Stakeholders worry over Nigeria’s loss of $250bn in petroleum industry

Petroleum industry bill

Stakeholders at the ongoing public hearing on the Petroleum Industry Administration, Fiscal and Host Community Bills, have expressed concern over the nation’s loss of investments worth $250 billion in the petroleum industry.

Speaker Yakubu Dogara at the public hearing on Petroleum Industrialisation Bill on Tueday in Abuja

Speaker Yakubu Dogara at the public hearing on Petroleum Industrialisation Bill on Tuesday in Abuja

At the public hearing on Tuesday in Abuja, they blame the situation on the absence of supportive legislation for the oil and gas industry reform.

Members of the Oil Producers Trade Section (OPTS), comprising 28 indigenous and international operators of 90 per cent of the oil and gas sector, therefore, applauded the ingenuity of the National Assembly on the bill.

They, however, frowned at the provisions for the relinquishment of licensed areas, as well as retrospective legislation on the relinquishment of fees after seven years.

They kicked against the punitive legislation on the revocation of licence over the delay in the submission of data, as well as the $2/mmbtu on gas flaring.

They recommended instead $0.5 or its equivalent in naira at the prevailing exchange rate per 1,000 standard cubic feet of gas in the case of routine flaring.

According to a joint statement by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG), Nigeria has lost some $250 billion worth of investments due to its inability to legislate on the proposed reforms.

They gave the breakdown as: “$15 billion yearly in investments withheld or diverted to other countries because of uncertainty, as investors do not know which rules will guide their investments; and another $14.7 billion potential earnings in seven years (2010-2017), had the Petroleum Industry Bill been passed into law in 2009.”

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They observed that the tax burden on the operators could render many deepwater and gas projects less attractive and recommended the calculation of cost efficiency factors by increasing the percentage of revenue used in the computation to at least 30 per cent.

The oil workers also aligned with the OPTS and independent producers on overbearing powers conferred on the National Petroleum Regulatory Commission, just as they kicked against the indiscriminate award of oil blocs to former or serving public officers or members of the government.

To ensure adequate funding of the Host Community Development Fund, the unions noted that the 2.5 per cent operating budget is inadequate, while the oil and gas companies expressed concern that the bill imposes an additional financial burden on those who are already paying taxes, fees and royalties.

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