The Minister of State for Petroleum Resources, Timipre Sylva, has revealed that the much anticipated Petroleum Industry Bill (PIB) will include provisions for lower taxes to sustain stable investments in Nigeria’s oil sector.
Sylva also pointed out that Nigeria’s plan to ensure the growth of its oil industry has not been heavily impacted by the coronavirus pandemic, as key priority projects that had been up for execution in 2020 have not been derailed.
According to a report from ThisDay, this disclosure was contained in a statement by Sylva, while delivering a speech at the seventh joint International Energy Forum and International Gas Union (IEF-IGU) ministerial gas forum that was held virtually.
The Minister said that the government is not unaware of serious concerns raised by oil companies over high taxes, especially on onshore and shallow water operations, which it hopes to address with the PIB.
What the Minister is saying
Sylva, in his speech during the event, said, “We are not unmindful that the industry players are of the view that the current level of taxation on onshore and shallow water operations is excessive and therefore the proposed PIB should include a significant lowering of these taxes for new investments and for existing operations.’’
“As a government, we have identified major constraints that have delayed recent projects from reaching financial close or caused projects to be delayed and/or abandoned altogether. The PIB before Nigeria’s legislative arm that we propose will, I believe, provide this new framework.”
“To secure the future of the industry in Nigeria, fiscal and other terms must be based on a more conservative economic outlook. A framework must be created for the Nigerian petroleum industry to grow and invest in additional petroleum production even under difficult economic conditions.’’
“For this reason, we are proposing grandfathering in the new PIB. The proposed PIB framework shall be based on core principles of clarity, dynamism, neutrality, open access and fiscal rules of general application,” he added.
On the development of its gas resources, which appears to be a major area of priority for the government, especially with its diversification drive, and how well they have gone, the Minister stated that they are focused on the development of industrial and transport gas markets as well as gas-for-power.
He said: “We believe gas will become the dominant fuel for generating power not only in Nigeria but in Africa as well. We have commenced the implementation of carefully conceived initiatives to foster productivity and attract investments along the gas value chain.” This, he explained includes the promotion of natural gas as an alternative fuel in Nigeria.
“Substituting traditional white products with gas will cushion the effects of deregulation and create enormous job opportunities for Nigerians. It is expected that this will stimulate economic growth, further improve our energy mix, drive investments, and provide jobs in Nigeria,” Sylva added.
What you should know
- The Petroleum Industry Bill which is an oil reform bill, was submitted to the National Assembly by President Muhammadu Buhari, in September, is key to the repositioning of Nigeria’s oil and gas industry, especially under its post-covid-19 agenda.
- The laws governing oil and gas exploration have not been fully updated since the 1960s due to some contentious issues like taxation, payment to local communities, terms and revenue sharing within Nigeria and so on.
- Nigeria has repeatedly failed to pass the PIB, which is considered relevant to the country’s quest to make its oil industry regain its competitiveness, attract investments, 20 years after it was initially conceived.