Key points
- Federal Government has engaged PwC to benchmark Nigeria’s oil and gas taxes, fees and levies against global standards.
- The exercise aims to address concerns over multiple statutory charges affecting investment competitiveness.
- Government says administrative burden, rather than the value of some charges, is a major challenge for operators.
- Oil production has risen above 1.8 million barrels per day, while active rigs have increased to more than 60.
Main story
The Federal Government has commissioned PricewaterhouseCoopers (PwC) to carry out a global benchmarking exercise of taxes, fees and levies in Nigeria’s oil and gas industry as part of efforts to improve the country’s competitiveness and attract more investment.
The Minister of State for Petroleum Resources (Oil), Sen. Heineken Lokpobiri, announced the initiative on Tuesday at the 25th Nigeria Oil and Gas (NOG) Energy Week conference and exhibition in Abuja.
According to the minister, the study is being undertaken in collaboration with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) following persistent concerns from industry stakeholders about the large number of statutory charges imposed across the petroleum value chain.
Lokpobiri said the objective is to compare Nigeria’s fiscal regime with those of other petroleum-producing countries and identify globally competitive practices that could strengthen the investment climate.
He acknowledged complaints that operators contend with more than 270 different fees and levies, noting that while many of the charges may be relatively small, the cumulative administrative process of handling numerous invoices and payments places a significant burden on businesses.
He disclosed that the benchmarking report would soon be completed and expressed confidence that its recommendations would provide a lasting solution to the issue.
The minister said the Tinubu administration had continued engaging industry stakeholders to address genuine concerns affecting the sector while pursuing regulatory reforms aimed at improving investor confidence.
He said government remained focused on creating a stable and predictable operating environment capable of attracting fresh investment, encouraging exploration and increasing crude oil production.
Lokpobiri disclosed that Nigeria’s crude oil production had risen to more than 1.8 million barrels per day, according to the latest weekly figures from the NUPRC.
He attributed the increase to sustained investment, improved security around oil facilities and ongoing drilling campaigns across the industry, adding that Nigeria still has significant capacity to raise production further.
The minister also said the number of active oil rigs had increased from about 40 in 2023 to more than 60, providing a stronger platform for future output growth.
He added that the approval of international oil companies’ onshore asset divestments had strengthened indigenous participation, with Nigerian independent producers now accounting for more than 60 per cent of the country’s oil production.
According to him, the divestments have enabled international oil companies to concentrate on deep offshore operations while indigenous firms expand production from the acquired onshore assets.
Lokpobiri reaffirmed the government’s commitment to policies that support exploration, expand reserves and sustain production growth, while congratulating Renaissance Africa Energy and its partners on their recent hydrocarbon discovery and encouraging operators to intensify exploration activities.
The issues
Nigeria’s oil and gas industry has long faced criticism over the multiplicity of taxes, fees and levies imposed by various government agencies. Industry stakeholders argue that the numerous statutory charges increase compliance costs, discourage investment and reduce the country’s competitiveness compared with other oil-producing jurisdictions. The government’s decision to commission an independent benchmarking exercise is intended to identify international best practices and support reforms that simplify the fiscal framework while maintaining government revenue.
What’s being said
“We have commissioned PwC to carry out a global benchmarking exercise. Nigeria must be globally competitive.” — Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil)
“When people say there are more than 270 fees and levies… the real issue is the administrative burden of processing numerous invoices and payments.” — Heineken Lokpobiri
What’s next
The PwC benchmarking study is expected to be completed soon, after which the government is expected to consider reforms aimed at harmonising taxes, fees and levies across the petroleum industry to improve Nigeria’s attractiveness to investors.
Bottom line
The Federal Government is seeking to simplify Nigeria’s oil and gas fiscal framework by benchmarking it against global standards, while leveraging rising oil production and increased indigenous participation to strengthen the sector’s long-term competitiveness.
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