The Nigerian government has added some changes to the Petroleum Industry Bill (PIB) which includes the reduction of hydrocarbon tax to 30% for converted leases, down from 42.5% in its original bill plan, in a bid to attract more investors to Nigeria’s oil and gas sector.
This was disclosed by Reuters in an exclusive report on Friday, which cited people close to drafting the bill and revealed a letter from interested oil companies.
The report disclosed that the Bill was expected to be passed in May, and would have some later stage changes such as:
- Lowering of royalties for new production from deepwater oilfields to 5% from 7.5% and boosting the production level that triggers higher royalties from 15,000 barrels per day (bpd) to 50,000 bpd.
- For onshore and shallow water oilfields, it will reduce the hydrocarbon tax to 30% for converted leases, down from 42.5% in the original bill.
- NNPC’s assets and liabilities will be transferred to a limited liability corporation, which will enable oil companies receive debt owed by NNPC.
The report revealed that oil executives in their letter urged for more changes regarding gas and fiscal term stability, stating that “terms are not sufficiently competitive to stimulate the desired new investments.”
What you should know
Recall Nairametrics reported in December 2020 that the Minister of State for Petroleum Resources, Timipre Sylva, revealed that the much anticipated Petroleum Industry Bill (PIB) would include provisions for lower taxes to sustain stable investments in Nigeria’s oil sector.