By Adejumo Kabir
The oil and gas sector in Nigeria has over the years been plagued by weak management, lack of accountability, defective leadership, and reactive regulation, which has made the country further lose ground among the leading oil producing nations.
To address critical challenges in this sector, the Bola Tinubu-led government had introduced reforms aimed at revitalising the industry. While the Petroleum Industry Act (PIA) and recent Executive Orders to reform the sector seem promising, the implementation has been slow, raising concerns among stakeholders, particularly industry players, who argue that the pace of reform has been sluggish and weak.
Recently, Good Governance Africa – Nigeria (GGA-Nigeria) held a public event on the oil and gas sector reforms, presenting the results of our survey on “Investors’ Perceptions of Nigeria’s Regulatory and Policy Reforms in the Oil and Gas Sector” to the media with a focus on promoting sustainable socio-economic development.
Experts at the media presentation and the roundtable discussion outlined critical challenges, explaining that the gaps between policy and implementation remains a major concern for investors.
Halting progress
The survey, which captured perspectives from stakeholders in Nigeria’s oil and gas sector, including consultants, upstream operators, and international investors, portrays a complex picture of reform efforts. The responses provided a comprehensive overview of how both domestic and foreign players perceive the evolving policy environment.
While 75 per cent of the respondents view the reforms positively, citing notable progress in areas such as clearer licensing procedures and increased engagement between regulators and the private sector, concerns persist about policy inconsistency, regulatory enforcement, and macroeconomic instability, which are seen as significant barriers to investment.
Similarly, only 10 per cent of the respondents indicated a “very positive” outlook, as infrastructure challenges, currency exchange difficulties, and perceptions of corruption remain major concerns despite the reforms being steps in the right direction.
Key challenges
The major bottlenecks facing Nigeria’s oil and gas sector reform are weak regulatory capacity and bureaucratic inefficiencies. The regulatory agencies responsible for overseeing the sector seem to lack the necessary capacity to effectively enforce new policies.
This institutional weakness has created an environment conducive to corrupt practices and inefficiency, undermining the government’s reform efforts. The consequences are far-reaching, including inconsistent policy implementation, lack of transparency and accountability, and an unpredictable operating environment for investors.
Unfortunately, the situation is exacerbated by the only partially reformed regulatory structures which further complicate the regulatory process and creates opportunities for corruption and rent-seeking behavior, discouraging investment and also undermining the government’s efforts to promote economic growth and development.
The GGA survey’s findings underscore the need for a sustained effort to address the challenges by building on the progress made so far and addressing the concerns of stakeholders to create a more favourable environment for investment and drive growth in the sector.
Proposed solutions
Despite these challenges, there are still opportunities for progress if the government prioritises strengthening its regulatory framework, enhancing institutional capacity, and promoting a culture of transparency and accountability.
This will require significant investments in human capital, technology, and infrastructure, as well as a commitment to reforming bureaucratic processes and eliminating corruption.
GGA will continue to work with like-minded organisations and industry players to push for meaningful reforms and implementations. As part of efforts to make meaningful contributions, a larger conference on the survey’s findings would be held on 11 September this year, with the theme, “Pitching Nigerian Gas to the World: How to Structure for Success and Unlock Investment in High-Value Gas Project”.
The event will provide a focused platform for Nigerian asset and project owners to understand what global investors look for, and explore how best to structure, position, and present their gas projects to attract the capital needed to unlock their full potential.
By holding the government accountable, advocating for transparency, and accountability, stakeholders will help create an environment that supports sustainable development in the oil and gas sector.
The urgency of now
The oil and gas sector is a critical component of Nigeria’s economy. As the country’s primary revenue source, the sector requires effective management. By scaling up its reform efforts, Nigeria can drive economic diversification and reduce dependence on oil revenue, attract foreign investment to stimulate growth, and foster sustainable development to protect citizens’ interests.
A robust and well implemented regulatory framework will enable the country to navigate the complexities of the global energy market, capitalise on emerging opportunities, and build a more sustainable future.
In conclusion, the government must demonstrate stronger commitment to implementing the reforms and learn from the experiences of other oil-producing countries that have successfully implemented reforms to drive progress.
Stakeholders must continue to push for transparency for the sector to realise its full potential and contribute to the country’s socio-economic transformation.
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Adejumo Kabir Adeniyi is a senior researcher at Good Governance Africa-Nigeria. He is an expert with many years of experience in community development work and governance accountability sector.
