There are indications that the Federal Government may tinker with the Petroleum Industry Bill (PIB) with the aim of accommodating various opinions, especially on tax and fiscal regimes, which have pitched oil firms against the government.
The bill, already at the committee level at the Senate, proposes to ensure that government increases its take from a growing number of deep-water developments; review royalties on gas production, increase the tax from gas by creating a new fiscal regime separate from rules governing oil and change the way tax breaks are applied to new developments.
Executives of Nigeria’s biggest producers – which include ExxonMobil, Royal Dutch Shell, Total and Chevron – said the proposed new terms were so stringent that they risked deterring investment rather than encouraging it. As prelude to the PIB review, another round of presentation was made to Emmanuel Egbogah, presidential adviser on petroleum, by representatives of international and indigenous oil companies. This week, a stakeholders’ meeting will also discuss areas in the PIB that need to be fine-tuned in order to make Nigeria investment friendly. The controversy surrounding the bill is as old as the bill itself as oil companies have complained that the tax and fiscal regimes would stifle their business concerns in the country.
Shell Petroleum Development Company (SPDC) has been very vocal about the bill as it said the bill in its current form would erode $50 billion investment if passed. The company’s executive vice president for sub-Saharan Africa, Ann Pickard, said “the PIB threatens to make bad situation worse if passed in its current form, it will take years to correct the mistakes.” The bill is meant to overhaul the country’s oil and gas sector before the end of the year, ramping up the pace of reform in spite of fears among Western majors that the changes could cost billions in profits.
The government had hoped the new law will form the foundation for a revival of an industry where attacks on pipelines and constraints on investment have fuelled a growing sense of crisis among energy companies.