Nigeria’s new tax regime on Deep Offshore, Inland Basin bother oil and gas companies

A new tax regime being put in place by the Nigerian government seems to bother operators in the country’s oil and gas sector, as they are seen kicking against the bill yet to be signed into the law.

The proposed regime, seeking to amend the Deep Offshore and Inland Basin Production Sharing Contract Act, 2018 seeks to introduce additional 50 percent royalty on revenues above  $20/bbl 1993 real terms, which now translates to $35/bbl in 2019.

Speaker of the House of Representatives, Yakubu Dogara said the bill under consideration was aimed at ensuring higher earnings to government from offshore operations.

“In this era of economic doldrums in the country, the passage of this bill and its promulgation into law will help to shore up earnings from oil, cushion the economic hardship and ameliorate our burden of budget deficit,” he said.

But, the conglomerate of oil and gas producing companies in a memorandum presented at a public hearing at the House of Representatives, said the new tax regime will prohibit competitive operations in the country. The House of Representatives’ Committee on Petroleum  Resources (Upstream called for the hearing on Tuesday.

If passed, the proposed bill will cause “detrimental impact on the petroleum industry, government’s revenues and ultimately the broader economy,” the the Oil Producers Trade Section (OPTS) said in the memorandum.

According to them, “unlocking Nigeria’s abundant natural resources requires a competitive fiscal regime implemented with best-in-class process and oversight. Putting these prerequisites in place will ensure that Nigeria can attract the required investments to enable a strong, long-term growth in the petroleum industry that will increase and stabilize Federal Government’s revenue’s and contribute to the overall Nigerian economy.” the Oil Producers Trade Section (OPTS) said in the memorandum.