The reforms so far implemented by President Bola Tinubu in the oil and gas sector as well as the executive orders signed in May last year have reduced the number of taxes in the sector as well as provided the much needed clarity in the oil and gas sector.
The Group Chief Executive Officer of the NNPC Ltd, Mr. Mele Kyari, said this on Tuesday at the opening session of the Nigeria International Energy Summit (NIESS) in Abuja.
Kyari said the three Executive Orders of President Bola Tinubu and the current tax reform have attracted Foreign Direct Investments (FDIs) into the oil and gas sector.
The three Executive Orders, which became effective 28th February 2024, are the Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024; Presidential Directive on Local Content Compliance Requirements, 2024; and Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024.
The target of the Executive Order is to unlock up to $10bn fresh investments in the nation’s oil and gas sector.
This is expected to come through fiscal incentives for non-associated gas, midstream and deepwater oil and gas.
The Executive Order streamlines contracting processes, procedures, and timelines from 36 months to six months and also ensured that local content requirements are implemented without impeding investments or the cost competitiveness of oil and gas projects
Speaking on the impact of the Executive Orders on the oil and gas sector, Kyari added that the industry has over 13 different taxes.
He noted that the current tax reforms have brought clarity to the sector and reduced the number of taxes.
The GCEO said, “That’s why you’re seeing all these things happening. And this is a reality that is unfolding. And this also leads to a number of things that happen also today, the tax reforms that is happening in our country today.
“Our industry always cries that we have over 13 different types of taxes that we pay. Not just about the quantum of the taxation, but other challenges and at this point, we are happy today that the tax reform that we are seeing today is clarifying the issue, making easy administration of taxes, reducing the number of taxes that are on the table, and ultimately allowing investors to have a long sight around their investment and what can come out of it.
“We are seeing the benefit coming forward.”
He said investors are now optimistic about the oil and gas industry.
“Investors have seen that when they put their money in our country today, in our businesses, particularly oil and gas sector, they can get back their money, they can get their returns, and there’s also a stable fiscal environment that will give them a long-time view of their investment, and I’m sure that is why you are seeing several investors are coming back into our country, and it’s working for us,” he said.
Kyari also said the NNPC Ltd has vowed to protect the interests of Nigerians and will take any action possible to ensure energy security in the country.
Kyari said the company is a major oil and gas sector player and would not be taken for granted globally.
He warned Nigerians to ignore conversations by some industry players and insisted that there is a gap to be filled to secure the energy future of Nigerians.
Empowered by the Petroleum Industry Act, 2021, the GCEO assured that it will take any action within the law to protect Nigerians.
Kyari said, “There is a wide space today, not minding all the conversations you hear out there that there’s still a space that must be filled. So, there is so much space there that gas can’t be fill, and that’s why this country has taken the next step, which is to build necessary infrastructure, create the necessary framework, and create the necessary fiscal incentives that are required.
“And that space is required by law for NNPC to do this, stabilize the market, bridge any gap that exists in our country so that energy security is provided for our country.
“And no doubt, we are aware of the open conversations out there, but I can tell you that the law requires NNPC to fill this gap, and whenever it becomes necessary, we take every necessary step to ensure energy security for our country.”
The GCEO said the recent attacks on the PMS from the NNPC by some social media reviewers were wrong.
He said the NNPCL has made deliberate efforts to invest in different forms of energy including electricity to position Nigeria on the path of prosperity.
He said, “As we all know, Nigeria is largest economy, that’s not in dispute. But not just largest economy, but we have the potential of growing even bigger. And here, as I said, we’re going to $1tn GDP.
“I think that’s too small, that’s not very ambitious. Because I think we can do better than this. And the projection is showing that this country will do better than this. I’m sure we know that $1tn is maybe the balance sheet of one IT company somewhere.
“This industry will surely be the biggest contributor to this development. And that’s already happening.”
He highlighted that the NNPC is building gas infrastructure and delivering gas into the domestic market.
The NNPC boss said “We know today that every domestic gas-based industry or power plant in the country is getting all the gas that it needs because we are building the infrastructure. We are delivering this infrastructure, and this country is working.”