By Aisha Muhammad Magaji
The Nigerian Senate has directed the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to impose sanctions on international oil companies (IOCs) and other operators found to be flouting provisions of the Petroleum Industry Act (PIA).
The directive was issued by the Senate Committee on Petroleum (Upstream) during an oversight meeting with NUPRC officials in Abuja on Wednesday.
Committee raises alarm
Senator Bassey Akpan, Chairman of the Committee, expressed concern that certain oil majors continue to disregard key directives of the PIA, which came into effect in 2021. He said such non-compliance undermines Nigeria’s efforts to reform its oil sector, improve transparency, and boost revenues.
“The Petroleum Industry Act is not optional. Any operator, no matter how big, must comply with its provisions. We are directing NUPRC to apply sanctions against defaulting firms without fear or favor,” Akpan said.
The committee noted several violations by oil companies, including:
- Failure to remit mandated contributions to host community development trusts.
- Incomplete submission of upstream data as required by law.
- Non-compliance with local content provisions and environmental obligations.
Lawmakers said these breaches have worsened tensions in oil-producing communities and deprived Nigerians of benefits intended under the PIA framework.
NUPRC’s response
In his briefing, NUPRC Chief Executive, Engr. Gbenga Komolafe, admitted that compliance gaps exist but assured senators that the Commission is stepping up enforcement measures.
“We are monitoring all operators closely. Where we find breaches, we will impose penalties in line with the law. The PIA is the foundation of Nigeria’s oil sector reform, and we cannot allow its provisions to be ignored,” Komolafe stated.
He explained that NUPRC has already issued warning letters to several companies and is compiling a compliance report that will guide sanctions and future enforcement actions.
Why compliance matters
The Petroleum Industry Act was passed to overhaul Nigeria’s oil and gas industry after decades of delay. It seeks to improve governance, ensure fair revenue distribution, attract investment, and foster development in host communities.
Under the Act, companies are required to set aside 3% of their operating expenditure to fund Host Community Development Trusts (HCDTs). They must also maintain strict environmental standards and regularly submit operational data to regulators.
Analysts say non-compliance undermines these objectives, particularly in the Niger Delta, where oil exploration has fueled decades of environmental degradation and community unrest.
Senator Akpan emphasized that failure to sanction defaulting companies could erode the credibility of both NUPRC and the PIA itself.
“The PIA is a landmark achievement, but if we allow operators to treat it with levity, Nigerians will not feel its impact. We expect NUPRC to act decisively,” he said.
Other senators also weighed in, with Senator Stella Oduah calling for public disclosure of defaulters’ names. “Transparency is key. Nigerians deserve to know which companies are undermining their laws,” she argued.
Representatives of some oil companies, speaking off record, said compliance challenges are partly due to the complexity of the Act and delays in issuing certain regulatory guidelines. They called for continuous engagement with regulators rather than punitive measures.
However, civil society groups welcomed the Senate’s stance, arguing that only strict enforcement will ensure the PIA benefits ordinary Nigerians.
The Senate Committee has given NUPRC two months to submit a comprehensive compliance report, including sanctions applied to erring companies. It also pledged to intensify oversight to ensure the Commission fulfills its mandate.
For host communities, the outcome could be significant. If enforced, the PIA could deliver billions of naira annually for local development, improve environmental standards, and strengthen accountability in Nigeria’s most important industry.
As Nigeria struggles with dwindling oil revenues and rising economic challenges, the push for full compliance with the PIA may prove decisive in restoring confidence and stability in the oil and gas sector.
