(Repeats to add pictures available, no change to text)
* Three draft bills are part of Petroleum Industry Bill
* Drafts set out tax, royalty rates for oil, gas firms
* Would create funds for communities hit by operations
* President would have power to award petroleum licences
By Paul Carsten and Alexis Akwagyiram
ABUJA, May 10 – Nigeria’s government plans to create a powerful energy regulator with broad oversight of the oil and gas sector, according to draft versions of sweeping
reforms known collectively as the Petroleum Industry Bill (PIB).
The draft laws, posted on the Nigerian legislature’s website
on April 30, are the versions intended for the Senate, the upper
house of parliament.
The PIB aims to improve transparency, attract investors,
stimulate growth and increase government revenues.
After being debated for well over a decade, the unwieldly
and contentious legislation was broken into sections to help it
pass into law.
The governance part of the bill was passed by both houses of
parliament in January. However, that section has not yet been
signed into law by President Muhammadu Buhari, who is also
Nigeria’s oil minister.
The inability to pass the law and uncertainty around
taxation has stunted investment in the west African nation,
particularly in deep-water oil and gas fields.
The three PIB sections yet to be passed address fiscal and
administrative issues and local communities affected by the oil
On Tuesday, Senate President Bukola Saraki told Reuters
Nigeria’s parliament aims to pass the long-delayed PIB by the
end of July.
The administrative bill largely deals with the scope of the
Nigerian Petroleum Regulatory Commission, which would be the
main body regulating the oil and gas sector in the country.
The commission would have the power to grant, amend and
revoke licences for all kinds of activity in the industry, from
exploration and drilling to distribution and sales. It would
also make public all those licences, permits and authorisations,
as well as the details of interests or shares held.
The bill sets the time limits for various kinds of licences:
three years for an exploration licence, 25 years for onshore
petroleum licences and 30 years for deep offshore.
The draft seeks to put an end to Nigeria’s subsidies for
petroleum products, with a “short transition towards full market
pricing”, within a year of the bill being signed into law.
“The President may direct the Commission to negotiate and
award Petroleum Licences to qualified investors outside of the
bidding process,” the draft also said.
The fiscal bill sets out the rates of tax and royalties for
various oil and gas enterprises, as well as various breaks such
as upstream gas operations receiving a tax-free period of five
years from the start of production.
For profits from: Assessable tax (%)
Onshore crude 65
Shallow water crude 50
Onshore natural gas 30
Shallow water natural gas 30
Deep offshore upstream crude 40
Deep offshore upstream gas 30
Tranches of production Royalty rate
(barrels per day) (%)
First 2,500 2.5
Next 7,500 7.5
Next 10,000 15.0
Above 20,000 20.0
Shallow water areas:
First 10,000 5.0
Next 10,000 10.0
Next 10,000 15.0
Above 30,000 20.0
Deep water areas:
First 50,000 5.0
Next 50,000 7.5
Above 100,000 10.0
Additional tax will also be charged when crude prices exceed
$60 a barrel, the draft said.
The third draft section of the PIB addresses communities
that host or are affected by oil and gas sector work.
For decades, communities in the Niger Delta oil heartland
have complained that spills and pollution have destroyed their
land and killed off wildlife.
RIghts group Amnesty International accused international oil
majors Royal Dutch Shell PLC and Eni SpA in
March of negligence when addressing spills in Nigeria.
Other oil majors such as Exxon Mobil Corp, Total SA
and Chevron Corp also operate in Nigeria.
The draft bill seeks to address some of those concerns by
making companies whose operations are in or near communities set
up a trust, with a fund, for the benefit of those people.
Failure to do so would result in the suspension of their
licence, the draft said.
Companies would have to contribute 2.5 percent of annual
operating expenditure for work in that area into the trust’s
fund, which would then be used to improve infrastructure, job
creation, education and health facilities.
(Reporting by Paul Carsten and Alexis Akwagyiram
Additional reporting by Camillus Eboh
Editing by Adrian Croft)