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Non-harmonization of taxes key worry of prospective investors in oil industry—PwC

A Partner and Africa Oil and Gas Industry expert at PwC Nigeria, Mr. Pedro Omontuemhen, has traced the observed cold feet of prospective investors in Nigeria’s oil and gas sector to issues of tax differentials and weak stability in fiscal regulations.

He also listed hostilities arising from host communities demands and challenges in engaging them in discussions when necessary taxes and realities had been paid.

Omontuemhen observed further that “A proper governance structure for the sector is important because it is important to make sure that the minister is not too powerful – not both judge and jury – and that the NNPC is not both player and regulator. The tax regime is very important too,” he said in an interview with The Oil and Gas Year.

“As an international investor, you want to make sure that you are getting the most value for your dollar. You can take that dollar to Mexico, Australia or Indonesia, so you want to know how much you will get in return for a dollar invested here. Until investors have that certainty, the market will remain in a watch-and-wait mode.”

He argued that if these issues remain unresolved for a long time, Nigeria may begin to lose investors in drones to economies where related issues had been made better and effective.

Some of the emerging nations with strong oil and gas governance structures include Mozambique, Ghana, South Sudan, and North Africa.

Continuing, the PwC official explained that “People are looking for oil everywhere else in Africa. The competition is only going to increase; so the quicker Nigeria puts her laws together to retain as much value as possible, the better.

“There are loads of opportunities for investors in the oil and gas industry here, whether in the upstream, midstream or downstream. Opportunities exist regardless of whether you want to play in the services space, the refining space or transportation. That is manifested in a number of foreign-owned companies in Lagos, Abuja or Port Harcourt,” Omontuemhen noted.

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