Feature Article by Humphrey Onyeukwu[i]
The Petroleum Industry Bill (PIB) is lauded to be the single most important legislation in Nigeria given our mono-economic set-up, however ridden with various mutations from the original intervention of the Oil and Gas Implementation Committee (OGIC) inaugurated by the Obasanjo administration in April 2000.
Several versions of the PIB materialized as an outcome and greatly skewed the many efforts in producing a bill that would fundamentally reform an industry lacking significant changes in administration and regulation. Discordant tunes emerged from the various stakeholders, each with self-confessed belief on how the reform agenda would have been carried out. The International Oil Companies, indigenous operators, international independents, regulators and even the minister alike joined in a macabre dance of what a PIB should be and what it should not be.
A sigh of relief may have seemingly arrived with the recent transmission of the bill to the seventh National Assembly. The Special Task Force for Implementation of the PIB, brainchild of the Federal Government’s concerted efforts to deliver on its promise to the nation in aftermath of the subsidy protests, submitted their finished product, a new Petroleum Industry Bill.
The new PIB, without doubt, has agitated the déjà vu trailing previous attempts. Questions answered and unanswered: Is it the much-needed cure to revive an ailing Nigeria’s oil industry? Would this be another stillbirth or is the stage finally set for culmination of the sector reforms. Who is really afraid of the Petroleum Industry Bill?
Continue reading “Who is really afraid of Nigeria’s Petroleum Industry Bill?”
Continuing with our fiscal theme, here’s the link to KPMG’s recently published article titled Petroleum Industry Bill 2012: Highlights of the Fiscal Provisions.The article highlights critical provisions of the Petroleum Industry Bill and concludes by stating that its provisions are likely to lead to an increase in the effective tax rate of many companies. It also opines that the current provisions of the PIB are unlikely to optimise domestic gas supplies as the fiscal incentives for upstream gas development under the PIB are less attractive than available under the Petroleum Profits Tax regime. The article may be found here.
Feature Article by Dr. Ekpen J. Omonbude
After what can be described as a very, very long wait, the Nigerian Government has forwarded the Petroleum Industry Bill (‘PIB’ or ‘the Bill’) to the National Assembly. This follows a series of drafts, disputes and revisions as the Government, the international oil companies (‘IOCs’), and the legislature failed numerous times to agree on previous versions.
The Ministry of Petroleum Resources (‘the Ministry’) describes the PIB as potentially “one of the most important pieces of legislation in the history of the oil industry in Nigeria, changing everything from fiscal terms to the make-up of the state-oil firm”. It is clearly an ambitious document, one which in our assessment could change, fairly significantly, the way in which the oil and gas business is conducted in Nigeria if passed into law as-is.
The industry has greeted the PIB with mixed reactions. For some upstream E&P players, it does not appear that there is satisfaction with the fiscal terms as stated in the Bill. For others, there appears to be a certain degree of confusion as to what would apply when, and how. International organisations appear to have taken a position of quiet optimism for now.
At over 220 pages, the PIB is a daunting read for most non-lawyers. It does however try to simplify what is currently a difficult petroleum legislative and regulatory framework to explain to the untrained eye (lawyer’s paradise, anyone?). Highlights of such attempts at simplicity are the apparent amalgamation of the relevant petroleum sector laws into one piece, and a reduction of the points of fiscal burden to a handful of fiscal instruments. The Bill in fact defines fiscal rent as “the aggregation of royalty, Nigerian Hydrocarbon Tax and Companies Income Tax obligations arising from upstream petroleum operations”. This simplicity may not however translate to reduced fiscal burden. In my view at least three separate pieces of legislation could have been submitted to the National Assembly, rather than one, but this is not the purpose of this particular exercise. Continue reading “Fiscal Provisions of the Nigerian Petroleum Industry Bill: A not so quick-and-dirty assessment, Part I”