Mrs Folorunsho Alakija, an energy tycoon and Nigeria’s richest woman has said that the country’s 85% tax on onshore crude oil production is dissuading local investors from taking over assets from international oil companies, Bloomberg reports.
Famfa Oil Ltd., founded in 1991 by Alakija and among dozens of Nigerian companies granted oil licenses in the early 1990s from the existing military regime at the time, has sought to acquire stakes in onshore oil fields, yet sees the tax regime as a deterrent. Onshore producers pay 30% corporate tax and 55% tax on petroleum profit, while offshore producers who bought stakes in the 1990s are exempt of corporate tax and pay 50% profit tax.
“The 85% that those who are onshore are having to pay is going to be too high for indigenous companies to be able to stand on their own two feet,” she said.
Investment in Africa’s largest oil producer has been held up by uncertainty over Nigeria’s Petroleum Industry Bill (PIB), a law that has been delayed in parliament for almost seven years due to political wrangling and opposition from international energy companies to proposed tax and royalty terms.
Mrs Alakija said; “It would be a good idea when the Petroleum Industry Bill does come out that it would have looked at tax relief for onshore, to help our people to be able to continue running their businesses and investing in that area”. “Nobody knows what is going to be the outcome of that bill” she added.
International producers have agreed to sell off $10 billion of mainly onshore assets over the past three years, according to Bloomberg Intelligence. Those assets are largely being taken over by local companies, such as Seplat Petroleum Development Co. but Mrs. Alakija noted that getting financing for fields may prove tough and expects more mergers and acquisitions in the industry, especially given the current low oil price environment.
No comments:
Post a Comment