‘Nigeria Requires Competitive, Consistent Fiscal Regime in Oil and Gas Sector’

The Chief Executive Officer, Subsaharan Africa, Bakers Hughes, a GE Company (BHGE), Mr. Ado Oseragbaje has stated that only a clear, consistent and competitive fiscal regime could incentivise investments in Nigeria’s oil and gas industry. Oseragbaje also argued that the federal government was able to dictate the terms for investors in the past because Nigeria was the only resource-rich country in the sub-region, adding that the investment landscape has since changed with many other neighbouring countries discovering oil and gas.

Speaking to journalists on the Petroleum Industry Governance Bill (PIGB) that was recently passed by the Senate, Oseragbaje said lack of clarity of policies, as well as the inconsistency and the lack of competitiveness had long term implications on the industry, adding that no matter how strict a policy is, it has to be clear, and consistent.

“But for everybody that is going to make long term investments, you have to have clarity as to the long term policy. If not, it is very difficult for you to invest and you say ‘okay, I am investing now: royalty today is five per cent but then in 2020, royalty is going to be 17 per cent or what? I don’t know.’ It is then very difficult for me to make a 10-year or 15-year investment, if I don’t have clarity of policy,” he said.

He said Nigeria should take into consideration the fact that investors now have choice to take their money to places like Mozambique, Ghana, Senegal and Central Africa, which were not Nigeria’s competitors 15 years ago. “Whatever the policy is, however strict it is, it needs to be clear such that my economic model takes it into account and then I can decide whether I invest or not. So the clarity of the policy is important,” he added. He said the consistency of the country’s model in the oil and gas sector should be for the long term.

According to him, once the country lays out a policy that is clear, there has to be a time horizon that investors use to plan and be notified of any impending changes in the investment landscape to guarantee business planning.

“The third piece that I think is important for the country to recognise is that the competitive landscape is actually changing. What do I mean by that? If you drew the hydrocarbon map of Africa 15 years ago, it would be very different from what you have today. Fifteen years ago, there wasn’t OCTP; there wasn’t Jubilee; Mozambique wasn’t there; Senegal hadn’t been discovered, and even some of these discoveries or extensions in Central Africa didn’t exist.