Proposed PIB will lower taxes for new investments, existing operations – Minister
The proposed Petroleum Industry Bill will significantly lower taxes for new investments and for existing operations when it becomes law, Nigeria’s minister of state for Petroleum Resources, Timipre Sylva, said on Thursday.
In a speech at the 7th (Virtual) Joint International Energy Forum – International Gas Union (IEF-IGU) Ministerial Gas Forum, the minister said the government is aware that industry players view the current level of taxation on onshore and shallow water operations as excessive, hence the proposed PIB should lower them.
“As a government, we have identified major constraints that have delayed recent projects from reaching financial close or caused projects to be delayed and/or abandoned altogether,” Sylva said.
“The Petroleum Industry Bill (PIB) before Nigeria’s legislative armthatweproposewill,ibelieve, provide this new framework.
“To secure the future of the industry in Nigeria, fiscal and other terms must be based on a more conservative economic outlook,” he said.
Sylva further said that a framework must be created for the Nigerian Petroleum Industry to grow and invest in additional petroleum production even under difficult economic conditions.
“For this reason, we are proposing grandfathering in the new PIB. The proposed PIB framework shall be based on core principles of clarity, dynamism, neutrality, open access and fiscal rules of general application,” he said.
Industry operators have long argued that Nigeria’s fiscal framework, which compels oil companies to pay taxes up to 85 percent on their profit including other levies, has done little to encourage investments.
Last year, Nigeria amended the Deep Offshore and Inland Basin Production Sharing Contract Act 2004, which regulates royalty payable on field basis.
It stipulates that oil companieswillnolongerpaygraduated rates for deep offshore production sharing contracts but will now pay a flat rate of 10 percent for finds in fields deeper than 200 metres.