Petroleum industry bill and the challenge of oil and gas taxation in Nigeria

Abstract

Oil exploration and production activities in Nigeria in it's over fifty years of operation is yet to operate at standards and levels of efficiency expected of a twenty first century oil and gas industry. The operating landscape, business and competitive environments, both locally in Nigeria and internationally have continued to change rapidly in the last few years in such a manner that the Nigeria's oil and gas industry as it is currently set up, can no longer operate in a sustainable manner. Over the years, the laws regulating Nigeria's oil industry have not been comprehensively reviewed. The main laws are the Petroleum Act 1969 (as amended), the Petroleum Profits Tax Act 1959 (as amended), and the Nigerian National Petroleum Corporation Act of 1977 (as amended). There are also a number of other laws, mostly decrees which have become obsolete and proven to be impotent in regulating the country's petroleum industry. It is for these and many other reasons that the Federal Government of Nigeria embarked on a journey of a comprehensive reform aimed at re-positioning Nigeria's oil and gas industry to foster a long-term sustainability of the sector, ensuring greater efficiency and effectiveness to meet the aspirations of Nigerians and all the stakeholders, and also ensuring global competitiveness. The proposed Petroleum Industry Bill (PIB) coalesces all the existing 16 laws into one comprehensive, all encompassing legislation, which captures all the experience of past more than 50 years in addressing all institutional matters: policy, structure, legal and governance.