleum framework is unstable. This amendment, in its current form, sends the wrong signal.”
To avoid this, he recommends the introduction of strong safeguards: A clear transition framework for existing contracts;
governance firewalls within the NUPRC to separate its regulatory and commercial functions, and independent oversight mechanisms to avoid abuse of powers or regulatory capture.
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Ironically, the PIA itself was designed to address decades of inefficiency, opacity, and politicisation in the oil and gas sector. The proposal to reassign powers from NNPC, long accused of inefficiency, to NUPRC might seem like a move to enhance transparency. But trading one flawed setup for another is not a reform.
If the regulator becomes too powerful, wielding both commercial and regulatory authority, it risks institutional overreach. Civil servants, not entrepreneurs, would control billions of dollars in petroleum contracts. That is a recipe for delays, indecision, and, worse, corruption.
Nigeria must tread carefully. There is merit in reforming the NNPC’s inefficiencies, but it must not come at the cost of eroding the foundational principles of the PIA. For us, a more viable approach would be strengthening NNPC’s commercial transparency through board reform, audits, and partial privatisation; maintaining regulatory independence for NUPRC; encouraging private capital in JV and upstream operations; and clarifying the legal status of existing contracts before any legislative amendment.
The PIA is still in its infancy. Tinkering with its structure, without broad industry consultation, legal safeguards, or operational clarity, risks destabilising Nigeria’s fragile petroleum ecosystem. Reform must be pursued, but not in a way that reverses progress.
