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Misgivings Surround ProposedReform of NNPC and the Oil andGas Industry in Nigeria
May 2009, Volume 22 Issue #5
At the inception of the Yar’Aduaregime, a policy initiative aimed atreorganizing the Nigerian NationalPetroleum Corporation (NNPC) wasannounced. The key aspects of thereform proposal include the creation ofthree regulatory agencies, onecommercial centre, one research andtraining centre, one manpower trainingcentre, two fund organisations, such asthe Petroleum Equalization Fund andPetroleum Technology DevelopmentFund, as well as one frontier explorationservice.The reform proposal would also providefor the conversion of all existing jointventures into Incorporated JointVentures(IJVs). Each IJV will be acorporate entity to be incorporatedunder the laws of the Federal Republicof Nigeria, and the incorporationprocess including capilisation andrestructuring will be carried out throughnegotiations with the respectiveinternational oil companies (IOCs)during the reform transition period.In addition, there is a Gas Master Plan.The Gas Master Plan aims to addresssome of the key challenges confrontingthe Nigeria gas sector, notably that ofinadequate infrastructure andcommercial framework, which has had astrong impact on the ability of the sectorto supply as rapidly as the marketopportunity dictates.In the view of the government, thereform process was informed by the factthat the existing structures in the oil andgas industry are no longer relevant toNigeria, bearing in mind the technologydynamics of the global petroleumindustry. It was odd that thegovernment would announce radicalchanges to the regulation of the oil andgas industry without legislative backingand input by operators in the industry.However, nearly two years after makingnews, the proposals have receivedsceptical appraisals from various sectorsof the oil and gas industry in Nigeria.Indeed, the major misgiving about theFederal Government’s oil and gasreform agenda is that it may burden thealready troubled sector with moreproblems.