The proposed Petroleum Industry Bill (PIB) will create an opportunity for Nigerian and foreign investors to buy shares in the Nigerian National Petroleum Corporation (NNPC).
The legislation will also modify deep-water royalties, which were revised in 2019, and establish new industry regulatory bodies.
“We have resolved to pass this bill as quickly as possible but let me emphasise that we will not sacrifice thoroughness at the altar of speed,” House of Representatives Speaker Femi Gbajabiamila told lawmakers on Monday.
President Muhammadu Buhari had earlier dispatched the PIB to the senate for legislative assent after he signed it off. The lower parliamentary arm must also endorse the document before it becomes law.
Senate President Ahmed Lawan assured that Buhari’s reaction to the bill would be read to the parliament on Tuesday, adding that it would be accorded an urgency of response.
As the Nigerian government begins the process of privatizing the Nigerian national oil firm, observers continue to raise concerns over the processes.
Some analysts optimistic about the process say the move would rid the NNPC successor company of needless bureaucracy, and make it function much more effectively. Because the successor company will not be a 100% state-owned parastatal, it would have to render transparent financial reports to investors even if, as it is very likely, the Nigerian government remains the largest shareholder.
In recent years, several oil producing economies hoping to improve the operational capacities of state-owned oil firms have opted for injection of private capital via share offering to investors.
Last December, state-owned oil giant Saudi Arabia, Aramco, raised a record $25.6bn (£19.4bn) in its initial public offering in Riyadh; the shares sold amounted to only a 1.5% stake in Aramco.
The share sale was the biggest to date, surpassing that of China’s Alibaba which raised $25bn in 2014 in New York.
The IPO is valued at $1.7tn – short of Saudi’s $2tn target, yet the move made it the most valuable listed company in the world.
The share sale is at the heart of Crown Prince Mohammed bin Salman’s plans to modernise the Saudi economy and wean it off its dependence on oil.
Analysts note that if the process is followed through, external shareholders will significantly improve governance in NNPC’s successor company as they will have a say in how it is run.
However, passing the law, which has taken about two decades, is the first step. Nigeria would have to take steps to list the NNPC on the stock market.
Nigerian investors hope this will not take run into delay.
Despite the proactive measures put in place by the Saudi government, the move to privatize Saudi Aramco went on for almost two years.
The oil giant eventually relied on domestic and regional investors to sell the 1.5% stake after lukewarm interest from abroad.
The PIB has been mired in political intrigues for 20 years, with different governments that have tried to pass it requiring but failing to achieve political support across party and ethno-regional lines. President Buhari has been able to hammer out a PIB which the National Assembly, controlled by his All Progress Congress (APC) party and whose leadership he has handpicked, is expected to speedily pass.
The aspiration of the PIB encompasses transforming the company from a state-owned corporation status to a limited liability firm, into which the Nigerian government will transfer the NNPC assets. The company will run as a commercial establishment that will not be funded by the state. The Nigerian Government will be able to sell shares in the successor company to the NNPC.