• Nigeria may strip NNPC of oil contract control under new bill

• Reform aims to boost transparency, end billions in lost revenue

• Contract role to shift to regulator NUPRC, pending parliamentary approval

Nigeria is preparing a major reform that could reshape its oil sector by stripping the state-owned Nigerian National Petroleum Company (NNPC) of its authority over oil contracts and handing it to the industry regulator.

The proposed legislation, currently under parliamentary review, aims to curb what Justice Minister Lateef Fagbemi called "statutory leakages and opaque deductions" that cost the government billions of dollars each year.

The NNPC has long held a dual role as both a commercial operator and the custodian of oil contracts, a position widely criticized as a source of corruption. While the 2021 Petroleum Industry Act sought to clarify these roles, significant gray areas have remained in practice. By transferring contract management to the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Abuja hopes to improve revenue transparency and strengthen the independence of the regulatory system.

This reform is the latest in a series of changes initiated since President Bola Tinubu took office in May 2023. Other measures include the removal of gasoline subsidies, the full implementation of the petroleum code, the appointment of new leadership at the NNPC, and the adoption of a more attractive fiscal framework for major oil companies. These policies have already begun to revive investment, with over $8 billion in investment commitments secured in the past year, including $5 billion for the Bonga North project.

The effectiveness of this reform, however, will depend on the government's ability to prevent the regulator from becoming both a regulator and a contract manager, which could undermine the system's integrity.

If implemented with rigor and transparency, the reform could solidify the recovery momentum initiated by Tinubu and enhance Nigeria's competitiveness against other African oil producers.

Olivier de Souza