UPDATE 1-Nigeria's presidency rebuffs landmark oil reform bill in current form

(Adds presidency comment)

* Bill sent back to lawmakers

* Contested part covers state oil company governance

* Bill would curb president’s power to award contracts

* Reform key to reviving investment

ABUJA, Aug 29 (Reuters) - Nigeria’s presidency rebuffed a landmark oil industry reform law because of issues with its current form, the executive said on Wednesday, marking a setback for plans to reinvigorate investment in Africa’s largest crude producing nation.

The presidency said it had sent the Petroleum Industry Governance Bill (PIGB), dealing in part with the management of the Nigerian National Petroleum Corporation, back to the National Assembly last month. This legislation forms a section of the broader Petroleum Industry Bill (PIB).

Part of the presidency’s disagreement with lawmakers is the fact that the bill would reduce the power of the president and oil minister to oversee and award oil licences and contracts, said a person with knowledge of the matter.

President Muhammadu Buhari is also the Nigerian oil minister.

The PIGB was returned to parliament at the end of July partly because it allowed a regulatory body to take 10 percent of oil revenues, to the detriment of federal, state and local governments, said Ita Enang, a presidency official who liaises with the legislature.

Provisions such as the expanded remit of an oil fund and others that created conflicts in interpretation or ambiguity were also partly the reason why the bill was not fit for presidential assent, Enang said in a statement.

The head of the upper house of parliament’s committee on upstream petroleum was not immediately available for comment.

The governance bill would create four new entities whose powers would include the ability to conduct bid rounds, award exploration licences and make recommendations to the oil minister on upstream licences.

Both houses of parliament passed the governance bill in January but it still needed the president’s signature to become law.

Senate President Bukola Saraki told Reuters in May that it had been transferred to the presidency, but a person familiar with the matter said it was not sent until July when parliament had intended to have all the PIB sections passed.

Parliament has so far passed only the governance section of the bill, after it was broken down into sections to try to accelerate its passage.

When Buhari came to power in 2015, passage of the PIB was seen as “critical for the revival of investments into the sector”, according to a presidential report from the time seen by Reuters.

The administration’s plan had been to pass the PIB within 100 days of taking power, according to the report, which noted that “uncertainties over the fiscal terms from an unapproved PIB” were a key issue in Nigeria’s oil sector. (Reporting by Paul Carsten Additional reporting by Camillus Eboh and Felix Onuah Editing by Alexandra Hudson and David Stamp )