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Privatisation Of NNPC: The Most Fundamental Problem With The Petroleum Industry Act (Pia) By Femi Aborisade, Esq.


On the 16th day of August 2021, President Mohammadu Buhari signed the Petroleum Industry Bill (PIB) into law. The PIB is henceforth to be referred to as the Petroleum Industry Act (PIA), pursuant to the assent of Mr. President.

The PIA has been mostly criticized for providing that the Joint Venture Partners, called Settlors, shall contribute only 3% of their actual operating expenditure in the immediately preceding calendar year to the host community’s Development Trust Fund (see Section 240(2) of the Act).

However, the central problem with the PIA is beyond provision of 3% of actual operating expenditure to the host Community. The real problem with the PIA is that it is a neo liberal piece of legislation that has now legitimized the privatisation of the NNPC, which ordinary people and radical organisations have been resisting for decades. In other words, the PIA has dispossessed society of the decades of public investment in the NNPC and donated it to the private sector.

By Section 53(1) of the Act, the Nigerian National Petroleum Company Limited shall be incorporated within six months from commencement of the Act, that is, from 16th August 2021. By Section 53(2) of the Act, the Government shall subscribe to the initial paid-up share capital of NNPC Limited. 

Upon incorporation, NNPC Limited shall be appointed the agent of NNPC for the purpose of winding down the assets, interests and liabilities of NNPC (S.55(1), PIA). Section 54(7) of the Act provides that “assets, interests and liabilities means (sic!) tangible, intangible, real or personal property, rights and obligations, in each case of all types”. By S. 54(1) & (2) of the Act, the assets, interests and liabilities of NNPC to be transferred to the NNPC limited shall be determined and caused to be transferred “within 18 months of the effective date“.

Although Section 53(5) of the Act provides that the shares held by the Government in NNPC Limited “are not transferable” in any manner, “by way of sale, assignment, mortgage, or pledge”, the same section 53(5) ridiculously provides that the shares shall be transferable if the transfer is “approved by the Government and endorsed by the National Economic Council on behalf of the Federation“. By section 318 of the Act, ‘Government’ means the Federal Government of Nigeria. 

Indeed, Section 55(2) of the Act provides that, NNPC Limited, upon being appointed agent of NNPC, pursuant to S.55(1), shall have the power to enter into contracts with third parties with respect to the assets, interests and liabilities of NNPC. To strengthen the power of the NNPC limited to sell or transfer the shares of the NNPC it has inherited, Section 53(6) provides that “… any sale or transfer of shares of NNPC Limited shall be at a fair market value”.

Section 54(3) of the Act formally declares that NNPC shall cease to exist as an entity existing to serve any form of public interest, no matter how limited, after its assets, interests and liabilities have been transferred and/or extinguished in favour of NNPC Limited.

For the avoidance of any doubt, Section 53(7) of the Act asserts that there has been a complete paradigm shift in the orientation of the NNPC – from an entity for public good, to an outright business entity, without any pretense to serving any social good or public interest. The section provides that:

“NNPC Limited and any of its subsidiaries shall conduct their affairs on a commercial basis in a profitable and efficient manner without recourse to Government funds… and NNPC Limited shall operate as a Companies and Allied Matters Act entity, declare dividends to its shareholders and retain 20% of profits as retained earnings to grow its business.”

From the foregoing, the essential ultimate goal of the PIA is to take over the assets and interests of the NNPC and to facilitate sale of shares or privatisation of the assets. This means the PIA is nothing but a neoliberal piece of legislation to rob or steal the wealth that belongs to all and hand over to the private sector, ‘legitimately’, or ‘according to law’. In that context, ordinary people in the host Communities and in Nigeria, as a whole, have been robbed of a common patrimony, through the PIA.

With the impending privatisation of the NNPC under PIA, the public would lose control over the price of fuel in the domestic market. Whenever there is an outcry against imposition of increases in fuel price in the domestic market, the Federal Government would reply, as they do on electricity issues: “Oh! It is no longer owned by the Government. It is no longer under public/Government control. It is now owned and controlled by the private sector”. Thus, uncontrolled astronomical and perennial increases in the price of fuel would characterise the PIA phase.

There is a direct relationship between the price of fuel and the prices of all other goods and services. The higher the price of fuel, the higher the cost of education, health, etc, and the loss of value/purchasing power of the minimum wage, and so on. Therefore, PIA ought to be resisted. It is a declaration of war against the socioeconomic wellbeing of ordinary people. The failure to resist privatisation of NNPC (which is what PIA comes to in the final analysis) would have dire consequences for the welfare of the downtrodden, their education, health care, purchasing power of the minimum wage, etc.

PIA & employment status: from employment with constitutional flavor to master-servant employment relationship

The PIA has caused a fundamental change in the character of employment relationship under the NNPCS. By the provision of Section 57(1) of the Act, employment relationship has now been transformed from employment with constitutional flavor to that of Master-servant relationship, which does not protect tenure of employment. Section 57(1) of the Act provides:

“Employees of NNPC shall be deemed to be employees of NNPC Limited and its subsidiaries on terms and conditions not less favourable than what previously obtained.”

However, employment under NNPC Limited in which the private sector owns the shares means that the employment relationship has been transformed from one with constitutional flavour to a master-servant relationship, under which employment tenure becomes unprotected, precarious, unstable and uncertain.


Organised Labour, NLC, TUC, individual industrial unions, their branches, zonal and state structures, the People’s Alternative Political Movement (TPAPM), ASCAB, student/youth organisations, radical political movements and parties, and all other radical forces, should resist the PIA. It is imperative to so do, particularly within the context of Section 310(1)(f), which repeals the PPPRA (Petroleum Products Pricing Regulatory Agency (Establishment) Act No. 8 of 2003), under which organized labour  was able to exert some pollical influence, to curtail fuel price increases. 

22nd August 2021



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