“PIB is considerate, refreshing and competitive” – Petroleum minister responds to Shell’s claims

by Stanley Azuakola

On Thursday, in the United States of America, at a forum themed – Nigeria-Africa’s Frontier in the Global Economy, the Nigerian government gave what qualifies as its first rebuttal of claims by International Oil Companies (IOCs) that the new Petroleum Industry Bill (PIB) does not give them a fair shake.

At the roundtable, which was declared open by President Goodluck Jonathan, with former British prime minister, Tony Blair, and former U.S. secretary of state, Condoleezza Rice, as special guests, Nigeria’s minister of petroleum resources, Diezani Alison-Madueke, defended the terms of the proposed bill.

She said that the increment of the FG’s share from deep offshore oil blocks production from 61 to 73 per cent as contained in the draft Petroleum Industry Bill, PIB, before the National Assembly, was in order.

The parts of the PIB which are not going down well with the oil companies include the Nigerian Hydrocarbon Tax, of 50 per cent on profits from production in onshore and shallow water areas; 25 per cent tax from frontier acreages and deep offshore water areas; and a company income tax of 30 per cent, which they would all be expected to pay.

Shell’s country chair, Mutiu Sunmonu had argued at a stakeholders forum in Lagos last week that the fiscal terms of the law was uncompetitive and would stifle investments. However, the government insists that the two-tier tax rate is in line with its resolve to establish a progressive fiscal framework that would encourage further investment in the petroleum industry, while at the same time optimising revenues accruing to the government.

(Read: Wow! Oil companies owe Nigeria N1.57 trillion, greater than our capital budget)

According to Alison-Madueke: “I like to state that the proposed increase of government take to about 73 per cent is not only competitive, but also considerate, when we look at the scale of other entities around the world, like Norway, Indonesia and even Angola, with even higher government takes.

“The new PIB provides for a refreshing fiscal regime, which has strong incentives for enhanced exploration of new frontiers, especially in the Inland Sedimentary Basins as well as providing strong support base for the complete activation of the Gas Master Plan.

“Under the new arrangement, fiscal regime is anchored on royalty and tax, which is now predicated on production, as opposed to terrain and investment as was previously done.

“Royalty by production as outlined in the Bill is designed to capture the output of company as opposed to its location while creating a fair balance between small and big operators operating in the same terrain, thus giving operators the opportunity to make fair returns during field decline,” she added.

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