Energy

Nigeria struggled to attract investments into the Oil, Gas industry over the years — LCCI

Published

1 year ago

January 10, 2023

By Adenike Agunsoye

The Lagos Chamber of Commerce and Industry (LCCI), in recognition of the potential impact of the 2022 Finance Bill on the operations of members operating in various sectors of the economy, has reviewed that recent statistics reveal that Nigeria has struggled to attract investments into the Oil & Gas industry and that investments in the Nigerian oil and gas sector have declined significantly in the last seven years, and that the operations overheads of oil and gas companies remain above 40 per cent above the global benchmark.

This was contained in the statement signed by the Director-General of Lagos Chamber of Commerce & Industry, Dr. Chinyere Almona, FCA on Friday 6th January 2023.

The Chamber reviewed that in line with FGN priorities and ongoing initiatives to incentivise gas production, several sections of the PIA clearly show the determined efforts by the government to limit gas-flaring and contain very steep penalties.

Also, gas flare fees/costs are treated as a penalty and as such a non-tax-deductible item. And that oil and gas companies in Nigeria have reduced flaring by 70 per cent since 2000 while nearly doubling overall gas production and commercialised volumes in four-folds.

The Chamber opined that with the plan to exit some large enterprises from the Pioneer Status incentives, the Government can save about N6trillion tax expenditure (waivers, exemptions, incentives granted by the government), according to the Honourable Minister of Finance, Budget and National Planning in her 2023 Budget presentation.

“On the path of caution, we urge the government to tread conservatively in raising tax rates, since there are new ways of rescuing some tax expenditures to add up to government revenue in 2023. Leaving rates at their levels will not lead to a loss of revenue.”

They stated that the oil sector’s contribution to Gross Domestic Product (GDP) through 2022 was just around 5 per cent but this sector accounts for over 85 per cent of foreign exchange earnings and about 50 per cent of total government revenue.

This suggests that this sector requires a sensitive regulatory environment to avoid disruptions to investments in the sector.

With the divestments by some IOCs from the oil and gas sector, LCCI agreed that there is a need to reposition the industry through a steeply implemented Petroleum Industry Act (PIA) to pave way for new investments and also encourage indigenous companies to reflate the sector with required investments.

Also, industry statistics revealed that indigenous companies contribute about 30 per cent of crude oil and 20 percent of the country’s gas production, as well as 40 per cent and 32 per cent of oil and gas reserves, respectively.

The Chamber, based on feedback from operators in the Oil & Gas sector and the wider business community, has recommended that the 30 per cent CIT for all oil and gas companies should be retained.

The Chamber suggests retention of the Tertiary Education Tax (TET) rate at 2.5 per cent, since it was just recently increased from 2 per cent to 2.5 per cent, and at the proposed rate of 3 per cent Nigeria’s corporate income tax rate would rise to about 36 per cent which is one of the highest rates in the world, according to available research.

LCCI opined that amending the Petroleum Profit Tax Act with the same provision in the PIA section 104 should be considered.

Also, Gas flares-out projects should be incentivised to ensure monetisation of the resource for the benefit of Nigeria.

And they also recommended that Finance Bills are presented for extensive stakeholders’ consultations before they are passed by the National Assembly.

The Chamber promised to continue to work towards mobilising the private sector to support the implementation of the 2023 Federal Budget.

“As regard achieving revenue targets for the budget, the MDAs and Government Owned Enterprises (GOEs) can intensify their revenue mobilisation efforts in an enabling environment where the private sector thrives.

“To achieve the laudable objectives of the 2023 Budget, we urge the government to sustain current efforts toward the realisation of crude oil production and export targets by creating an investment-friendly oil and gas industry. Public-Private Partnerships (PPPs) are the best models to fast-track the pace of our infrastructural development.”

Energy

530 CNG buses ready for deployment in Lagos, Oyo, Kwara, FCT, others

Published

8 hours ago

May 16, 2024

NewsDirect

The process for nationwide deployment of Compressed Natural Gas (CNG) vehicles has commenced. Not less than 530 buses are to be deployed by the end of the month in six pioneering states.

These are Oyo, Lagos, Kwara, Kogi, Kaduna, Nasarawa, and the Federal Capital Territory (FCT) Abuja.

Programme Director of the Presidential Compressed Natural Gas Initiative (PCNGI) Michael Oluwagbemi stated this yesterday.

It was during the event signaling the commencement of 15-day-long activities ahead of the rollout.

He said the distribution is on a demand-led basis. He added that efforts would be accelerated at the conversion of diesel and petrol-fuel engines across the country.

According to Oluwagbemi, President Tinubu has directed the PCNGI to ensure the conversion of at least 10 per cent of the total number of vehicles in the country in the first year of the rollout of the initiative.

The programme began yesterday in the Southwest with the Presidential (virtual) commissioning of the critical gas supply projects.

Today, the team will inspect the Jets and Mikano Factory along with representatives of the Ministry of Labour and workers unions.

Southsouth and Southeast stakeholders engagement will be held tomorrow in Port Harcourt, the Rivers State capital.

Affiliate conversion and refuelling at the Femadec Site as well as an inspection tour of the Total Energies support station are planned.

Another six-day inspection tour of the Kojo Factory at the Enugu-Onitsha Site will begin on May 24 to receive the first set of assembled tricycles, buses, cylinders and kits ahead of the official launch.

The Luojia Assembly Plant for CNG tricycles on the Lagos-Ibadan Expressway will be inaugurated on May 30.

“These programmes are a fulfilment of President Bola Ahmed Tinubu’s promise to drive Nigeria’s energy transition in the transportation sector leveraging CNG and enabling economic growth,” Oluwagbemi stated.

He noted the President’s political will to ensure the full utilisation of natural gas which hitherto was being flared.

Energy

Oil block bid rounds: NUPRC assures interested buyers of conducive environment

Published

20 hours ago

May 16, 2024

NewsDirect

The Chief Executive of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Engr Gbenga Komolafe, has assured prospective investors interested in participating in the country’s oil rounds of a conducive environment to conduct their business.

Komolafe made this assertion at the Miami International Roadshow for the 2024 licensing round, organised by the NUPRC in partnership with the Petroleum Technology Association of Nigeria (PETAN) and Zetse Advisory & Consulting.

Speaking, Komolafe declared that the marketing of oil blocks has garnered staunch backing from the highest echelons of the government.

Engr. Komolafe, who underscored the role of presidential support in attracting investors to the Nation’s oil sector, said the Licensing Round is part of concerted efforts by Nigerian authorities to revitalise the country’s oil and gas industry and foster increased investment.

According to him, the backing signals a concerted effort to provide a conducive environment for both domestic and foreign investors seeking opportunities in Nigeria’s energy market.

The Miami International Roadshow serves as a crucial platform for showcasing Nigeria’s vast potential in the petroleum sector and fostering partnerships with international stakeholders. By collaborating with stakeholders such as PETAN and Zetse Advisory & Consulting, Komolafe further affirms Nigeria’s commitment to fostering a transparent and investor friendly regulatory environment in its pursuit of energy sector excellence.

Energy

Tinubu commissions OB3, ANOH, AHL gas projects

Published

22 hours ago

May 16, 2024

NewsDirect

…Reiterates commitment to utilise Gas for economic growth, prosperity

President Bola Ahmed Tinubu on Tuesday virtually commissioned three gas projects in Imo and Delta state.

The projects were executed by NNPC Limited and its partners in Ohaji-Egbema, in Imo State and Kwale, in Delta States, on Wednesday.

The three projects commissioned include the expansion of the AHL Gas Processing Plant, the ANOH Gas Processing Plant and the 23.3km ANOH to Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline Projects.

Speaking, President Tinubu reiterated the commitment of his administration to utilize Nigeria’s abundant gas resources towards revamping the nation’s industrial growth and kickstarting its economic prosperity.

“It is pleasing that approximately, 500MMscf of gas in aggregate would be supplied to the domestic market from these two Gas Processing Plants, which represents over 25 percent incremental growth in gas supply. In practical terms, this translates into more gas to the Power Sector, Gas-Based Industries, and other critical segments of the economy,” the President added.

The President said from the onset, his administration was clear of its intention to leverage on the virtually unlimited capacity of gas to deepen domestic gas utilisation, increase national power generation capacity, revitalise industries, and create multiple job opportunities for economic growth.

He said aside the Presidential Compressed Natural Gas (CNG) Initiative which is aimed at moving Nigerians away from petrol and diesel as vehicular combustion fuel, significant progress has also been recorded in incentivising gas development through Presidential Executive Orders.

While congratulating the projects partners (NNPC Limited, Sterling Oil Exploration & Energy Production Company Limited (SEEPCO) and Seplat Energy for the successful implementation of the three projects, Tinubu particularly charged the NNPC Limited to, as the national energy company of choice, sustain its relentless efforts and record more successes in the energy sector for the benefit of all Nigerians.

He described the commissioning as a highly significant milestone for Nigeria as it demonstrates his administration’s efforts to accelerate the development of critical gas infrastructure geared at enhancing the supply of energy to boost industrial growth and create employment opportunities.

He said the projects were fully in line with the Federal Government’s Decade of Gas initiative, and his administration’s quest to grow value from the Nation’s abundant gas assets while concurrently eliminating gas flaring and accelerating industrialisation.

“I wish to assure the citizenry that these are just the beginning, as the federal government is stepping up its coordination of other landmark projects and initiatives that will ensure the earliest realisation of gas-fueled prosperity in our country. Consequently, I wish to assure investors in the energy space that this is an investment enabling government and we will not relent in facilitating the ease of doing business,” the President noted.

Earlier in his address, the Minister of State for Petroleum Resources (Gas) Rt. Hon. Ekperikpe Ekpo highlighted the efforts of his ministry to continue to champion the utilisation of gas as a transition fuel as Nigeria moves towards achieving clean energy efficiency and security by 2060.

Ekpo commended the President for his leadership and support towards the success of the three projects.

He said: “Mr. President, the decision to eliminate fuel subsidies at the start of your administration has compelled increased spending in upstream and midstream gas development, and the use of gas as an appropriate, more cost-effective, and cleaner alternative to diesel and gasoline. Furthermore, in keeping with the Paris Climate Change agreement, this measure solidifies the use of gas as our transition fuel as we move the Nation towards achieving green energy sufficiency by 2060.”

The Minister appreciated President Tinubu, saying his “inspiring leadership has been the driving force behind our progress towards a future full of opportunity and promise.”

He described the AHL Gas Processing Plant 2 (GPP – 2) and ANOH Gas Processing Company (AGPC) Plant, which were commissioned, as important facets of the Decade of Gas initiative, and a reflection of the NNPC Ltd. and its Joint Venture partners’ efforts.

“In addition to producing over 160,000 metric tonnes of propane and 100,000 metric tonnes of butane annually, this plant promotes rapid industrialisation and reduces reliance on LPG import,” he said.

In his remarks, the GCEO NNPC, Mr. Mele Kyari described the commissioning as a demonstration of Mr. President’s commitment and support to grow the domestic utilisation of natural gas for power generation, as feedstock for gas-based industries and overall rapid industrialisation of Nigeria on the back of the enormous gas resources in the country.

Kyari assured that as part of its mandate, NNPC Ltd remains committed to maintaining energy security by executing more strategic gas projects for the benefit of Nigeria.