[Mail and Globe] A proposed law aimed at sweeping reforms of Nigeria's oil sector is almost halfway through the legislative stages of approval but some of its provisions are sending jitters among giant oil operators. Multinational oil companies, already buckling under incessant militant attacks which have cut production by about 30% in the past three years, back the Bill regarding the streamlining of the industry's governance and operational processes. But they are uncomfortable with the proposed taxation regime.
The petroleum industry Bill, which went through its second reading and debate in the senate last week, is intended to overhaul the regulatory and operational systems of the industry, the lifeline of the West African powerhouse. It plans to transform the existing joint ventures between the transnational oil firms and the state Nigeria's National Petroleum Company (NNPC), and turn NNPC into an autonomous and internationally profitable entity.
It also wants to improve on tax collection -- decoupling oil from gas taxes as well as develop a system responsive to fluctuations in oil prices so as to capture on any windfall profits.
According to leader of the Senate Teslim Folarin, the Bill is designed to "simplify the collection of oil revenue through shifting emphasis to easily collectible revenue as royalties and rents".
In a discussion document multinationals said they back the reforms, but fear that some of the provisions of the Bill could thwart growth in the sector.
They argue that many provisions in the Bill "are unclear and open to multiple interpretations which would substantially increase investment risk, comparatively placing Nigeria at a disadvantage for inflow of foreign investment".