Oil sector fiscal terms unattractive to investors – NNRC
The existing fiscal terms in the Nigeria’s oil and gas sector are not strong enough to attract investors into the country, a report by the Nigerian Natural Resource Charter has revealed.
Presenting findings from its 2017 Benchmarking Exercise for Nigeria’s oil and gas industry in Abuja on Monday, the NNRC observed that although a fiscal framework existed in the industry, its ability to generate the required revenues had proved inadequate.
It said, “On fiscal terms, the regime is not strong enough to attract investors, as compared with other African countries especially in the area of deep sea exploration. The fiscal regime in the sector is not flexible enough to respond to dynamic levels of production and profitability.”
The Programme Coordinator, NNRC, Tengi George-Ikoli, stated that the presentation released by her organisation on Monday was a prelude to the actual unveiling of the 2017 Benchmarking Exercise Report reflecting changes in the management of Nigeria’s oil and gas resources since 2014.
She said, “It is expected that the report would be presented and made available to the public and stakeholders in the oil and gas sector by the first quarter of 2018. The conclusions reached in this report highlight the main strengths and weaknesses of Nigeria’s petroleum sector governance, including reform priorities and opportunities.”
In the document released Monday, the NNRC stated that the level of inter-agency coordination in the oil and gas sector was poor and this had limited the full realisation of government policies and plans.
“As a result, the strategic measures to enhance the oil and gas sector’s operational effectiveness are not well coordinated,” it said.
It said gaps existing in the institutional and legal framework created critical operational problems for actors in the oil and gas sector, as it stressed that of particular concern was the allocation of oil wells without regard to best practices.
The report showed that the conflict between government and industry objectives and distrust among the actors limited the adequacy of consultation efforts, adding that early consultation would most likely improve trust and collaboration among stakeholders.
It said oil and gas sector contracts were hardly made available to the public, as asset disclosure and information on beneficiary ownership was still not available for effective scrutiny within the industry.
On oil exploration, the report stated that government had no clear policy governing the award of licences; its decisions were rather driven by the prevailing socio-political environment.
George-Ikoli stated that to accurately review changes in sector’s governance, a consortium of researchers consulted with multiple stakeholders in the sector, including industry experts, practitioners, civil society and community leaders.
“The purpose of the report is to provide a benchmark for measuring progress in the country’s oil and gas sector against the 12 Charter precepts,” she said.