GOVERNANCE FRAMEWORK OF THE NIGERIAN PETROLEUM SECTOR: AN APPRAISAL

Abstract

The most recent literature highlights the link between particular natural resources and
institutional capacity. Institutional capacity as a primary determinant of economic
growth and performance has thus been a growing focus of the natural resource
governance literature. In fact, there is an agreement on the importance of institutional
capacity even in the resource curse debate. The underlying assumption in the institution
hypothesis is that high-quality institutions lead to good governance and good economic
policies that allow for better economic growth and human development, whereas in
countries with low-quality institutions, natural resources will hamper growth and invite
the resource curse. Prior to the enactment of the Petroleum Industry Act (PIA) 2021,
the basic institutions governing the Nigerian petroleum sector were, on the whole, not
efficient. One major issue was whether the three basic functional roles in the petroleum
sector should be concentrated or dispersed. While recognizing that the reform of the
former institutional governance framework of the Nigerian petroleum was overdue, the
paper questions the extent to which the reform measures under the PIA 2021 may be the
most viable option given that Nigeria differs in its institutional attributes, on account of
which her governance needs vary. It is argued that the institutions reform needs of the
Nigerian petroleum sector may not necessarily be as postulated under the PIA 2021. In
other words, even though the institutional reforms of the PIA 2021 are sound and
supportable, the growth experiences of some resource-rich development countries seem
to speak otherwise for Nigeria