On September 19, 2025, Nigeria announced a transformative shift in its oil sector governance.
A draft amendment to existing legislation proposes transferring oversight of commercial oil contracts from the state-owned Nigerian National Petroleum Company (NNPC) to the Nigeria Upstream Petroleum Regulatory Commission (NUPRC).
This move could fundamentally reshape how Africa’s largest oil producer manages its critical petroleum resources, which form the backbone of its economy.
Why This Reform Matters
The proposed change positions NUPRC as both a regulator and a manager of commercial oil contracts, consolidating significant authority within a single entity.
While this could streamline decision-making and address inefficiencies in the current system, it raises concerns about potential conflicts of interest.
Combining regulatory and managerial roles may compromise impartial oversight, a critical issue for Nigeria, where oil revenue accounts for a substantial portion of national income.
Ensuring fairness and transparency in the sector will be paramount as the government navigates this transition.
Impact on Corporate Governance
Under the current framework, NNPC’s board holds key powers, including approving budgets and shaping strategic decisions for Nigeria’s oil interests.
The amendment would strip NNPC of these responsibilities, transferring them to NUPRC. This shift could diminish NNPC’s autonomy, sparking debates about accountability in decision-making processes.
Stakeholders worry that centralizing authority in NUPRC might obscure transparency, potentially affecting investor confidence and public trust in Nigeria’s oil governance.
Roots in the 2021 Petroleum Industry Act
The 2021 Petroleum Industry Act (PIA) established NNPC’s role in managing commercial oil contracts. However, flaws in the PIA’s structure have allowed significant federal revenues to bypass the national treasury, undermining public finances.
Nigeria’s Attorney General, Lateef Fagbemi, highlighted these issues in a letter to the gas minister, noting that unclear deductions and legal loopholes have led to substantial revenue losses.
The proposed reform aims to plug these gaps, ensuring more robust fiscal contributions from the oil sector.
Addressing Revenue Shortfalls
Fagbemi emphasized that “the drop in oil revenue is largely due to ambiguous deductions and structural weaknesses in the PIA.”
These shortcomings have strained Nigeria’s economy, prompting urgent calls for reform. By shifting oversight to NUPRC, the government seeks to enhance accountability and secure funds critical for national development.
The success of this initiative will depend on its ability to balance efficiency with transparent governance.
What Lies Ahead
If enacted, this amendment could redefine Nigeria’s oil industry, strengthening regulatory control while navigating potential oversight challenges.
Investors, policymakers, and citizens will closely watch how these changes impact transparency, efficiency, and revenue recovery.
As Nigeria strives to stabilize its economy, the reform’s success hinges on maintaining a delicate balance between centralized authority and fair, accountable management.
The coming months will be crucial in determining whether this bold move delivers on its promise to bolster Nigeria’s fiscal future.
READ ALSO: Bolsonaro Hospitalized in Brasilia After Illness, Son Reports
