

































APPRAISAL OF THE PETROLEUM SECTOR NATURAL RESOURCE 

GOVERNANCE IN NIGERIA* 

      ABSTRACT 

The work seeks to appraise the Nigerian Petroleum sector and the issue of Natural resource 

governance. This issue aggregate to create a situation hereafter referred to as “resource curse”, 

which provides the rational basis for understanding the prevalence of poverty in many 

resource rich countries. It also seeks to interrogates how law, corporate governance and 

institutional restructuring can help reform the Nigeria Petroleum sector to actualize the ideals 

of sustainable industry. The Nigeria Petroleum sector remains an enclave that provides a tiny 

proportion of the overall employment and has relatively few direct linkages with the rest of 

the economy. This to a large extent includes the challenge of transparency and accountability 

in revenue management. 

A Doctrinal methodology, combining primary and secondary sources of information was 

adopted in this work. The key legislations are the constitution of the Federal Republic of 

Nigeria 1999 as (altered), the Petroleum Industry Act 2021, Petroleum Profit Tax Act 2007, 

Audit Act 1956, Fiscal Responsibility Act 2007, Public Procurement Act 2007, and Nigerian 

Extractive Transparency Initiative (NEITI). 

The work finds that Nigeria’s unwholesome reliance on Petroleum and rent seeking has 

created structural imbalances and socio-economic maladies in the economy. And identifies 

the challenges in Nigeria’s quest to institutionalize Natural Resource governance and has 

made policy recommendations with a view to reforming and institutionalizing the practices of 

Natural Resource governance within the Nigeria context. 

The works concludes that good natural resource governance that embodies corporate 

governance is essential to the realization of the laudable objective of the Petroleum Industry 

Act, without which the exploitation of the petroleum resources in Nigeria will not attain its 

desired objective of impacting positively on the other sectors of the economy.  

 
 

____________ 
*Anthony Ndudi MekwunyeLL.B (Hons) LL.M, M.Phil BL, Legal Practitioner, anthonymekwunye@gmail.com 
 

INTRODUCTION  

The Nigerian Petroleum sector is plagued by high incidence of lack of transparency and 

accountability, this menace is so evident that Nigeria is unable to account for the volumes of 

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mailto:anthonymekwunye@gmail.com


crude oil produced, exported and the receipts of the proceeds of sale.1 For instance, it was 

reported that a total of $27,361,347,275 was reportedly lost from the period of January to 

December 20172.This colossal loss has been attributed to a number of factors such as 

discretionary deductions by the Nigerian National Petroleum Corporation (NNPC) from its 

earnings and misappropriation of such funds, improper tax deductions, unpaid Niger Delta 

Development Commission (NDDC) contributions and discretionary award of oil block.3 The 

opaque operation of the sector has made it difficult for the Nigerian Extractive Transparency 

Initiative (NEITI) to effectively track how transparent the operations of the sector have been 

over the years. It appears therefore that the extant governance structure has not been able to 

adequately mainstream issues of transparency and accountability. 

Nigeria continues to face the daunting task of restructuring the petroleum-based economy, 

whose revenues have been squandered through corruption and mismanagement4. The National 

Assembly recently passed the Petroleum Industry Act (PIA).5 Important issues have been 

raised concerning the quality of the PIA framework and its ability to serve as a catalyst for the 

country’s economic development. Does it, for instance embody key natural resource 

governance precepts aimed at re-structuring and positioning the petroleum industry to better 

serve as a catalyst for the country’s economic development. Does it, for instance embody key 

natural resource governance precepts aimed at restructuring and positioning the Petroleum 

industry to better serve the development needs of the country? This is more so when Nigeria 

is compared with jurisdictions such as Norway and Brazil that have through strong 

governance frameworks been able to derive benefits from the exploitation of their natural 

resources while  

 

 

_____________________ 

2
Also, Nigeria lost about $64 million between the second quarter of 2015 and the first quarter of 2017 due to unmetered oil 

wells. See Akintayo, O. (2018) Nigeria lost over $27bn Oil Revenue in 3years' Sweet Crude Reports. Vol 4(55) pp 1-4.See also 
Katsouris, C. and Sayne, A. (2013) Nigeria's Criminal Crude: International Options to Combat the Export of Stolen Oil 
(Chatham House) available at https://chathamhouse.org/publications/ papers/view/194254 accessed 5th May 2021. Where 
the authors indicate that “Nigerian Crude oil is being stolen on an industrial scale. Nigeria losses at least 100'000 barrels of 
oil per day, around 5% of total output, in the first quarter of 2013 to theft from its onshore and swamp operations alone… 
Nigeria’s dynamic, overcrowded political economy drives competition for looted resources. Poor governance has 
encouraged violent opportunism around oil and opened doors for organized crime. “See also Eboh, M. “How Petroleum 
Sector drove Nigeria into Economic Recession “The Vanguard News available at https://www.Vanguard News available at 
https://www.vanguardngr.com/2017/01/ petroleum-sector-drove-Nigeria-economic-recession/amp/Accessed; 29th April, 
2021.  
3Ibid 

                                                                 
11See Okpanachi, E. “Confronting the Governance Challenges of Developing Countries p. 26; See also Saches, J. & Warner, A 

(1995). Natural Resource Abundance and Economic Growth (Development Discussion Paper No. 517). Cambridge, M.A: 
Harvard Institute for International Development; Ross, M. (1999). The Political Economy of the Resource Curse. World 
Politics Vol. 51(2), 297-322; Ross, M. (2001) Does Oil Hinder Democracy? World Politics Vol. 53, 325- 361. 

 

 

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https://chathamhouse.org/publications/
https://www.vanguard/
https://www.vanguardngr.com/2017/01/ petroleum


4 McPherson, H.M. (2009) Governance and Hyper-Corruption in Resource-Rich African Countries Third World Quarterly Vol' 
30(8), 1542. 
5 Act to provide for the Governance and Institutional Framework for the Petroleum Industry and Other Related Matters.” 

 

limiting its negative impacts on the people and environment6. Similarly, to what extent has the 

extant legal and institutional framework which include the Petroleum Act, 19697, (the 

principal legislation) the Nigerian National Petroleum Corporation Act8been able to 

mainstream good natural resource governance practices in the petroleum sector? This is 

premised on the concept that certain technocratic reforms of governance institutions can 

unlock the development potential of the so-called ‘resource dependent states such as Nigeria. 

Thus, governance is constituted and legitimized by institutions.9 

 

Although, the PIA contain laudable objectives, however, addressing the seeming lack of 

political will to mainstream and enforce natural resource governance precepts in the 

petroleum sector and the accompanying institutional competencies is key to realization of the 

ideals of the PIA. 

Nigeria continues to grapple with the transparent management of revenues from the petroleum 

sector. Revenue that accrues from petroleum resources appear to have been captured by 

special interest’s groups, bureaucrats and politicians for their personal benefit as against the 

benefit of the citizenry. This sad state of affairs is attributable to the inability of the 

government to adequately mainstream natural resource governance in the sector. Though the 

industry is plagued with a plethora of issues, thus this paper seeks to focus on three core 

problems bedeviling the sector, due to its particular relevance to socio-economic development 

and sustainability. These problems centre on the legal and regulatory framework which have 

overtime become obsolete and does not adequately mainstream good governance practices; 

secondly, the institutional structures which are inherently weak are unable to enforce good 

governance practices and lastly, the pervading culture of lack of transparency and 

accountability in revenue management has predisposed the sector to corruption. 

The inability of a legal regime to adequately mainstream transparency and accountability is 

indicative of the governance deficits in the management of Nigeria’s natural resource wealth.  

These manifest in form of undue reliance on obsolete laws and regulations, lack of objectivity 

in decision making, poor public access to information, non-disclosure of oil revenues, delays  

 
 

____________ 
6Since 1972 Norway has separated policy, regulatory, and commercial functions in the governments administration of 
petroleum development. This approach particularly its requirement that the national oil company (NOC) only carry out 
commercial activities, has inspired admiration and imitation as the "canonical model', of good bureaucratic design for the 
hydrocarbon sector. See Thurber, M'C and Heller, P.R.P (2011) Exporting the "Norwegian Model” The Effect of 
Administrative Design on Oil Sector Performance' Energy policy Vol 39(9) 5366-5378. However, it is pertinent to inquire 

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whether adopting a blanket approach to the governance of natural resource similar to what obtains in a developed country 
might do more harm than good. 
7Cap P10 LFN 2004 
8
Cap. P123 LFN 2004 

9 Paavola, J. “Institutions and environmental governance: A reconceptualization, Ecological Economics” (2007) Vol. 63(1) 93-
103 

occasioned by multiplicity of approvals and approving agencies at various levels of 

government, poor enforcement, lack of independence and oversight within the relevant 

agencies, inter-agency rivalry and tax evasion on the part of International Oil Companies 

(IOCs). The extant frameworks which include the Petroleum Act,10(the principal legislation), 

and by extension the Petroleum Profit Tax11, the Audit Act12, the Fiscal Responsibility Act, 

2007 and the Public Procurement Act, 2007 which border on the fiscal regulatory 

environment of the Petroleum sector have struggled over the years to properly manage and 

monitor revenue returns from the industry. Thus, the gaps and conflicts existing within these 

extant laws has fostered a culture that lacks administrative and fiscal guidelines, a poor 

enforcement regime and lack of independence and uncertainty. Thus, obstructing transparent 

and accountable resource revenue management. 

Secondly, the question of enforcement of accountability measures is a subset of the broader 

question of quality of institutions. Transparency programmes alone no matter how well 

designed and implemented cannot bring the desired change in the country.  

Improvements in institutions are critically important to lifting the natural ‘resource curse’. It 

is further argued that the extant institutions and management structures within the Nigerian 

Petroleum Industry are weak and lack the requisite independent oversight which are in most 

cases subjected to executive control. Also, these agencies lack the capacity to manage such a 

complex and dynamic industry and do not incorporate adequate international standards of 

transparency and accountability in its framework to allow for sufficient release of information 

or any means of auditing how the funds are utilized. 

Thus, the current industry structure and patterns of regulation are deficit, hence, the challenge, 

with the management of the Nigerian Petroleum Industry (NPI) is how to adequately establish 

independent and capable administrative agencies manned by persons of integrity who work 

within a proper legal framework. This requires institutionalizing the highest standards of 

transparency and accountability in the management process for sustainable development of 

the country. For the purpose of this paper, discussion will focus mainly on the role of the 

National Assembly, the Ministry of Finance, Fiscal Responsibility Commission, (FRC) 

Revenue Mobilization Allocation and Fiscal Commission (RMAFC); The Auditor General of 

the Federation (AuGF); Bureau of Public Procurement (BPP); Nigerian National Petroleum 

Corporation (NNPC), and the Department of Petroleum Resources (DPR) to enthrone 

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resource governance especially in the coordination of crude oil revenue collection. However, 

it will be 
 

____________________ 
10 

1969 Cap P10 LFN 2004 
11 Cap. P13 LFN 2004 
12 

Ordinance Act of 1956, Cap 17 LFN, 1990 

 

discerned that these regulatory institutions have become deputized in relevance in favour of 

the NNPC arising from the NNPCs fund generating power for the government. 

Conceptual Framework  

Understanding the concept of the “resource curse” and its effect on the economy. 

The resource curse thesis affirms the widely held view that countries endowed with natural 

resources, such as minerals, oil and gas, has been less able to develop their economies than 

less endowed natural resource countries. Existing literature on natural resource in Africa has 

made significant contributions towards the understanding of key challenges and prospects of 

the sector, especially with regard to governance-related matters. The “resource curse” 

therefore provides conceptual basis for understanding the correlation or linkage between 

natural resource and poor economic performance. 

The ‘curse’ is an aspect commonly attributed to the governance of natural resource 

exploitation process and the management of the resource rents. Auty13in his seminal 

workstates that the inability to unlock mineral wealth for the benefit of the citizenry in 

developing countries is a phenomenon that has become known as “resource curse” or 

“paradox of plenty”. Flowing from this premise, Sala-I-Martin et al in their empirical work 

provides ample evidence that indicates that natural resource revenue is more likely to lead to 

rent-seeking and corruption in countries that have not developed sufficient quality of 

governance before the natural resource discovery.14Bedeeb et al15opined that the ‘oil curse’ 

has been attributed to countries whose economies are reliant on oil production as opposed to 

other natural resources. However, the success stories of some natural resource-abundant 

countries, such as Norway and Brazil, suggest that the abundance of natural resources is not a 

curse per se, but the inability of the government to manage natural resource wealth is 

responsible for the emergence of the ‘resource curse’ in many resource-rich countries such as 

Nigeria.It is important to distinguish between two key measures of countries natural resources, 

these are: "resource dependence" and "resource abundance". Brunnschweileret al16 define 

"resource dependence" to refer to the degree to which a country actually relies on resource 

revenues and "resource abundance" on the other hand refers to a country's estimated finite 

endowment of subsoil wealth or deposits of minerals, oil and gas.  

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__________________ 
13

Auty, R. M. Sustaining Development in Mineral Economies: The Resource Curse Thesis, London; New York, Routledge, 
1993 
14 

Sala-I- Martin, X and Subramanian, A. (2003) Addressing the Natural Resource Curse: An illustration from Nigeria NBR 
Working Paper Series 9804 Cambridge. Massachusetts: National Bureau of Economic Research. Available at 
<http.www.nber.orglpapers/w9804> accessed 8th March 2021. 
15 

Badeeb, R.M., Lean, H.H. Clark, J. (2017) The Evolution of the Natural Resource Curse Thesis: A critical Literature Survey. 
Research Policy Vol. 51 pp 123. 
16

Brunnschweiler, C.N. Bulte, E.H. (2008) 'The Resource Curse Revisited and Revised: A tale of Paradoxes, and Red Herrings. 
Journal of Environ. Econ. Management. Vol. 55(3) pp.258 -264 

However, it is important to investigate the mechanisms that link resource dependence to poor 

economic performance. Two approaches have evolved as mechanisms to address the link: 

Political and economic. The former being traced to rent-seeking weak institutions and 

corruption and the latter traced to the 'Dutch disease', volatility of oil prices and failures of 

economic policies. These economic and political factors are not unique to resource rich 

economies as they are also endemic to poor resource countries in general. However, Di 

John17holds the predominant view that natural resource economies experience higher levels of 

such factors than non-resource economies. 

Flowing from the above assertions, it can be said that the possession of natural resources is 

not sufficient to confer economic success. However, to incorporate exceptions to the general 

theories of the resource curse, several countries have successfully harnessed their resource for 

the benefit of their citizenry and thereby escaping the "resource curse". Gerelmaa et al18 

investigate these theories and states that resource poor countries such as South Korea, Taiwan, 

Hong Kong and Singapore were among the fastest growing economies, while resource rich 

countries such as Congo, Sierra Leone, Venezuela and Nigeria and some Middle Eastern 

countries exhibited the poorest economic growth. In essence, it can be argued that the 

possession of mineral wealth is not an automatic sentence to the 'curse' as a properly instituted 

governance structures can eliminate to a large extent the resource 'curse'. 

To understand the curse' Humphreys at al19made a distinction as to how resource wealth 

differs from other types of wealth' The authors indicate that, unlike other resources, natural 

resources (i.e., oil, gas and. minerals) do not need to be produced, but only extracted and the 

second key difference of natural resource wealth stems from the fact that they are non-

renewable. Karl20 follows the distinction by indicating that oil and gas occurs relatively 

independently of other economic processes and does little to create employment. To him, oil 

and gas is capital intensive and the skills required for these jobs usually do not fit the profile 

of a country's unemployed. Similarly, Ross21 indicates that authoritarian regimes in resource 

rich states can rely more on resource rents than tax revenues, which correspondingly weaken 

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public demand for democratic accountability, thus the ease of appropriation of resource rents 

by those in power mediates the  
 

________________________ 

17
Di John, J. ‘Is There Really a Resource Curse? A Critical Survey of Theory and Evidence (2011) Glob.Gov, Vol.17(2) pp. 167-

184. 
18 

19
Humphreys, M. Sachs, J. Stiglitz, J.E. Escaping the Resource Curse, (Columbia University Press, New York, 2007) page?. 

20
Karl, T.L. (2005) Understanding the Resource Curse in Covering Oil: A Reporters Guide to Energy and Development, In: 

Tsalik, S. Schiffrin, A. (ed) Open Society Institute, New York pp 2l-27; Karl, T.L. (2007) Oil -led development: Social Political 
and Economic Consequences. Encycl. Energy Vol. 4 pp. 661 - 672. 
21Ross, M. (2001) Does Oil Hinder Democracy? World Politics Vol.53 (3)pp.325-361;Ross,M.(2007)How Mineral Rich States 
Can Reduce Inequality in Escaping the Resource Curse, In: Humphreys M, Jefferery, S.D and Stiglitz, E.J (eds) Columbia 
University Press, N.Y. pp 236-255.  

resource dependency relationship.  

This implies that countries with an abundance of minerals or hydrocarbons can exhibit 

comparatively high levels of poverty and inequality and economic under-development as a 

result of its enclave nature which is highly situated in the hands of experts, mostly 

International Oil Companies (IOCs). In addition, deteriorating environmental quality, 

institutionalized corruption, the increased frequency of conflict and war, child malnutrition 

and adult illiteracy are vulnerabilities that most resource rich countries face.22 

Natural Resource Governance 

The meaning of good governance has never really been clearly articulated. However, 

according to Doornbos,the concept of 'good governance' became prominent in the early 1990s 

and substituted the structural adjustment term as the ideal concept for aid conditionality23. He 

further indicates that though by extension it signifies sound administration and management, 

in another logic it allowed the "depoliticization of the development process, turning 

fundamentally political issues into objective judgement on what is good and bad"24. Similarly, 

Mkandawire suggests that the concept has been devoid of politics or purely administrative at 

all but rather "good governance has often been used as a signifier for the same macro-

economic policies as those previously termed structural adjustment and an instrument for 

ensuring the implementation of adjusted programmes.25Bourgouin et al indicates that the 

extensive literature on the resource curse extensively adopts the framework of good 

governance often linking political science with institutional economics which highlights 

mechanisms to link resource curse. 

AccordinglyOkoli et al suggest that: - 

governance is arguably, the most crucial challenge of government and politics 

in contemporary states. "It refers to the capacity of the state to develop and 

leverage civic synergies to enable her effectively oversee its jurisdiction, 

enforce its values, implement its policies, control its population, as well as 

harness and exploit its resources for the advancement of the common good.27 
 

 

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__________________ 
22

Though the literature is voluminous, the seminal works are Auty, R.M. Sustaining Development in Mineral Economies: The 
Resource Curse Thesis' New York Oxford University Press, 1993; Karl, T.L. The paradox of Plenty: Oil booms and petro states 
Berkeley: University of California Press, 2001; Ross, M.L. Does Oil hinder democracy? World Politics 53(3); Ross, M.L. The oil 
curse: How Petroleum wealth shapes the development of nations @Princeton: Princeton University Press, 20 1 2).  
23

Boschini, A. Peterson, J, &Roine, J. (2013) The Resource Curse and its potential reversal. World Development Vol. 43. pp 
19-41. 
24

Ibid. 
25Mkandawire, T, (2007) Good governance: the itinerary of an idea. Development in Practice. vol 17 (4-5) p. 253-276 
outcomes to poor institutions, mostly concerning rent-seeking behaviour by political elites. 
26Bourgouin, F. et al (2013) From good governance to the contextual politics of extractive regime change. In: Jewellord N.S. 
et al (ed) Resource Governance and Developmental States: Critical International Political Economy Perspectives. Macmillan 
Distribution, England. P 87 - 104. 
27 

Okoli, A.l. and Uhembe, C. A. (2015) 'Crisis of Natural Resource Governance in Nigeria's Extractive Industry: Examining the 
Phenomenon of Artisanal Mining/Quarrying' Global Journal of Human-Social Science. Vol l5 (5). 

 

Similarly, Roba et aldefinegovernance as a system of engendering control and regulation in 

any public domain to encompasses governmental and non-governmental measures geared 

towards ensuring guided and regulated life in governmental, civil and corporate practices.28 

The European Commission define Good governance as going beyond tackling corruption; it 

includes such things as "access to health, education and justice, pluralism in the media, the 

functioning of parliament and the management of public accounts and natural resources".29 

Oviedo, in his articlecontextualizes governance in the extractives, where he indicates that 

without adequate governance mechanisms, conflicts over natural resources are often 

accentuated, as different sets of actors seek to utilize resources based on their specific needs 

or priorities.30 
 

Flowing from this, Roba et al define natural resource governance as the 

 rules and regulations that determine (or govern) natural resourceuse and  

 the way these rules and regulations are developed andenforced. It is thus 

 about relationships and who has the power andresponsibility to make and  

 implement decisions.31 
 

The authors also indicate that Natural resource governance 

 refers to the application of the governance concept and principlesin  

 determining how natural resources are exploited and utilized byrelevant  

 stakeholders. It encompasses norms, rules, institutionsand mechanisms  

 that regulate the decisions and conducts ofgovernments, organizations  

 and individual stakeholders in relationto natural resource access, control,  

 allocation, exploitation anduse.32 
 

However, Grant et al in their article titled New Approaches to the Governance of Africa's 

Natural Resources' takes a narrower approach to Natural Resource Governance and indicates 

that rather than focus the governance of natural resources with actors (state and non- state) 

involved in the process, it should be more aligned to the fundamental rules that guide 

themanagement of natural resources. The authors indicate that policy prescriptions should not 

focus on a change in actor behaviour but towards improving resource governance.33 

 

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___________________________ 

28
Roba, G. Gibbons, S.S. and Mahadi, Y.Y. (2013 'Booklet l: Strengthening natural resource governance in Garba Tula' 

International Union for the Conservation of Nature (IUCN) <http://www.fao.org/fileadmir/ user_upload/drought/docs/ 
Handbook% 201%20Strenglhening%20 natural%0202resource%20governance% 20in%20GarbaTula.pdf> accessed 10 May 
2021. 
29

 The European Commission (2006) 'Governance in the Consensus on Development' <http://eur-lex.europa.eu/legal-
content/EN/TXT/?uri: URlSERV%3Ar13012>. accessed 10th May 2021. 
30

 Oviedo, G. "Improving Governance of Protected Areas for Conservation and Equity." Cited in Surkin, J. Natural Resource 
Governance, Empowerment and Poverty Reduction (IUCN Gland, 2011) <https://cmsdata.iucn.org /download Vdfid 
governance_lessons_final.pdf). accessed 20

th
 May 2021. 

31 Roba, G. Gibbons, S.S. and Mahadi, Y. Y. (2013) 'Booklet l: Strengthening natural resources governance in Garba Tula" 
international union for the conservation of Nature (IUCN) http://www.fao.org/fileadmin/user upload/drought/dice/ 
Handbook & 201%20 strengthening %20 natural %20resource%20governance%20in%20 Garba Tula.pdf^ accessed 24th 
November 2021. 
32

Ibid. 
33

Grant, A.J. et al (2015) New approaches to the governance of Africa's natural resources. In: Grant, J.A. (ed) in New 
Approaches to the Governance of Natural Resources: Insights from Africa. Macmillan Distribution, England. Pp.4. 

 

Cambell in her book gives a more contextualized approach to the notion of 'governance' and 

posits that many approaches to governance are problematic as they "presuppose the existence 

of a presumed consensus concerning the choice of good administrative procedures which 

draw in management techniques"34 The author further asserts that governance has been based 

upon criteria that has become universally accepted, which now serve as the basis upon which 

various governments are to conform to reform their institutions. Building support on 

Campbell's theory, it is opined that a criterion for governance that adopts a neo-liberal 

strategy as the universal as opposed to a homogenous approach to governance can be 

detrimental. It is posited that the criterion for a system governance should take into 

consideration the problems reminiscent in the Nigerian Petroleum Industry NPI) given the 

highly volatile and historical resource landscape by mainstreaming and situating a more 

contextualized approach to NRG in Nigeria. 
 

Does the Existing Legal Regime Governing the Petroleum Sector MainstreamNatural 

Resource Governance? 

The ambition to develop oil and gas activities continues to determine what policy instruments 

governments formulate in the process, thus the legal framework represents the most basic and 

fundamental of institutions for managing natural resources. Legal regulations establish the 

government's authority over the resources on its territory35determine the rules on how those 

resources will be extracted and produced, and who can reap benefits from resource use and 

who must bear and mitigate the costs. They also establish the bureaucratic agencies that are 

responsible for implementing and enforcing the rules on resource use, guarantee property 

rights, create accountability mechanisms and prevent corruption in resource management. 
 

 An assessment of the Extant Legal Framework 

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The promulgation of the Petroleum Act of 1969 was a landmark in the history of petroleum 

legislation in Nigeria. Its importance, amongst others, like its predecessor is that it provides 

that the entire ownership and control of all petroleum in Nigeria is vested in the Federal 

Government of Nigeria. It also revised all the terms and conditions under which pre-1969 

concessions were granted and repealed the Minerals Oil Ordinance of 1914.  

 

The Act wasorganized into five parts: Oil Exploration Licenses (OEL), Oil Prospecting 

Licenses (OPL) and Oil Mining Licenses (OML); Rights of Pre-Emption; Repeals, 

Transitional and Savings Provisions.  

 

______________ 
34Campbell. B.K (2013) Modes of Governance and Revenues Flows in African Mining. In: Campbell. B'K "(ed) Modes of 
Governance and Revenue Flows in African Mining. Macmillan, England. p 3. 
35See s.40(3) of the 1979 constitution; s. I of the Petroleum AcL,1969 Cap P10 LFN 2004. 

The position of the federal government as the owner and controller of oil in Nigeria is further 

enshrined in both 1979 and 1999 Constitutions.36 

 

In a bid to manage the oil industry, the federal government of Nigeria established the NNPC 

in April 1977 to succeed its predecessor the Nigerian National Oil Company (NNOC). The 

NNPC has the mandate to manage the operational aspects of the oil industry in Nigeria, and in 

1988 was decentralized into twelve strategic business units covering the entire spectrum of the 

corporation's operations: exploration and production, gas development, refining, distribution, 

petrochemicals, engineering, and commercial investments. Between 1978 and 1989, the 

NNPC constructed refineries in Warri, Kaduna and Port Harcourt, these Downstream 

Operations of the NNPC cover oil/gas conversion into refined and petrochemical products and 

took over the 35,000- barrel Shell refinery established in Port Harcourt in 1965.37 Over the 

years, the operations and activities of the NNPC have centred around coping with challenges 

of dealing with developments in the oil industry, particularly with regards to its operations 

and products. However, the extant legislation still governs new developments that have 

metamorphosed since the discovery of oil in 1956. The dissatisfaction with the performance 

of NNPC, symptomized by corruption, decaying infrastructure and inadequate refining 

capacity, has fueled the debate on the theoretical and holistic overhaul of the oil and gas 

sector, particularly the legal framework which has become obsolete. This calls to question 

how a law that was promulgated in 1969 can effectively cater to the vagaries of a dynamic 

and complex industry and ensure good governance and better management of Nigeria's 

resources. Akinrele in his article38indicates that the extant policy structures which may have 

been suitable at the time, have failed to extract maximum benefits for the country and has 

fueled corruption and helpederode institutional integrity. 

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The author further indicates what has led to a wide variety of well-documented failures 

including: the waste of natural gas resources through routine flaring; an inflexible tax regime 

which has led to the need for extra-legislative Memorandum of Understandings (MOUs); 

inefficiencies and lack of clarity in the downstream petroleum products sector; and an 

unsustainable joint venture funding model, amongst other issues.39 
 

 
________________ 
36 

See Second Schedule, Exclusive Legislative List, item 39,1999 Constitution.; A significant milestone in the history of 
ownership of oil and gas in Nigeria was reached in 2002 when the Supreme Court held that the seaward limit of littoral 
states was the low-water mark of the land surface, and therefore, littoral states could not derive revenues from natural 
resources (including oil and gas) located beyond the low-water mark. Attorney General of the Federation v Attorney General 
of Abia State (2002) 6 N.W.L.R (Part 764) 542. 
37 

Ibid 
38

Akinrele, A. A. (2014) Transparency in the Nigerian Oil and Gas Industry Journal of World Energy Law and Business Vol. 7(3) 
p.220-235. pp233 
39

 Ibid 

The Campaign for the deregulation of the oil sector presents a contextual review and a good 

starting point of the enormous challenges facing the sector, as the downstream sector 

constitutes a key source of energy to consumers and incidentally where enormous corruption 

in the sector has been revealed.40As pointed out by Akinola et al41 the Nigerian downstream 

oil sector has been characterized by crises ranging from ineffectiveness, to fuel scarcity, 

corruption and maladministration. Thurber et al42observed that the deregulation policy suffers 

mostly from the wide resentment from majority of Nigerian’s especially as it bothers on the 

removal of subsidy, which is an essential requirement of the deregulation policy. Similarly, 

Gilles43 Opines that the licenses for exporting crude oil and importing refined products is 

opaque and highly discretionary.  

Similarly, Bello44 alleges that NNPC officials in collaboration with politicians distribute 

such licenses both for individual gain and to buy support for politicians in the legislature. 

Thurber et al states that if regulation is limited to oversight and supervisory functions, aimed 

at guaranteeing quality of products and preventing consumer exploitation, then the process 

of deregulation could help achieve greater cost effectiveness.45 The author further indicates 

that to achieve an appropriate deregulation policy, Nigeria's resources need transparent and 

accountable management, thus Government commitment to accountability, corporate 

governance and responsibility are core values in rebuilding the trust of Nigerians in 

deregulation and subsequent reforms.46It is opined that the Petroleum Act does not engender 

accountability and the prevention of corruption in resource management as it is largely 

ineffective and inefficient to foster integrity, openness and accountability. Thus, though the 

review reveals the clamour for deregulation, it is submitted that deregulation without a 

structured policy and an appropriate law in place will only make the exercise futile and open 

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to corruption. The passage of the petroleum Industry Bill (PIB) is therefore expected to help 

revise, update and consolidate extant petroleum related legislations. The commencement of 

the Petroleum Industry Act, 2021 provides legal, governance, regulatory and fiscal  
 

___________________________ 

40 
The downstream sector of the oil and gas is currently partially deregulated making it difficult for prices for petroleum 

products to be market determined. The sector was regulated with government maintaining a monopoly of supply of 
petroleum products and few oil majors dominate it. The dominance of these firms in the market has made the petroleum 
market industry in Nigeria an oligopolistic one. 
41

 Akinola, O.A and Wissink, H. (2017) Public Sector Performance in the Nigerian Downstream Oil Sector A Critical Reflection. 
Journal of Asian and African Studies. Vol. 53(3) , 476 - 490.  
42

Thurber, M.C. Oil and Governance: State- Owned Enterprises and the World Energy Supply. (Cambridge University Press, 
2011) ,737. 
43

 Gilles, A. (2009) "Reforming Corruption Out of Nigerian Oil? Part One: Mapping Corruption Risks in Oil Sector Governance 
CMI U4 Brief. Cited in Thurber, M.C. (n 42) ,737.  
44

 Bello, O. Political Patronage Dashes Bid to Reduce Diesel Price. Business Day. 6 October 2008. Cited in Thurber, M.C. Ibid 
p.737. 
45

 Ibid. 
46

 Ibid. 

framework for the Nigerian Petroleum Industry, and the development of host communities. It 

also provides for the establishment of the Nigerian upstream Regulatory Commission to deal 

with technical and commercial regulatory functions of the commission.The objective of the 

commission is to deal with the upstream Petroleum operations, promote healthy, safe, 

efficient and effective conduct of upstream petroleum operations in an environmentally 

accepted and sustainable manner. It also set, define and enforce approved standards and 

regulations for design, construction, fabrication, operation and maintenance of plants, 

installations and facilities used or to be used in upstream petroleum operations. 

The Act also established the Nigerian midstream and downstream petroleum operations, 

including technical, operational and commercial activities and ensure implantation of 

environmental policies, laws and regulations for midstream and downstream petroleum 

operations. The effectiveness of these bodies is yet to be seem as what the law did was to 

separate the functions and personals of the Department of Petroleum Resources into these 

bodies for effective implementation of government policies.         
 

The Lack of independence and the requisite capacity in the existing institutional 

structures within the Nigerian Petroleum Sector. 

Another set of arguments for the resource curse focuses on institutional quality. Several 

studies have investigated the role of institutional quality and found that natural resource curse 

can be avoided if institutional quality is sufficiently high. North47defines institutions as a set 

of formal rules and informal conventions -that provide the framework for human interactions 

and shape the incentives of members of society. 

Hodler48 indicates that resource rents are thought to bring not only conflict but also corruption 

and downward pressures on institutional quality. Similarly, Auzer explains that in petro-states, 

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government institutions may either be the main contributing factor to a 'resource curse', or a 

'blessing'49 

In the same vein, Torner et al50 consider weak institutions responsible for the slow growth 

experienced in Nigeria, Mexico and Venezuela after oil was discovered in these countries. 

similarly, Sala-I-Martin et al51 found that corruption that emerged after the discovery of oil 

was responsible for the slow growth experienced by Nigeria and natural resources exert a 

negative  

 

______________________ 

47
North, D. (1991), Institutions" Journal of Economic Perspectives Vol.(l) pp.97-112 

48
Hodler, R. (2006) The Curse of Natural Resources in Fractionalized Countries Eur. Econ Rev Vol 50(6) p' 1367 - 

1386. 
49 

Auzer. K.A (n. a\P.22. 
50 

Tomell, A. and Lane, P.R. (1999) The Voracity Effect' Am' Eon' Rev Vol' 89 p 2246' 
51 

Sala - I - Martin et al (n 38). 

 

and nonlinear impact on growth via their negative impact on institutional quality. Alexeev et 

al52 treat institutions as endogenous and show that previously found negative effects of natural 

resources wealth on the quality of institutions are likely to be spurious because of the positive 

link between GDP and natural resources. Mehlum at al53 argue that institutions are decisive 

for determining whether resource revenues bring a curse or a blessing. Thus, the quality of 

government institutions can determine the impact of resource revenues on the economic 

performance of resource abundant countries. They suggest that a 'grabber friendly institution' 

may lead to economic stagnation and in turn low growth. In effect, Auzer, states that the 

quality of pre-existing institutions may have an adverse effect on the impact of natural 

resources on growth, whilst resource abundance may also have an effect on institutional 

quality, leading to ineffective governance through rent seeking corruption and patronage.54 

 

Osahuee55 states that decades of elite corruption, misrule and lack of enforced regulations 

have successfully crippled this giant and potentially debarred the potential benefits of its 

natural resource wealth from trickling meaningfully to the vast majority of its suffering 

masses. Thurber et al aptly describe the NNPC thus: 
 

...despite its formal organization as a vertically integrated oil 

 company, NNPC is neither a real commercial entity nor a meaningful oil 

operator. It lacks control over the revenue it generates and thus is unable 

to set its own strategy. It relies on other firms to perform essentially all 

the most complex functions that are hallmarks of operating oil companies. 

Yet unlike some NOCs it also fails to fit the profile of a government 

agency: its portfolio of activities is too diverse, incoherent, and beyond 

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the reach of government control for it to function as a government policy 

making instrument. 
 

Similarly, Nwokeji56has described the role assigned to the NNPC as at one time or another 

included managing the interests of the Federal Republic of Nigeria in the oil and gas industry, 

making input into industry policy, performing regulatory functions and driving Nigeria's 

economic, industrial and technological development. However, the author also states that 

what  

 

___________________ 

52 
Alexeev, M and conrad, R. (2009) The Elusive curse of oil. The Review of Economics and Statistics. Vol 91 (3) p. 

586-598; Alexeev el at (1Otl) The Natural Resource Curse and Economic Transition' Economic Systems Vol. 35(4) 
P 445-461. 
53

Mehlum, H. Moene, K. Torvik, K. (2006) Institutions and the Resource Curse Econ. Journal Vol. 116 (508) P.1-
20. Cited in Auzer, K. K. (n.48) 
54

Auzer (n 48) p. 23. 
55 Mark C. Thurber et al, NNPC and Nigeria’s oil Patronage ecosystem in David G Victor et al (eds) Oil and Governance: State 
Owned Enterprises and the World Energy Supply (Cambridge University Press, 2010) ,701. 
56 Nwokeji. G.U. The Nigerian National Petroleum Corporation and the Development of the Nigerian Oil and Gas Industry: 
History, Strategies and Current Directions. The James A. Baker lItr Institute for Public Policy and Japan Petroleum Energy 
Center, 2007. 

 

behoves the corporation is marked by a struggle over what the corporation controls and who 

owns what.57 Flowing from the above, studies have shown that States involvement in 

petroleum production in oil producing countries through national oil companies to be a 

determining factor for increased corruption among officials related to the oil and gas sector. 

Arezki et al58 indicate that the ownership structure of oil and petroleum industries plays a 

major role in the existence of corruption in the resources sector. Whilst, Cameron et al59 

emphasize that an understanding of the kinds of organizational structures that are typical in 

the oil and gas are imperative and without sound knowledge of standard approaches to oil and 

gas governance, governments efforts to make the sector work and to achieve social and 

economic benefits may have limited outcomes. 
 

To emphasize what obtains within the NPS, Nwokeji identifies that the DPR is backward 

compared to the NNPC and instead of strengthening the regulator it has been placed under the 

administrative control of the National Oil Company (NOC).60Nwokeji further noted that the 

DPR had been in place before the NOC in 1971, whilst the NOC was formed in 1972 as a 

requirement for Nigeria joining OPEC, in effect the regulator was a Nigerian initiative, while 

the NOC came on stream as an externally instigated element.61 

This was also well reiterated by Onuoha where he stated that in practice, the NNPC is still in 

charge of producing oil and simultaneously regulating the industry.62 

 

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The NNPC's capacity can be measured by the quality of the extant legislative framework, thus, 

the Petroleum Act and its ability to serve as a catalyst for the country's economic development 

may run counter - productive in promoting good natural resource governance, going by the 

assertions of Thurber, Nwokeji and Onuoha as the extant framework does not make 

provisions for the NNPC as a regulator. It can be fair to assert that a law meant to create 

accountability and prevent corruption in resource management is largely ineffective and 

inefficient and does not foster integrity, openness and accountability. 
 

Within the Nigerian Oil and Gas sector, various divisions and subsidiaries overlap in terms of 

responsibilities and a lack of clarity of roles exist. Nwokeji63 identifies this overlap in  
 

___________________ 

57Ibid. 
58

Arezki . R. Bruckner, M. (201l) Oil rents, corruption and state stability: evidence from panel transgressions. Eur. Econ Rev 
Vol. 55. p955-963. 
59

Cameron, P.D and Stanley, M.C. Oil, Gas and Mining: A Sourcebook for Understanding the Extractive Industries. 
International Bank for Reconstruction and Development, 2017. 
60

Nwokeji, U.G. (n 56) p.27 
61 Ibid 
62

Onuoha, A. (2005) From Conflict to Collaboration: building peace in Nigeria's oil producing communities. London: Adonis 
& Abbey Publishers. Cited in Perouse De Monclos, M.A. (2014) The politics and crisis of the petroleum Industry Bill in 
Nigeria. Journal of Modern African Studies Vol. 52(3) pp.403 -424. 
63Nwokeji, U.G (n 56) p.27. 

 

responsibilities, when he states that the Integrated Data Services (IDS), duplicates the work of 

National Engineering & Technical Company (NETCO) by offering petroleum engineering 

services, the National Petroleum Investment Management Services (NAPIMS) impinges on 

the core of Exploration and Production functions of Nigerian Petroleum Development 

Company (NPDC) and thereby stretches the NAPIMS technical manpower too thin. This 

comes with the anomaly of combining regulatory, commercial and operational functions into 

a single body. Also, Akinola et al notes the lack of clarity between the regulatory roles of the 

Department of Petroleum Resources (DPR) and the Petroleum Products Pricing Regulatory 

Authority (PPPRA).64 

Similarity, Nwokeji indicates that splitting of qualified personnel into various agencies 

duplicating one another's regulatory function, with none maintaining a critical mass is a factor 

of NNPCs under performance in regulation.65 

 

 

Thuberet al make some principal observations of the NNPCs and the Nigerian Oil sector, the 

authors indicate that the company is a sector manager and quasi regulator, using the approval 

authority of National Petroleum Investment Management Services (NAPIMS) to assert 

control over IOCs. Secondly, Thurber asserts that the NNPC is a buyer and seller of oil and 

refined petroleum products and plays an operational role in upstream, downstream and gas 

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transport activities and a service provider to the Nigerian oil sector, without been effective in 

any of the various oil sector jobs66Nwokejifurther states that 
 

the historical lack of success in establishing an independent regulator despite 

outward efforts is part of a pattern of lurching reform that does nothing to 

substantially alter the functioning of the petroleum sector. Incidentally, 

initiatives to reform NNPC and the oil sector have been put forward by many 

Nigerian presidents, mainly focusing on organizational forms, leaving intact 

basic power dynamics, institutional dysfunctions anddeficiencies in human 

capacity that support the status quo...the NNPC is a struggling corporation, 

constrained by internal weakness, such as institutional frailties and corruption 

and externally imposed burdens, such as interventions by political leaders and 

sundry socio-political obstacles...the NOC has lagged behind its counterparts 

in other countries, such Brazil, Venezuela, Malaysia, and Indonesia, even 

lagging behind with its African counterpart Angola's Sonangol which is being 

justifiably celebrated. There is now a clear recognition of the structural 

weakness of the Nigerian oil and gas industry and the corresponding 

weaknesses of NNPC'.67 
 

_____________________________ 

64 
Akinola et al (n 41) p.477  

65 Nwokeji, U.G. (n56). 
66

 Thurber, M.C. Oil and Governance: State- Owned Enterprises and the World Energy Supply. (Cambridge University Press, 
2011) ,737. 
67

Nwokeji U.G (n. 65) p 88. 

 

Finally, Thurber indicates that the NNPC has become an instrument of patronage as a 

result of its being unsuccessful in developing its capability in oil.68 The author further 

states that 

... this in not unconnected to the complexity and bureaucracy of NNPC processes 
which provide ample opportunity for distribution of favours, with 
 

each approval step representing a transaction process that benefits a network 

of associates and more worrisome is that top jobs in the NNPC are dispensed 

to politically favoured individuals with the rotation of NNPC board members 

based on regional basis in line with regional structure of Nigeria's patronage 

network and consequently making it difficult to effect sustained positive change 

within the organization especially when the GMD changes with each 

presidential election".69 
 

From the aforementioned reviews, it is observed that various authors have limited the 

discussion of institutional quality in the petroleum sector to the role of the NNPC.  

However, it is posited that several institutions that go beyond the NNPC have the collective 

responsibility to ensure transparency and accountability in the governance of the Petroleum 

revenue. Institutions such as the Federal Inland Revenue Service, Fiscal Responsibility 

Commission, Revenue Mobilization and Fiscal Allocation Commission (RMFAC) Public 

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Procurement Commission, the National Assembly, Ministry of Finance, Department of 

Petroleum Resources are institutions that have contributed to the failure of petroleum revenue 

governance. These institutions lack poor institutional governance and have become moribund 

due to weak enforcement of laws, obsoleteness and lacking in the requisite capacity and have 

not been able to adequately monitor revenue from the NPI. However, the writer supports the 

view that the NNPC has failed to screen out its operational autonomy to avoid political 

capture. Thus, rather than limiting the scope of this work to the NNPC, the paper rather 

prefers to take a broader approach by reviewing other institutions which have a collective 

responsibility to ensure transparency and accountability in petroleum revenue management 

within the Nigerian Petroleum Industry. (NPI) 

The observance of good natural resource governance practices as a catalyst in  

enhancing transparency and accountability in petroleum revenue management 
 

Most relevant to this discourse are twin concepts of 'transparency' and 'accountability' which 

have become an integral part of the global governance agenda. Acosta70 notes the existence of 

global Initiatives such as the Publish What You Pay (PWYP) coalition and the 'Extractive 

Industry Transparency Initiative (EITI) which were formed to promote improved accountable 

systems for the management of natural resources revenue and to promote greater transparency  

 
_____________ 

68 
Thurber, M.C. Oil and Governance: State- Owned Enterprises and the World Energy Supply. (Cambridge University Press, 

2011) ,737. 
69 

Ibid. 
70

 Acosta, A.M. (2013) The Impact and Effectiveness of Accountability and Transparency Initiatives: The Governance of 
Natural Resources. Development Policy Review Vol. 31 (Sl): s89-s105. Pp.94. 

 

and timely disclosure of government information through the creation of multi stakeholder 

monitoring bodies and civil society actors, amongst others. The objectives of transparency 

and accountability forms the pillars of good corporate governance in any sector. However, 

poor mainstreaming on the part of the government particularly in the Nigerian oil and gas 

sector has come as a result of high rentierism that has further encouraged the sector to remain 

opaque thus fueling the incessant degree of corruption. Thus, the opaque relationship between 

the Federal Government and the Nigerian National Petroleum Corporation has created 

transparency and accountability concerns with incessant accusations of mismanagement and 

corruption in the sector. 

The importance of transparency was established by Kolstad et al where the authors 

categorically state that transparency reduces the possibilities of rent-seeking activities and 

increases the accountability of the government.71 To address Nigeria's efforts in curbing 

corruption and enforcing transparency in the sector and if implementation has been able to 

curb the tide of corruption, Idemudia72 observes that institutions and new laws have been 

established to address the resource curse and fight corruption. These include the Independent 

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Corrupt Practices and Other Related (ICPC) in 2000, Economic and Financial Crimes 

Commission (EFCC) in 2002 and the Fiscal Responsibility Act in 2007. However, the author 

opines that notwithstanding these initiatives to curb corruption, corruption still remains 

prevalent in the sector.73 It is posited that fighting the 'resource curse' or corruption within the 

Nigerian Petroleum Sector goes beyond the implementation of anti-corruption laws, such as 

the EFCC and the ICPC but rather what is imperative is the reform of existing laws to make it 

more compliant to the dynamics of the sector, such as the Audit Act and the Petroleum Act. 

Notwithstanding, Idemudia et al in another article74 also attributes the limited success of these 

initiatives to the problem of "structural formalism" or the idea that since these agencies and 

laws are managed and implemented by government officials that benefit from corruption, 

their implementation is often uneven and subject to governmental interest andcapture.  
 

This perhaps adequately captures the lack of pro-activeness in implementing laws as opposed 

to just promulgation. Again, Akinrele also states that Nigeria has in the last 15 years 

introduced a plethora of new legislation, guidelines and policies aimed at promoting higher 

standards of 

 
________________ 

71 Kolstad, I. and Wiig, A. (2009) Is Transparency the Key to Reducing Corruption in Resource- Rich Countries. World 
Development Vol.37 (3) 521 -532. pp. 524. 
72Idemudia, U. (2012) The Resource Curse and the Decentralization of Oil Revenue: The Case of Nigeria" Journal of Cleaner 
Production Vol. 35 p. 183 -193. pp. 185. 
73 Ibid 
74 

Idemudia, U. Cragg, W. Best, B. (2010) The challenges and opportunities of implementing the integrity pact as a strategy 
for combating corruption in Nigeria's oil rich Niger Delta region. Public Administration and Development Vol. 30 (4),277-290. 

 

governance and accountability in the business sector of which the petroleum sector forms the 

substantial subset.75In addition, he states that the Freedom of Information Act 2011, Nigerian 

Extractive Industries Transparency Initiative Act 2007, Code of Conduct Bureau and Tribunal 

Act l99l, the 1999 Nigerian Constitution, Advanced Fee Fraud and Other Related Offences 

Act 2006, Money Laundering (Prohibition) Act 2011 and the Public Procurement Act 2007 

are all legislation that promote accountability. However, he posits that there remains the 

challenge of implementation and enforcement, such as political interference and an inefficient 

judiciary which present obstacles to proper enforcement. Olayinka76 states that the non- 

passage of the PIB has not only stalled the needed reform of the NNPC, but has contributed to 

the unwillingness of International Oil Companies (IOCs) to invest in the sector because of the 

prevailing high level of uncertainty for future investment. Similarly, Iluezi- Ogbaudu77state 

that it behoves on the Federal Government in a bid to ensure an enabling environment for 

investment to look into the position of the law as of today and consider same against its effect 

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on investment in the sector and make necessary reforms as soon as possible. The author 

further asserts that Petroleum Act has not undergone any major reforms since its enactment. 

Nwokeji78 also addresses the same issue where he observes that the Oil industry 

administration is largely done on an ad-hoc basis and the principal law governing the Nigerian 

industry is outdated. 
 

Transparency international, a global coalition against corruption has ranked Nigeria 148 out 

of 180 countries with a paltry score of 27 out 100 in its 2017 corruption perception index.79 
 

Thus, the Petroleum Act and its ability to serve as a catalyst for the country's economic 

development has run counter - productive for the objective of good natural resource 

governance.  Agbiboa80posits that 'Nigeria remains a cesspit of corruption and exacerbated by 

the discovery of oil.’ As pointed out by the author81corruption and ineptitude of Nigeria's first 

republic were the two often-cited reasons used by the military to carry out coups. Adelegan on 

his part recommends that for oil and gas reforms to have any implications on economic 

development,  

 
____________________ 

75 
Olayinka, C. NNPC audit report and need for autonomy. The Guardian 22 February 2015 available at 

<http:/l4mp/slguardian. nglfeatures /focus/nnpc-audit-report-and-need-for-autonomy/ amp> accessed 25th May 2021. 
76 

Iluezi, O. E. Oil and Gas Regulation In Nigeria: Assignment Of Rights In the Upstream Sector. Available at<http:// 
www.lawyard.ngloil-and-gas-regulation-in-nigeria-assgnment-of-rights-in-the-upstream-sector-by-iluezi-ogbaudu-
efemena/>. Accessed 25

th
 May 2021 

77Nwokeji, U.G. (n56). 
78

See Transparency International available at <https://www.transparency.orglcountryA.IGA> accessed 24
th

 May 2018. 
79Agbiboa, D.E. (2013) Corruption and Economic Crimes in Nigeria: Social and Economic Perspectives African Security 
Review Yol.22(l): 47-66. Cited in Agbiboa D.E. (2014) Under- Development in practice: Nigeria and the Enduring problem of 
corruption. Development in Practice Yol.24 (3) pp. 390-404. 
80

Ibid. 
81Adelegan, A.E. (2017) Oil and Gas Sectoral Law Reform and its Implications for Economic Development in Nigeria. 
International Journal of Development and Economic Sustainability Vol. (5) 3 pp.24-31. 

 

transparency, accountability and ethical conduct should be deepened. 

What exists in Nigeria is endemic corruption and poor governance structures which have 

existed prior to the discovery of oil and possibly due to the existence of authoritarian regimes. 

The current approach and legal framework for the governance of petroleum resources revenue 

lacks transparency and no mechanisms for ensuring that those who manage the revenues are 

accountable to the people on both the exploitation of the resource and the manner in which the 

revenues are applied. Thus, adopting the right policies and building transparent and 

accountable and capable institutions, Nigeria's resource wealth can be used to lift its people 

out of poverty. 
 

 

Conclusion 

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A vibrant regulation and an equitable framework for the transparent and accountable 

distribution of petroleum revenues are important to effectively manage the Nigerian 

petroleum industry. But the attainment of these factors is often dependent on other factors 

which may extend beyond the province of law to bring about a holistic approach to reform. 

For instance, a vibrant law would often depend on the human capacity from which it can 

source professional employees, these issues were identified under the discussion of the PPTA 

where staff of the FIRS are limited in capacity to understand therudiments of transfer pricing 

or financial reports of the IOCs. There is a need to strengthen tax rules and develop competent 

manpower to carry out transfer audits. 
 

Thus, no matter how laudable the PIA is, supporting legislations which are obsolete or lacking 

in enforcement capacity will continue to lag the sector in bringing about the needful changes 

that is long over- due. Similarly, an industry cannot itself operate where there is unbridled 

corruption, in such a situation poverty is at its highest as revenues are not equitably 

distributed due to political and elite capture. Revenue authorities as well as Anti-Corruption 

institutions should endeavour to develop integrated data to aid information sharing. Thus, 

institutional cooperation between the Federal Inland Revenue Service (FIRS), Bureau of 

Public Procurement, Fiscal Responsibility Commission, Cooperate Affairs Commission (CAC) 

The Securities and Exchange Commission (SEC) and anti- corruption agencies, The 

Economic and Financial Crimes Commission (EFCC) and the independent Corrupt Practices 

Commission (ICPC)) which were created specifically to tackle corruption in Nigeria. With 

cooperation amongst these agencies, this can detect the flow of funds, however, what exists is 

inter- agency rivalry and lack of cooperation. 
 

It is pertinent to note that tax evasion and tax avoidance are a global problem and Nigeria 

must be part of the global tax agenda, such as the Multilateral Competent Authority 

Agreement 2019 and the Global transparency forum on access to information and the African 

Peer Review mechanism. Thus, except Nigeria belongs to these global bodies, the country 

will continue to be shut from contemporary initiatives to fight tax crimes and further "race to 

the bottom". 
 

Strict accountability mechanisms are required to address corruption, thus, to attemptan 

isolated reform may thwart the overall objective. It is important that several factors through 

legal and extra-legal means are embedded to ensure sustainability in the sector. The 

attainment of that fine balance between developed legal institutional frameworks that are 

managed by capable individuals on the one hand, while on the other hand are regulating 

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without being unduly burdensome on operators is the hallmark of effective petroleum industry 

regulation. 

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