Politicians and oil companies have been identified as the reason for Nigeria’s continued tax losses and why the country has not enjoyed proceeds from the production and sale of crude oil.
President Muhammadu Buhari said this while signing the Deep Offshore Bill into law in London yesterday.
The Details: The bill is expected to allow Nigeria to receive its fair share of income from the sale of natural resources.
Part of the statement made by the President read: “Today is an important day for all Nigerians, particularly the young generation.
“Today, I signed into law the amended Deep Offshore Act. Nigeria will now receive its fair, rightful and equitable share of income from our own natural resources for the first time since 2003.
“In that year, oil prices began a steep increase to double, and at times, triple over the following decade,” he said.
“All this time, Nigeria has failed to secure its equitable share of the proceeds of oil production, for all attempts to amend the law on the distribution of income failed,” he added.
[READ MORE: Buhari assents to the Deep Offshore Act]
He blamed politicians and oil companies as the reason why taxes still stood at the barest minimum above $20 per barrel.
“A combination of complicity by Nigerian politicians and feet-dragging by oil companies has, for more than a quarter-century, conspired to keep taxes to the barest minimum above $20 per barrel, even as now the price is some three times the value,” he stated.
He explained that by signing the bill, Nigerians would begin to enjoy a favorable return of the country’s natural resources which would raise the standard of the living of the citizens.
What you should know: The bill amends legislation on agreements related to offshore oil production. Essentially, it changes the 1993 Deep Offshore and Inland Basin Production Sharing Contract to add two new revenue streams.
One is a flat 10% royalty on all projects over 200 meters deep and the other is a 7.5% royalty on frontier and inland basins. Essentially, the two measures are designed to add about $1.5 billion to government coffers in just two years but an oil industry group.
Although the offshore oil projects have helped to boost oil output in the last few years from Nigeria, they are among the most challenging for companies to develop.