Oil
Oil workers may clash with IOCs next week over PIB
LAGOS: The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Gas Workers (NUPENG) are set to clash with the International oil companies (IOCs) over perceived differences in some of the provisions contained in the Petroleum Industry Bill (PIB), as the National Assembly resumes next week to consider the bill.
PENGASSAN is strongly opposed to what it sees as insincerity on the part of the IOCs, especially their position over the current fiscal regime contained in the PIB, which they deem unfavourable. The IOCs through Mr. Ubaka Emelumadu, Vice President, Gas, Sub-Saharan Africa, Shell Upstream International had said at a stakeholders meeting, that the PIB currently under consideration in the National Assembly will no doubt play a vital role in the survival and growth of the oil and gas industry in Nigeria.
However, he pointed out that there are some areas of disparity between the IOCs, the government and other stakeholders.
“In terms of fiscals, what we have seen and know of this PIB requires improvement to attract the required level of investment to match Nigeria’s expectations now and in the future. The royalties and rents are high. For instance with gas tax increasing from 30 percent to 80 percent, royalty increasing from 7 percent to 12.5 percent for big producers and minimal tax allowances for investment incentives on gas cannot simply work,” he said.
According to the workers, these claims by the IOCs are disputable because the royalties, taxes and rents they have been enjoying in the industry before now are far lower than what obtains in other countries.
The workers maintained that the gas tax is still below 50 per cent as against the 85 percent recommended by the current fiscal regime and that royalty which the IOCs hardly pay are not up to 12 per cent as against the 20 per cent maximum.
The fiscal regime recommends that the assessable profits of an oil-producing company be obtained from its adjusted profits, and the law allows all unsecured losses suffered by the company during any previous accounting periods to be deducted from its adjusted profits.
If all the losses cannot be relieved from the adjusted profits of any accounting period, it may be due to insufficient profit from which such losses could be offset.
The PPTA allows the unrelieved losses to be carried forward to the succeeding accounting periods. Some of the IOCs are said to have been taking undue advantage of this particular provision and had been claiming insufficient profit over the years.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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