The Nigerian National Petroleum Corporation (NNPC) wants the National Assembly to hasten the amendment of royalty rates for oil gotten from deep offshore sources.
Responding to the publication of Petroleum Profit Tax (PPT) accrued to the country between the third quarter of 2015 and third quarter of 2017, which was released by the Central Bank of Nigeria (CBN), the corporation’s Chief Operating Officer, Upstream, Bello Rabiu, told TheGuardian that amendments to the deep offshore and inland basin production sharing contracts act of 1993 are welcome and needed.
He also proposed some needed changes to the National Assembly.
“It is our opinion that the proposal to increase the royalty rate for terrains beyond 1000 metres, from zero per cent to three per cent, is commendable but it is necessary to also make corresponding adjustments in other categories,” Rabiu said, adding that the incentives in PSC’s have outleaved their usefulness.
“It is our opinion that these incentives have outlived their usefulness and are now impediments to the Federal Government’s revenue collection efforts. The use of such incentives can be terminated by an amendment of section 4 of the Act.”
According to the report from CBN, the government received N495.39 billion as PPT/royalties in third quarter of 2015. During the first quarter of 2016, the government earned lower at N314.04 billion. The next quarter saw a further drop in revenue to N212.78 billion. In the third quarter of 2016, there was an increased to N392.38 billion. and another decrease to N273.13 billion in Q4 2016.
The year 2017, which was the beginning of the OPEC plus alliance saw revenues rise to N325.38 billion in the first quarter. There was a slight lessening in Q2 to N320.49 billion. The third quarter of Q2 rose to Q3 2015 heights at N489.41 billion. CBN said N103.46 billion was put into the 13 per cent Derivation Fund for distribution among the oil producing states.
In all, the government made N3.211 trillion from PPT/royalties in the quarters under review.
NNPC says it has received permission to review the terms of the production sharing contracts, which regulate the drilling of oil offshore. Rabiu called on the National Assembly to seek relevant input from the Federal Inland Revenue Service, to determine the most suitable opinions regarding the methodology for the computation of taxes in view of the proposed royalty regime.
Rabiu also wants the Minister of Petroleum Tesources to be able to fix royalty rates according to specified economic indicators.
