When it becomes fully operational, the new Petroleum Industry Act (PIA) may significantly reduce government’s revenue and in fact result in a cut in remittances by the Nigerian National Petroleum Company Ltd (NNPCL), a policy brief by OrderPaper, has hinted.
The brief aimed at Mainstreaming Fiscal Responsibility in Nigeria’s Petroleum Sector, released in Abuja by the organisation which has the objective to improve revenue remittance and transparency in the oil and gas sector, added that the new PIA also has some drawbacks.
“Although the PIA has several good initiatives, there are drawbacks related to revenue mobilisation into the central pool of government.
“The law has serious implications for the public finances of the federation. For instance, the reduction in remittance of collectables by the NNPC Ltd will result in a considerable reduction in revenues available for service delivery by the government,” it stated.
The brief was authored by the OrderPaper with support from United States Agency for International Development (USAID) and Palladium and supported by the Growth Initiatives for Fiscal Transparency (GIFT) Nigeria Project.
At the event, one of the speakers, who is an Oil and Gas Governance expert, Mr. Henry Adigun, noted that the failure by the federal government to implement in full the provisions of PIA was already hurting the oil and gas industry.
In his remarks, Executive Director, OrderPaper, Oke Epia, noted that the brief examined the extant fiscal responsibility instruments as they relate to the petroleum sector.
“This is because the sector is not only the mainstay of the economy and major foreign exchange earner but also the pivot upon which diversification and economic growth and development should stand,” he added.
Epia said that the PIA was supposed to reform administration and revenue remittance but that had not happened, noting that, “These are the issues that led GIFT Nigeria to commission the study.”