By Adefolarin A. Olamilekan
Midway into President Bola Ahmed Tinubu’s first term, Nigeria’s oil and gas sector—a critical artery of national revenue and foreign exchange—stands at a defining crossroads.
Since taking office, President Tinubu has initiated a wave of economic reforms targeting the energy sector. These reforms are designed to rejuvenate a once-stagnant industry, boost government revenue, enhance investor confidence, and reposition Nigeria as a competitive player in the global energy market.
A Reform-Driven Agenda
From the campaign trail to his early days in office, Tinubu made bold pledges to transform Nigeria’s oil and gas landscape. Central to his agenda were:
- Phasing out the controversial fuel subsidy regime
- Encouraging local refining capacity to reduce import dependence
- Positioning natural gas as a transition fuel for a cleaner energy future
- Operationalising the Petroleum Industry Act (PIA) to restructure the NNPC into a commercially viable enterprise
These commitments signalled a break from past cycles of inefficiency, corruption, and policy inertia. They also reflected a broader ambition: using the sector not only to shore up public finances but to create jobs, spur innovation, and foster inclusive economic growth.
Pre-Reform Challenges in the Oil and Gas Sector
Before Tinubu assumed office in 2023, Nigeria’s oil and gas industry was weighed down by a host of systemic challenges:
- Fuel subsidies drained public coffers and encouraged smuggling.
- A lack of local refining capacity forced the nation to import refined petroleum products despite being a top oil producer.
- Opaque operations and poor accountability at the NNPC discouraged foreign investment.
- Delays in implementing the PIA, passed in 2021, created regulatory uncertainty.
- Widespread oil theft and pipeline vandalism weakened production output and revenue.
These persistent issues stifled sectoral growth and left Nigeria vulnerable to external shocks, including fluctuating global oil prices.
Impact and Benefits of the Reforms
In the two years since Tinubu launched his reform drive, several gains—though incremental—have been recorded:
- Fuel subsidy removal has freed up trillions of naira, allowing for reallocation toward infrastructure and social programs.
- NNPC Ltd., now operating under the PIA, has made strides toward operational transparency and efficiency, though full commercialization remains a work in progress.
- Increased investment interest in domestic refining, with the Dangote Refinery’s commissioning and rehabilitation of government-owned refineries showing promise.
- Gas sector prioritization has advanced, with several pipeline and LPG projects aimed at positioning Nigeria as a gas-powered economy.
- Rising foreign reserves and revenue remittance, attributed in part to a more unified and market-reflective approach to the oil sector.
These developments suggest that while results are still unfolding, the policy direction is more structured than in years past.
Challenges of the Reform Process
Nonetheless, several challenges continue to test the resilience and credibility of these reforms:
- Widespread public hardship linked to subsidy removal has spurred inflation and eroded purchasing power.
- Operational inefficiencies and governance gaps persist within NNPC Ltd. despite structural reforms.
- Security concerns, particularly oil theft and attacks on pipelines, remain a major threat to production and revenue.
- Delayed regulatory clarity and bureaucratic bottlenecks still deter long-term investments.
- Labour and civil society resistance to deregulation and liberalization policies further complicate reform implementation.
Conclusion
President Tinubu’s reform agenda in the oil and gas sector is a bold attempt to address decades of mismanagement and economic distortion. While the sector has shown signs of renewal, significant hurdles must still be overcome to deliver lasting results.
What’s clear is that reforming Nigeria’s oil and gas sector is not a sprint—it is a marathon. Success will require sustained political will, institutional accountability, investor-friendly policies, and above all, a governance approach that balances economic growth with social protection for the Nigerian people.
