On Friday, Acting President Yemi Osinbajo disclosed that he had directed the Minister of State for Petroleum, Ibe Kachikwu to “engage” with oil companies “on the way forward” over repeated calls to relocate their head offices from Lagos to the states where they produce their oil from.

This proposal which has been suggested before, as far back as 2003 is highly popular with the people of the Niger Delta where oil exploration has ravaged their environment and has hardly benefited from the wealth of oil while other states benefit from the taxes paid by the oil companies.

But how much will change should these oil companies heed the call and move their head offices to the base of their operations?

The bulk of taxes and royalties paid by oil companies in Nigeria go to the Federal Government with the exception of personal income taxes, business premise registration fees and tenement rates which are paid to state governments.

Not only that, if a company has its head office registered to do business in, say Lagos State, all the income taxes for its employers and withholding taxes for goods and services supplied to it will go to the state irrespective of where it is doing business within the country.

Although data on how much oil companies pay in income and withholding taxes to states is not publicly available, one can infer that these taxes run into billions of naira. As at 2015, three international oil companies operating in Nigeria – Shell, Chevron and Eni – were employing approximately 12,000 full-time and contract workers.

Almost every oil company, whether operating major or marginal oil fields, have their head offices in Lagos State, making the state the beneficiary of all taxes that are payable at the state level.

As such, if the oil companies heed the call of Acting President Osinbajo and move their head offices to where they have the bulk of their operations, it will be a boost to the revenues of those states.

But the question is: will the oil companies move their head offices?

There are a lot of advantages to these oil companies being in Lagos, which is Nigeria’s economic capital. It puts them in close proximity with companies they do business with, such as financial institutions. Of course, the companies could always maintain offices in Lagos if they move their head offices. But short of a law compelling them, there is yet to be any compelling argument to make them do it.

Another question is how does a company determine what state should its head office be situated in if its operations are offshore? For example, Famfa Oil which is owned by Africa’s richest woman, Folorunso Alakija operates the Agbami field which is off the coast of central Niger Delta in 4900 feet of water. Also, Shell Nigeria has increasingly sold its onshore assets and the bulk of its production comes from the Bonga offshore field, which is 120km into the Atlantic Ocean southwest of the Niger Delta.

Also, what happens if the bulk of an oil company’s production changes from an oil block located in one state to an oil block in another state? Does this mean that the company has to change head offices again? Doing so will be an added layer of unnecessary stress for the company.

It is curious that the states in question do not seem to be making any overtures to these companies to put their head offices in their states. Identifying what hindrances they might have in their states of operation that makes them prefer Lagos and removing them might go a long way in convincing them to make the move.

In the meantime, we wait to see how the engagement between the government and these companies on this matter goes.