The multinational voices its concerns about the PIB which is before the National Assembly.
Oil giant, Shell, has complained about the fiscal terms proposed in the Petroleum Industry Bill, PIB, saying the bill would hurt the industry if approved by the National Assembly.
The Managing Director, Shell Nigeria, Mutiu Sunmonu, who described the tax provisions in the proposed law as grossly ‘uncompetitive’, said if passed into law without amendments, they are capable of stifling investment and making offshore oil and gas projects unviable.
Mr. Sunmonu’s statement on Wednesday seemed a response to the views of participants in the recent stakeholders’ forum organized by the Nigerian Extractive Industries Transparency Initiative on the PIB, which is before the National Assembly.
“A balanced PIB is what is required – one that will provide optimal revenue to the government, whilst providing sufficient incentives for new investments to fuel growth,” Mr. Sunmonu said.
The new law, the Shell boss said, must also “take local business challenges into consideration as well as the impact on existing investments. What we have seen of the draft PIB to date does not indicate a bill that fits these criteria.”
Disagreeing with Mr. Sunmonu, a former Legal Adviser and Group Executive Director, Corporate Services of the Nigerian National Petroleum Corporation, NNPC, Yinka Omorogbe, said the revised fiscal and tax provisions in the draft law is good for the country and the growth of the petroleum industry.
“The overall objective of the PIB to reposition the country’s oil and gas industry to take care of contemporary industry challenges sphere has been accepted as the surest way to secure maximum and sustainable value to the nation,” said Ms. Omorogbe, who is currently a law teacher in the University of Benin.
The PIB was conceived to transform the country’s petroleum industry, review the fiscal terms, and make the NNPC a viable commercial entity. The Shell boss however insists the bill is inadequate.
“The current draft PIB requires significant improvement to secure Nigeria’s competitiveness with other countries,” Mr. Sunmonu said. “As it stands right now the PIB will render all deepwater projects and all dry gas projects unviable.”
Details of the draft law, Mr. Sunmonu said, enforces oil companies to pay 50 per cent profit tax for onshore and shallow water areas, and another 25 per cent tax for frontier acreage and deep water areas.
“A bad PIB will deter investment. Nigeria needs to compete – and the PIB will either enable or strangle that competitiveness,” Mr. Sunmonu said.