Reactions Trail Planned Designation of NUPRC as Oil Concessionaire, NNPC’s Shareholder Exit

Peter Uzoho 

The approval by President Bola Tinubu to commence the amendment of the Petroleum Industry Act (PIA) 2021 to effect some key changes to whittle down the powers of the Nigerian National Petroleum Company Limited (NNPC) as concessionaire of oil blocks in the country is generating controversy and calls for caution amongst stakeholders in the nation’s oil and gas industry.

Among the issues currently unsettling some of the stakeholders is the proposal by the federal government to vest the power and role of concessionaire of all oil and gas exploration and production assets and representative of the Federation in all agreements with the international oil companies (IOCs) and independent companies in the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) thereby displacing NNPC. 

Another key change contained in the government’s proposal is the removal of the Ministry of Petroleum Incorporated (MOPI) as a shareholder of NNPC, while making the Ministry of Finance Incorporated (MOFI) the sole shareholder of the national oil company. 

THISDAY learnt that the Attorney General of the Federation (AGF), Lateef Fagbemi had notified several of the country’s federal agencies of Tinubu’s approval of the proposed amendment to the PIA 2021 with the title: “The Petroleum Industry Act (Amendment) Act 2025.”

The federal government holds equity stakes in JV, Production Sharing Contracts (PSCs), Sole Risks and other contractual agreements in oil operations with the IOCs and independent firms through NNPC.

By the structure of these contractual or ownership models, NNPC is the representative of the government’s interest, with shares typically ranging from 55 per cent to 60 per cent in major ventures, while the foreign partners hold the remaining interest and serve as operators.

The arrangement therefore gives the government direct ownership of a substantial portion of Nigeria’s crude oil production.

However, stakeholders have raised concerns on those proposed changes, especially the one that seeks to make NUPRC the concessionaire of oil assets and the Ministry of Finance the sole shareholder of NNPC.

They warned of impending risks if passed by the legislature without wide consultation, more clarity, and inclusiveness, pointing out that that may result in a conflict of interest between NUPRC and the operators it is supposed to regulate. 

The stakeholders also feel that removing the petroleum ministry as the NNPC shareholder will make the company’s board subservient to the finance ministry, as the board will become a mere executor of the directives of the finance ministry. 

Speaking to THISDAY,  National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr Billy Grilis-Harry, said there was need to properly interrogate the proposed changes in the PIA.

He opposed the idea of wanting to divest the Ministry of Petroleum from the controls of NNPC and the management of Nigeria’s acreages, joint ventures, and different business models in the oil and gas industry.

He wondered what would then be the relevance of the Ministry of Petroleum if it is no longer a shareholder of NNPC.

Grilis-Harry noted that it would be wrong to make the Ministry of Finance the sole shareholder of NNPC, warning that Nigeria cannot be drafting its bills to suit one season and one individual.

President of the Nigerian Association of Petroleum Explorationists (NAPE), Mr. Johnbosco Uche, told THISDAY that the success of the PIA hinges on stability, investor confidence, and a predictable business environment. 

On what becomes of the Nigerian Petroleum Exchange (Nipex), the contracting arm of the NNPC, if the NUPRC assumes the role of concessionaire, Uche said, “there must be absolute clarity on the future status and governance of the entity, which currently operates under the NNPC, to ensure operational efficiency and accountability.”