Nigerian Investment Summit,London
Minister of Petroleum Resources and Chairperson of the Board of Directors of the Nigerian National Petroleum Corporation (NNPC), Mrs. Diezani Alison-Madueke, has stated that the new Petroleum Industry Bill (PIB), currently before the National Assembly provides for a robust and efficient fiscal regime with strong incentives for oil production.
Speaking on Tuesday at the Nigerian Investment Summit in London organised by the Ministry of Trade and Investment in conjunction with the Bank of Industry (BoT), the minister said apart from providing a healthy deregulated environment for private sector participation in the downstream sector, the PIB is capable of providing a win-win scenario for all stakeholders in the oil and gas industry in Nigeria.
Alison-Madueke explained that the royalty by price ensures a trigger mechanism, which provides the existence of fair and balanced pricing for all irrespective of the terrain of the operator, as it comes with a self-adjusting rate based on the price of crude oil and the natural gas price.
She said: “We have a fiscal regime by royalty and tax, which is now predicated on production as opposed to terrain and investment as was previously done.
“Royalty by production as we have outlined in the bill will capture the output of the company as opposed to its location; it will create a fair balance between small and big operators operating in the same terrain; it will give operators the opportunity to make fair returns during field decline, and it proposes lower rates on condensates from large fields as well as ultra deep water fields.”
She noted that the new bill provides for an efficient tax regime based on the Corporate Income Tax (CITA), the Natural Hydrocarbon Tax and Production Bonus.
On concerns raised by some operators over the proposed increase in the government’s take from 61 to 72 per cent in the deep and ultra deep offshore concessions, the minister explained that in arriving at the figure, government considered all the variables taking into account the interest of the nation as well as what is obtainable in other jurisdictions across the world.
She clarified: “The proposed increase of government to 72 per cent is competitive when we look at the scale of other entities around the world like Norway, Indonesia and even Angola.
“You recall that the 1993 Production Sharing Contract (PSC) terms were based on $20 per barrel crude oil prices real time, but since the start of production in the PSC fields, crude prices have trended upwards. So it was very necessary to look at the terms again.”