International Oil Companies (IOCs) have called for caution, noting that the passage of the much awaited Petroleum Industry Bill, (PIB) “will not meet the government’s objectives of making Nigeria the leading destination for oil and gas investment.”
The IOCs further argued that although the PIB would lead to increased revenue for the federal government, the control of only $3billlion out of $70billion, representing 4% of oil investments in Africa by Nigeria would continue due to scarcity of funds.
This caution was issued at the opening of a public hearing on the PIB organized by the ninth Senate.
“We fear that if the PIB is passed in its current form, it will not meet the government’s objectives of making Nigeria the leading destination for oil and gas investment and the recent scarcity of investment – only $3billion out of $70billion (representing 4 per cent) in Africa – will continue.
“This lack of competitiveness is caused in part by the high cost of doing business in Nigeria, with overall project costs and operations costs being 69% and 42% respectively, higher than the global average,” Mike Sangster, who spoke on behalf of the oil producers, explained.
He, however, commended the “federal government’s efforts to introduce a comprehensive bill to address a number of issues affecting the operation of the industry.”
Mr. Sangster listed some positive provisions in the bill to include: Lower headline tax rates for onshore and shallow water oil development activities, gas production not subject to the new Hydrocarbon Tax (HT), and maintenance of current tax consolidation principles for the purpose of Companies Income Tax (CIT).
Other benefits, according to him, are the optional conversion to new PIB, recognition of ongoing deep water negotiation and commercialization of the NNPC.
Declaring the event open, President of the Nigerian Senate, Ahmad Lawan, said the PIB presently before the National Assembly will ensure that Nigerians benefit optimally from crude oil production and sale of fossil fuel reserves.
According to him, the National Assembly in its consideration of the piece of legislation would ensure that the bill when passed into law, guarantees improved revenue earnings for the country.
“Let me say this, we (National Assembly) will pass this bill not without ensuring that it is a bill that satisfies certain conditions.
“Nigeria is blessed with these resources; we want Nigeria to benefit optimally from them. In fact, we are in a hurry because we have lost so many years of benefits that we could have had,” Lawan said.
In his remarks, the Minister of State for Petroleum, Timipriye Sylva, noted that beside the current COVID-19 crisis that has caused the strongest recession experience, the oil industry is faced with other critical challenges, thereby making the PIB most expedient.
On their part, the Host Communities of Nigeria Producing Oil and Gas, insisted on 10% equity shareholding in the three companies to emerge from the commercialization of the NNPC.
National President of the association of host communities, Dr. Benjamin Tamaranebi, said they have been marginalized for 60 years with the negative impacts of exploration and exploitation.
