The Nigerian Petroleum Industry Bill ("PIB"), first presented to the Nigerian National Assembly in 2008, purports to enact far-reaching reforms on the Nigerian oil industry, the single most significant contributor to the national economy. In the five years since its first presentation, the PIB has gone through numerous variations (some of which are expected to be prejudicial to indigenous oil firms), and the salient features of which were referred to in our July 2012 Commentary, "Africa Resources Update".
On 7 March 2013, the PIB passed its crucial second reading on the floor of the Senate. Public hearings across the country will take place, during which many domestic and foreign interests will table their views before the final reading is held in the lower house. Repeated challenges to the PIB have led to its delayed promulgation, and contentious areas remain, including:
- Foreign oil companies see the PIB as an unwelcome intrusion into their traditional monopoly over the industry and an assault on their stranglehold over production and profits;
- There are concerns that the Host Community Fund, to which oil companies will have to contribute 10 percent of their net profits, may be abused by local governments; and
- The PIB's suggested increased tax terms have been argued by the International Oil Companies to materially decrease competitiveness.