As part of efforts towards reforming the oil and gas industry, the Ministry of Petroleum Resources (MPR) recently released the Draft National Petroleum Fiscal Policy. The release of the Policy follows the recent moves to rename the Petroleum Industry Bill (PIB) to “Petroleum Industry Reform Bill (PIRB)” and breaking this up into two separate bills to address one of the major challenges bedevilling legislative passage of the PIB.
The purpose of the policy is to provide a fiscal framework that will guide the planning and development of petroleum activities in an efficient manner and ultimately lead to the socioeconomic development of Nigeria. Government is also interested in increasing revenue generated from this sector of the economy.
Some of the highlights of the Policy include:
• Reintroduction of the Nigerian Hydrocarbon Tax
• Reduction of tax deductible items
• Limited recoverability of costs incurred overseas to a maximum of 80%
• Introduction of volume and price based royalty payments
• Introduction of production allowances as a preferred fiscal instrument over cost based incentives
Details of the Policy are fully examined HERE.