Nigeria orders oil multinationals to pay nearly $20 billion in taxes

ExxonMobil used to illustrate the story
ExxonMobil used to illustrate the story

The Nigerian government has ordered a number of non-Nigerian oil and gas companies to pay nearly $20 billion in taxes.

Reuters news agency reported Thursday that the move could deter investment in Africa’s largest economy.

Quoting industry and government sources, the news medium said the taxes are allegedly owed to local states.

Details of the demand are contained in a letter sent to the companies earlier this year via a debt-collection arm of the government, wherein the Nigerian National Petroleum Corp (NNPC) cited what it called outstanding royalties and taxes for oil and gas production.

The affected oil companies include Royal Dutch Shell, Chevron, Exxon Mobil, Eni, Total and Equinor. The firms were each asked to pay the Nigerian government between $2.5 billion and $5 billion, sources who saw or were briefed on the letters told Reuters.

PREMIUM TIMES’ efforts to confirm the details from the NNPC proved futile Thursday night, as the corporation’s spokesperson, Ndu Ughamadu, could not be reached.

But Reuters reports that the request were however confirmed by Norway’s Equinor, which produced around 45,000 barrels per day (bpd) of oil in Nigeria in 2017.

“Several operators have received similar claims in a case between the authorities in Nigeria and local authorities in parts of the country,” an Equinor spokesman said.

On its part, Exxon said it “is currently reviewing the matter”, according to a spokeswoman of the U.S. company.

The affected companies were expected to dispute their respective payment claims. Already, Equinor has said that it sees no merit to the case.

Nigeria, Africa’s biggest oil and gas producer, has in place several oil exploration mechanisms, including joint venture and production-sharing agreement with which oil companies develop and operate giant offshore fields.

The companies pay the government in the form of royalties and tax.

The Nigerian government has however had challenges with its own provision of cash calls in some of the agreements signed with the oil firms.

The new tax demand is expected to generate ripples in the industry, amidst numerous other operational challenges faced by local and foreign investors.

Already, the industry is plagued by massive oil theft, oil spills and corruption, among other factors that prevent the nation from realising its full potential despite its oil resource.

In 2018, Nigeria produced about 2.1 million bpd of oil, up from 1.8 million bpd it produced in 2017.

In 2016, the nation slipped into recession amidst dwindling oil revenue. It exited recession in the second quarter of 2017 after production and prices improved amidst relative stability in its oil-rich Niger Delta region.

The revelation comes as Nigeria prepares to go to the poll in an election described as crucial and keenly contested by analysts.

It is however unclear whether the new tax bill has anything to do with the demands of electioneering.

Support PREMIUM TIMES' journalism of integrity and credibility

 

Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.

For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.

By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.

Donate


NEVER MISS A THING AGAIN! Subscribe to our newsletter

* indicates required

DOWNLOAD THE PREMIUM TIMES MOBILE APP

Now available on

  Premium Times Android mobile applicationPremium Times iOS mobile applicationPremium Times blackberry mobile applicationPremium Times windows mobile application

TEXT AD: This space is available for a Text_Ad.. Call Willie on +2347088095401 for more information


All rights reserved. This material and any other material on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from PREMIUM TIMES.