The Nigerian Association for Energy Economics (NAEE) has called for clarity on the 30% NNPC Limited transfer of oil and gas profit to frontier exploration in the just-passed Petroleum Industry Bill (PIB).
This was disclosed by the Association’s President, Prof. Yinka Omorogbe, at the 14th Annual Conference of the Nigerian Association for Energy Economics in Abuja on Monday.
”In this season of change, we cannot be left behind. We cannot be the country that remains frozen in debilitating discussions on whether or not a Bill that will provide a new legal framework for the petroleum industry must pass or not because of controversial clauses that can be amended,” she said.
“As the nation debates the Bill, it is necessary to focus on its actual contents and not on interpretations that are not always supported by fact.
It is important for those who can, to come out with actual numbers and eschew the present discussions on percentages, based on the perception that they refer to the same thing when in fact they do not.
Daily we hear about three per cent as against 30 per cent. Three per cent of what?” she added.
She urged that clarification on the 30% rate needs to be brought upon, as the number was expected to be 10% for frontier development, not 30%.
Section 9(4) of the House draft of the PIB states that the Frontier Exploration Fund shall be 10% of rents on petroleum prospecting licences and 10% rent on petroleum mining leases; and 30% of NNPC Ltd’s profit oil and profit gas as in the production sharing, profit sharing and Risk service contracts, which would be to all Basins and undertaken, simultaneously.
Section 9(5) states that NNPC Limited shall transfer the 30% of profit oil and profit gas to the frontier exploration fund escrow account dedicated for the development of frontier acreages only.
What you should know
Nairametrics reported earlier this month that the House of Representatives passed the Petroleum Industry Bill (PIB).
The long-awaited bill which passed for a third reading will deregulate and overhaul Nigeria’s oil and gas sector.
- The PIB aims to improve regulation of the sector by creating just two regulators – the Nigerian Upstream Regulatory Commission (the ‘Commission’) and the Midstream and Downstream Petroleum Regulatory Authority (the ‘Authority’). These two will replace the multitude of regulating bodies in the sector. The regulators will have no commercial role, allowing them to perform oversight.
- New taxes: The current Petroleum Profits Tax (PPT) will be split into two, namely: a new Hydrocarbon Tax (HT) and Companies Income Tax (CIT). The HT and CIT will apply to companies engaged in upstream petroleum operations on a company-wide rather than contract area basis.
- Host Community Development Fund: The PIB established a Host Communities Development Trust which will oversee all Environmental, Social and Infrastructure projects in the communities where oil and gas assets are located.
- Upgrade environmental and social components by creating an Environmental Remediation Fund. The PIB will also require Environmental Management Plan where an Environmental Impact Assessment is needed and stop using chemicals in the upstream sector unless a permit is granted.
- Gas Flaring: PIB prohibits gas flaring or venting and imposes a fine that is not eligible for cost recovery. The gas production licensee must submit an elimination and monetizing plan for gas within one year of passage.