Oil
PIB: Asiodu demands immediate review of PSCs
LAGOS – A former Chief Economic Adviser and Petroleum Minister, Mr. Philip Asiodu, has called on the Federal Government to immediately commence the re-negotiation of fiscal provisions in deep offshore Production Sharing Contracts, PSC, while the Petroleum Industry Bill, PIB, is being awaited.
“There is a suggestion in some government circles that decisions on auctioning of concessions blocks, renewal of Oil Mineral Leases, among others, must await the passage of PIB. This is a wrong approach.
“I can see no rational explanation for not negotiating within the existing contracts to optimize Nigeria’s revenue up to the targets hoped for in PIB, while waiting for it to become law,” Asiodu said while delivering the keynote address at the 6th annual Nigerian Association for Energy Economic, NAEE, international conference in Lagos.
He maintained that there are many good things, similar to what the PIB hopes to achieve, which can be accomplished through negotiation and by acting with existing laws.
He disclosed that the PSCs executed in 1993 had three re-opener conditions which include the re-negotiation of the fiscal terms if the price of oil rose to US$20 per barrel; if mega discoveries were made of reserves above 500 million barrels and after 10 years of the first contract.
He noted that the US$20 per barrel threshold was reached in the year 2000, reserves of 500 million was achieved within seven years by a few consortia while the 10-year date of the first contract elapsed in 2003.
“In the end, whatever the wishes of a nation in global competition to attract investment and partners in progress, it can only conclude internationally competitive contracts and must demonstrate a habit of respecting such contracts,” he noted.
He bemoaned the fact that promoters of gas-based industries have been engaging in futile discussions with the Nigerian National Petroleum Corporation and the authorities in the sector for over 10 years over appropriate pricing for gas.
He disclosed that in such situations, the country is driving investment to more investment-friendly countries, which are increasing on a yearly basis.
He pointed out that the problems affecting the country’s oil and gas sector are the same problems which have over the years impacted negatively on all aspects of the national life.
According to him, things will only begin to improve if the government and national leadership will undergo a revolutionary change and embrace all the aspects of good governance.
“Eighteen months of sustained good governance will put Nigeria on irreversible path to wealth, stability and greatness,” he maintained.
Continuing, Asiodu said, “The smoothest and least traumatic scenario is for the incumbent President, Dr, Goodluck Jonathan, with the authority derived from a universally acclaimed election to assume that role of imposing good governance in all aspects of our nation during the next two year.
“To this end, these entails: the rule of law; efficient and prompt administration of justice; predictability, objectively and consistency in government measures; respect for sanctity of contracts; imposing discipline and coordination in fixing salaries and allowances of all political office holders, among others.”
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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