Stakeholders in the oil and gas sector have called for proactive fiscal policy in the petroleum industry to fast track investment and infrastructure development in the country. The stakeholders disclosed this at the Virtual workshop on Leveraging Fiscal Regulations to Attract Investments in the Petroleum sector, on Thursday. Mr Osten Olorunsola, Chairman, Energy Institute Nigeria, said that the oil and gas sector in Nigeria needed a lot of investment to meet with the current global challenges. He stated that globally, the industry had witnessed decline in product demand and low price regime, adding that only low cost molecules would be able to make it in the market.
Olorunsola said that the sector in Nigeria needed to transform to meet with current trend as the sector was not buoyant as perceived by many. He noted that the Nigerian government need to define what energy transformation meant to it and focus to ensure that it delivered on policies that would develop the sector. “We need steady revenue, growth in all spheres of the sector and value-oriented leaders. We need to speed up with legislation to ensure that oil in the ground does not remain there and also create enabling environment for business to thrive. All these will give rise to sustained investment,’’ he said Olorunsola further said that fair sharing remained the bone of contention in designing fiscal policy.
He advised that the new policy must ensure that change of government would not affect the sector, and must be simple, transparent, socially inclusive and flexible. “Beyond competitiveness, we must aim at fiscal profitability. Investment in the sector will be enhanced with good fiscal regulations. We need more transformation in fiscal policy to achieve the desired result,’’ he added. In her remarks, Mrs Audrey Joe-Ezigbo, President, Nigerian Gas Association (NGA), said that Nigeria need to move as a nation that could generate foreign exchange and create employment. She said that a lot need to be done to attract investors in the sector adding that Nigeria could take a cue from what Egypt had done in the past five years to develop their oil and gas sector. The NGA president said that while Nigeria oil and gas sector contributed 9.14 per cent to GDP, other oil nation like Angola and Kuwait contributed 50 and 40 per cents respectively to their nation’s GDP.
“Like Nigeria, Egypt has 61 Trillion Cubic Feet (TCF) of gas and 42TCF of gas yet to be discovered. This is small compared to what we have here in Nigeria. They started importing gas when they saw that domestic production was no longer meeting domestic demand. Egypt with good policy recognized this and unlocked their economy and had significant discovery and today, they are self sufficient,’’ she said
She noted that fiscal policy was significant to investors, adding that the NGA believed that natural gas could help bring about a lot of changes in the industry.
Joe-Ezigbo noted there was need to look at types of resources in the country in creating the fiscal policy and ensure a stand-alone policy for gas. She advised that government should also create landscape that incentivises gas, look at bottlenecks in contracting among others.
“It is imperative to pass fiscal policy, for upstream, downstream and midstream with gas having a stand-alone policy. The policy must address the dearth of capital and investment and must see gas as economic enabler that should not be over-taxed,’’ the NGA president added. Also speaking, Mr Joe Nwakwe, Chairman, Society of Petroleum Engineers, Nigeria Council, said that government must know that oil and gas also belonged to the next generation and hence good policy was imperative.
He said that the new fiscal policy must capture that to be realistic, adding that issues of Host Community must be critically looked into to ensure safety of workers. “Fiscal policy must strengthen licensing of operations and ensure peaceful production environment. The host communities must also be happy with the business happening in their area,’’ the SPE chairman said.