The paper analysed the implications of the politics of the Petroleum Industry Bill for
Nigeria’s socioeconomic development. It employed the qualitative method as its
methodology, in which semi-structured interview was used in eliciting primary data from
suitable respondents along with secondary data from relevant academic works. The paper
found out that the politics of the Petroleum Industry Bill had negatively affected the
operations, productivity, profitability, efficiency and effectiveness of the Nigeria’s oil and gas
industry, on which Nigeria relies to large extent for its upkeep and development. Other
findings include, increased Nigeria’s vulnerability to global oil dynamics and politics,
heightened Niger Delta crisis, reduced oil production, weakened economy and severe social
crisis. The paper recommended that the Federal Government of Nigeria, stakeholders in the
oil and gas industry, civil society organisations and Nigerian citizens should mount pressure
on the National Assembly to ensure a speedy passage of the Petroleum Industry Bill into law,
given the benefits of national transformation and sustainable socioeconomic development
derivable from it and then put an end to the unfortunate reality that it has been on ground for
ten (10) years without being passed into law.
Keywords: Politics, Petroleum industry bill, Nigeria, oil and gas industry, socioeconomic
The Nigerian oil and gas industry has been operating without a standard regulatory
framework upon which its operations and relations with the International Oil Companies
(IOCs), the oil producing Niger Delta, the Nigerian government and citizens are based.
Consequently, this has been retarding the development of the oil and gas industry, both in its
upstream and downstream sectors and this also impedes the overall socioeconomic
development of Nigeria, as it relies heavily on oil earnings (Onuegbu, 2015).
In order to address the foregoing identified problem, the Federal Government of
Nigeria in 2008 during the Yar’adua Administration, initiated the Petroleum Industry Bill
(PIB), designed to provide a sound regulatory framework for the oil and gas industry and
forwarded it to the National Assembly for passage. However, the bill has not been passed into
law and this has had many negative consequences. For this, the research sought to examine
the implications of the politics of the Petroleum Industry Bill for Nigeria’s socioeconomic
The Petroleum Industry Bill (the “PIB” or the “Bill”) is perhaps the most talked about
piece of legislation in Nigeria given the far reaching reforms which it proposes to an industry
which is the single most significant contributor to the national economy. Originally
introduced in December 2008, the bill has undergone numerous revisions and has been the
subject of intense debate. On 18 July 2012 President Goodluck Jonathan presented a new
version of the PIB to the seventh session of the National Assembly for consideration and
enactment (Fagbohunlu and Ikwuazom, 2012).
In an attempt to restructure the oil and gas industry, the Oil and Gas Sector Reform
Implementation Committee (OGIC) was inaugurated on 24 April 2000 under the
chairmanship of Dr. Rilwanu Lukman (then serving as the Presidential Adviser on Petroleum
and Energy). The OGIC was charged with the task of making recommendations for a far
reaching restructuring of Nigeria’s oil and gas industry. The recommendations of OGIC
included a proposal to separate the commercial institutions within the industry from the
regulatory institutions. In 2007, the Federal Government of Nigeria introduced the National
Oil and Gas Policy and re-constituted OGIC to make recommendations towards the
emergence of a new institutional framework to govern the operations of the oil and gas
industry, including the emergence of a new National Oil Company, new regulatory bodies
and a new national directorate, for a more effective policy formulation in the industry
(Fagbohunlu and Ikwuazom, 2012).
Further deliberations of OGIC produced the Lukman Report of 2008 which
recommended a new regulatory and institutional framework that, when implemented, would
guarantee greater transparency and accountability. This report formed the basis for the first
PIB that was submitted in 2008 as an Executive Bill. Among the salient features of the
original version of the PIB were the:
1. Unbundling and commercialization of the Nigerian National Petroleum Corporation
2. transformation of the existing joint ventures between multinational oil
companies and the NNPC;
3. deregulation of the downstream sector;
4. creation of new regulatory bodies; and
5. introduction of a new fiscal regime that sought to increase overall government
The Petroleum Industry Bill (PIB) seeks to revise, update and consolidate existing
petroleum legislation in Nigeria including existing legislation on the taxation of upstream
petroleum operations. The objectives of the Bill are as follows:
1. Creating a conducive business environment for petroleum operations;
2. enhancing exploration and exploitation of petroleum resources for the benefit of
3. optimizing domestic gas supplies, particularly for power generation and industrial
4. establishing a progressive fiscal framework that encourages further investment in the
petroleum industry while optimizing the revenue accruing to the Government;
5. establishing commercially oriented and profit driven oil and gas entities;
6. deregulating and liberalizing the downstream petroleum sector;
7. creating efficient and effective regulatory agencies;
8. promoting openness and transparency in the industry; and
9. encouraging the development of Nigerian content.
To achieve these objectives, the Bill provides among other things for:
1. The restructuring or reorganization of industry, institutions and the regulatory
2. a new fiscal regime for upstream oil and gas production;
3. allocation of Domestic Gas Supply Obligations to licensees; and
4. deregulation of the downstream sector (Fagbohunlu and Ikwuazom, 2012).
Iledare (2007) argues that any oil and gas industry that lacks a regulatory framework
or a law to guide its operations is doomed to fail and the desired optimum value cannot be
derived from the industry. This position clearly reflects the reality in Nigerian oil and gas
industry with so many concomitant consequences for the operations of the industry and
development of the country and well-being of its people. Franks and Nunnally (2011) posit
that no other resource dominates the world economy more than oil. Therefore, any state that
is endowed with it should not fail to put in place the necessary legal, administrative and
institutional mechanisms and structures in order to ensure smooth operations and then overall
sustainable development of the state and its citizens. Unfortunately, this is lacking at the
moment in Nigeria, as the Petroleum Industry Bill is still before the National Assembly and it
has been hijacked by vested interests despite its derivable benefits; if passed into law. This
leaves the Nigerian oil and gas industry without the requisite laws in place to guide its
operations so that it becomes more efficient, effective, productive and profitable.
In buttressing the above position, Ross (2003b) argues that the lack of a standard law
in Nigeria’s oil sector negatively affects Nigeria and most particularly, the teeming poor
segment of the Nigerian population, as some of these poor Nigerians hardly afford three
square meals a day and continue to suffer daily from lack of basic necessities, which are
necessary for a normal life or human existence. Similarly, Ross (2001a) asserts that the
foregoing situation has been undermining Nigeria’s democracy, as the lack of a regulatory
framework in the oil and gas industry has resulted in mismanagement and endemic official
corruption in the industry.
Speight (2011) argues that the supply of energy from different sources has played a
significant role in the history of human culture and this development has enhanced the
comfort, longevity and affluence of human beings. It was in the 20th century that petroleum
became the predominant hydrocarbon energy source and it has been playing an important role
in the advancement of human culture. For Munasinghe (2002), there continues to be a strong
connection between energy and economic activity in most industrialized and developing
countries. It is because of this and other related considerations that world leaders nationalised
their oil industries (Mahdavi, 2014). Mitchell (2011) argues that another strong factor is the
acquisition of power and its deployment to a state’s advantage at both national and
Fagbohunlu and Ikwuazom (2012) argue that the politics and delay in the passage of
the Petroleum Industry Bill retard the growth of the oil and gas industry and this impedes
Nigeria’s progress. Previous studies have shown that Nigeria has been depending heavily on
oil as the mainstay of its economy with implications, especially in the current state of
volatility in the global oil market, caused by geopolitics and collapse of oil prices (Agbaeze et
al., 2015). Therefore, this also calls for the diversification of the Nigerian economy away
from oil to other less volatile sectors, such as agriculture, solid minerals, manufacturing,
aviation and so on even after the passage of the bill (Okoye, 2012).
The research employed the qualitative method, in which both primary and secondary
data were obtained. Primary data were elicited through a semi-structured interview with five
relevant respondents from the National Assembly, oil and gas industry and the public. While,
secondary data were obtained from relevant academic works, especially journal and e –
The qualitative method was used because it was found most suitable for the research
and in this regard, flexibility and coherence in both gathering and analysing the data
featured in the course of conducting the research and this helped in achieving the main
objective of the research. Thematic analysis approach was utilised in presenting the
findings through four major themes.
Table 1: Demographic Profile of Respondents
Respondent A1 is a Senior policy maker at the National Assembly, Respondents B1
and B2 are Senior Nigerian National Petroleum Corporation (NNPC) officials, B1 from
NNPC Headquarters/Towers in Abuja, while B2 from Kaduna Refining and Petrochemical
Company Limited in Kaduna State. Respondents C1 and C2 are active public members from
both the Northern and Southern parts of Nigeria.
Results and Discussion
The findings alongside their implications are presented under the following four
1. Poor Performance of the Nigerian Oil and Gas Industry and its attendant effects:
This reflects the atmosphere of Nigeria’s oil and gas industry, which is also seized by
increased militant attacks on oil installations in the Niger Delta region, thus resulting in
reduced crude oil production and loss of oil revenues. All the 5 respondents (A1, B1, B2, C1
and C2) said that there was an evident disruption in Nigeria’s oil and gas industry and a threat
of industrial disharmony, arising from the downsizing or disengagement of oil workers,
especially those that are working for the International Oil Companies (IOCs), such as Shell,
Chevron and BP (British Petroleum). This, they said, was because of the politics, surrounding
the non-passage of the Petroleum Industry Bill, as this leaves the industry without a standard
legal or regulatory framework to operate.
2. Weakened economy:
The research found out that the non-passage of the Petroleum Industry Bill made to
suffer more from the prevailing game of global petroleum politics and collapse of oil prices,
which had caused a disastrous economic recession, resulting in a serious foreign exchange
crisis, fall in the value or purchasing power of the Nigeria’s currency, the Naira (N) and
galloping inflation. These have all combined to trigger a weakened and distressed economy
alongside a widespread cash crunch or squeeze and all Nigerians are complaining and the
government seems powerless to help or contain the ugly situation. All the five respondents
(A1, B1, B2, C1 and C2) testified to this. Relevant secondary data, as earlier evaluated in the
literature review also confirm this.
Respondents A1, B1, C1 and C2 further stated that politically, there is no order in
place and democracy is seriously being undermined, as Nigerian leaders are becoming
increasingly inefficient, corrupt and improvident, all due to what they have refused to do,
which is to ensure the speedy passage of the bill, given its derivable advantages for Nigeria’s
3. Severe Social Crisis:
Social life had been seriously and negatively affected, as Nigeria and its citizens are
suffocated by skyrocketing youth unemployment, increased abject poverty, hunger and
inequality due to the bad and unwarranted politics, surrounding the passage into law of the
Petroleum Industry Bill (PIB). All the respondents (A1, B1, B2, C1 and C2) unanimously
agreed to this reality by voicing it out.
4. Increased Nigeria’s Vulnerability to Global Oil dynamics, Politics and Collapse of
Under this, all the respondents (A1, B1, B2, C1 and C2) said that Nigeria was
vulnerable to global oil dynamics because it is one country that depends almost solely on oil.
For this, any shock in the global oil system or fall in the price regime would have serious or
even catastrophic impacts on Nigeria, as it is currently facing. However, fundamentally, they
stated that this was as a result of the lack of a sound legal, institutional and administrative
framework in place to help create a buffer for Nigeria’s oil and gas industry and Nigeria.
Furthermore, respondents A1, B1 and B2 further stated that Nigeria was vulnerable
because it is not operating in isolation, as it is a part of the global oil system. And with this,
the Nigerian state needs to do more by putting in place certain techniques or measures to get
out of the problem. The dynamics of the global oil business are also affecting Nigeria, as
there are many contestants coming into the market; as such Nigeria is losing markets, hence
losing oil earnings.
Drawing from the above findings and their implications, it is evident that Nigeria’s
development is in jeopardy, so also the collective well-being of Nigerians. This is because,
Nigerian oil and gas industry, which is the mainstay of the Nigerian economy performs
poorly due to lack of a sound legal and regulatory framework, arising from the politics that
has delayed the passage into law of the Petroleum Industry Bill (PIB), which if passed, would
provide the necessary framework for the industry to be efficient, effective and productive.
The PIB, if passed into law; would protect Nigeria from the ever volatile global oil market
and the dynamics of global petroleum politics as well as price crisis.
The findings of the research include, poor performance of the Nigeria’s oil and gas
industry and its attendant effects, weakened economy, severe social crisis, increased
Nigeria’s vulnerability to global oil dynamics, politics and collapse of oil prices have shown.
The paper gives the following recommendations:
1. Nigeria should diversify its economy away from oil to other viable and less volatile
sectors, such as agriculture, solid minerals, manufacturing, aviation and so on. This
would help revamp the weakened and distressed Nigerian economy and it would
equally reduce Nigeria’s vulnerability to global oil dynamics, politics and fall in
global oil prices, such as, the one currently being experienced with many negative
implications for the oil producing countries, Nigeria inclusive.
2. The Federal Government of Nigeria, together with the 36 states and 774 local
governments should ensure that critical infrastructure is provided, especially regular
power or electricity, which will have positive multiplier effects on the Nigerian
economy and its population.
3. Nigerian governments at all levels, federal, state and local levels, should ingeniously
create social welfare programmes in order to contain the current severe social crisis,
ravaging a significant percent of Nigeria’s teeming population. Rising youth
unemployment, extreme poverty, inequality and insecurity and so on have seized the
social landscape of the country at the moment. Therefore, this calls for an immediate
action to check the ugly trend.
4. Further research could be conducted; when the Petroleum Industry Bill is finally
passed into law on its impacts on the Nigeria’s oil and gas industry and overall
socioeconomic development of Nigeria, as advanced by previous studies.
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