The Lagos Chamber of Commerce and Industry (LCCI) has urged the National Assembly to ensure the passage of a competitive Petroleum Industry Bill (PIB) that would make Nigeria an investment destination of choice.
The Director-General of LCCI, Mr Muda Yusuf, made the call in a statement issued on Sunday in Lagos.
Yusuf said that the LCCI was fully in support of government’s efforts to drive the reform of the petroleum industry through a new PIB, which was currently before the National Assembly.
“The Lagos Chamber urges the National Assembly to put in place a law that will promote a more effective and efficient governance, administration, host community development and fiscal framework for the petroleum industry.
“A competitive bill will help preserve the integrity of the existing projects, whilst also encouraging future growth of production, and make Nigeria an investment destination of choice,” he said.
According to him, Nigeria, with the largest oil and gas reserves in Africa, has huge untapped potential to achieve its economic development goals, including gas-to-power ambitions.
Yusuf noted that in spite of having the largest reserves in Africa, Nigeria received a meagre four per cent (3 billion U.S. dollars) of 75 billion U.S. dollars invested in the continent between 2015 and 2019.
He said that this underscored the need to create a competitive environment to attract more investment to the oil and gas sector.
He said that the key objectives of the PIB 2020, among others, included reforming the institutional and fiscal framework and developing Nigeria’s gas sector.
Yusuf said that it was also aimed at creating a framework to support the development of host communities and foster sustainable prosperity, while bringing in new investments to grow the country’s production capacity.
“However, some of these improvements appear insufficient to deliver the true value to Nigeria, which the bill aims to achieve.
“Some provisions in the bill could adversely affect the growth of the industry and the overall economy.
“We firmly believe that based on constructive cooperation between the Nigerian Government and other stakeholders, host communities and industry, the objectives of the reform can be successfully met,” he said.
Yusuf noted that there were six key areas that the drafters of the PIB should look into, so as to ensure that the bill achieved its objectives.
He said that the areas included the preservation of base business and rights, as well as the granting of full royalty relief to new deep-water oil projects during the first five years of production.
He also wanted the removal of Hydro Carbon Tax, as the companies would still be subjected to Companies Income Tax Act (CITA).
Other areas, he said, were the segregation of upstream and midstream deemed assets, the harmonisation of tax practices, the permit of capital allowance and allowable deductions, which were consistent with existing tax legislations and CITA.
Yusuf said the PIB should also include an exemption for existing export gas supply contracts and obligations, while simplifying the administrative burden of compliance, minimising ambiguity and the extent of overlapping regulation.