The Minister of State, Petroleum, Chief Timipre Sylva, said that when the Petroleum Industry Act (PIA) fully takes off, it will provide for a 10-year tax vacation for some oil and gas investors in the industry.
Speaking at the Nigerian International Economic Partnership Forum at the United Nations General Assembly (UNGA) in New York, the minister stressed that the PIA has provided for a smooth fiscal framework for operators in the sector.Sylva, who spoke on the theme: ”Scaling Up International Economic Partnerships for Nigeria in a Post-Covid World” described the PIA as a watershed moment for the nation.
“The PIA 2021 has established a legal, governance, regulatory, and fiscal framework for the petroleum industry, host community development, and associated matters.
“It provides fiscal certainty, improves regulations and incentives for investment, including up to 10-year tax vacations, while guaranteeing better take for both government and private investors, thereby balancing rewards with risk,” he noted.
According to the minister, in the past decades, the Nigerian oil and gas industry faced serious policy as well as fiscal and operational challenges, making reformation of the sector a priority of successive administrations.These challenges, he said led to deferment of core investments, divestments, operational ambiguities, poor infrastructure, inadequate funding, and limited access to financing.
In addition, he explained that the absence of the right framework led to the lack of funding for project decommissioning and abandonment, including poor environmental stewardship as well as insignificant direct benefits to resource host-communities.
Surmounting these challenges, Sylva noted, required strong determination to reform the industry in order to build a robust, thriving and resilient economic backbone for domestic growth in the era of global energy transition.
Sylva argued that Nigeria was already reaping positive results from the enactment of the PIA 2021, stressing that for example, existing and potential investors now have certainty on the regulatory regime, which were not available in the past.
“This has helped to clear one of the major challenges that held back the sanctioning of new projects,” he noted.The minister maintained that government has taken the necessary steps to sustainably implement and operationalise the PIA 2021 within the timelines stipulated in the Act.
To this end, the government, the minister added, has inaugurated the steering committee, which he chairs and is responsible for PIA implementation immediately after the PIA was signed into law. He added that the law will also aid our energy transition plan through efforts to focus on natural gas, a much less CO2 emitting energy source, to power the country’s energy sufficiency.
“Natural gas remains our transition fuel, a viable and sustainable pathway to a clean energy transition, as it provides the energy needed for our growing population in terms of power generation, transport, feedstock for industries and clean cooking solutions.“Our reforms focus encompass energy security, economic competitiveness, and a reduction of greenhouse gas emissions. Our abundant natural gas can conveniently meet all three priorities simultaneously.
“With over 200 Trillion Cubic Feet (TCF) of proven gas reserve, and a potential upside of up to 600TCF, the most extensive in Africa, and among the top 10 globally, natural gas will be a major component of our energy mix for the foreseeable future,” the minister explained.
