Oil and Gas Industry has been described as the main source of revenue generation to the Federation and an engine driving the wheels of the Nigeria economy.
The Acting Chairman, Revenue Mobilisation Allocation and Fiscal Commission, Umaru Farouk Abdulahi, stated this at a retreat organized by the commission at Ibom ICON HOTEL, Uyo in Akwa Ibom State on Wednesday.
Petroleum Industry Act 2021 was passed on 9th August, 2021 and accented into law by the President, Federal Republic of Nigeria on the 16th August 2021.
It provides for Legal, Governance, Regulatory and fiscal framework for the Nigeria Petroleum industry, the development of Host communities and other related matters.
In his address, Barr. Abdulahi said, ‘It is a known fact that the industry contributes less than 10% to the country’s Gross Domestic Product, but accounts for over 80% of Nigeria’s foreign exchange earnings and 60% of its total income.
“As a result, any adverse change in the industryj will have a major and long-term impact on Federation Revenue. This may be the reason why various governments in the past and present have concentrated on the sector despite various discussions on the need to diversify the Nigerian economy,” he said.
Barr. Abdullahi continued, “the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) is one of the fourteen (14) Federal Executive Bodies established by Section 153 (1) of the 1999 Constitution of the Federal Republic of Nigeria (As Amended). Its responsibilities as provided in Paragraph 32 (a-e) Part 1 to the Third Schedule of the Constitution includes amongst others to; Monitor accruals into and disbursements of revenue from the Federation Account.
He added that, “It is in view of the above that the Commission is organising this retreat in order to engage with various stakeholders and address some of the grey areas in the Act to ensure seamless implementation of the Petroleum Industry Act in order to optimise Federation Revenue.
“Meanwhile, the Fiscal uncertainty that has before now bedevilled the Nigeria Oil & Gas space has now gotten clarity and directions through the passage of the PIA.
It is expected that the fiscal regime will attract more investments into the industry thereby increasing the activities of the sector. This will result in improved aggregate Tax revenue in the long run,” RMFAC boss said.
He said, ” RMFAC would ontinue to engage all relevant stakeholders in the effective implementation of the Act. This will include timely release of information circulars and practice notes to guide industry players.
“Increase capacity building of its members of staff for effective tax administration of the new law.
“Companies paying taxes above minimum tax threshold, to benefit with generous incentives of the PIA”.
“Minimum Tax Paying Companies to be impacted more on the fiscal changes if they opt to convert, including companies that are fond of declaring assessable losses”, he said.
“The impact of the removal of AGFA will pose significant influence on CITA Revenue, this however, will be compensated by the dual tax via HT”.
“Government Revenue generally will in the short term reduce and increases as the base increased by more investors. As most of the big existing producing companies are operating minimum tax regime”.
Establish an orderly, fair and competitive commercial environment that encourages investment in the Petroleum Industry,” RMFAC acting Chairman concluded.
Speaking at the retreat, the Governor of Akwa Ibom State His Excellency Mr. Udom Emmanuel said, “we are aware of the determined efforts of the industrialized nations to seam themselves off oil, and place emphasis on other sources to power our economy, he said.
He continued, “the current Russian war in Ukraine, has brought this issue back to the front burner of deliberations and we should begin to explore alternative sources that will deepen our foreign earnings.
He said, “In Akwa Ibom, in spite of our status as a leading producer of petroleum in the nation, for which we really have nothing much to show, but we will continue to embark on more life touching projects financed by both what we get from the Federation Account and from other sources of revenue from our investments in other critical sectors of our economy,” he concluded.
The PIA introduces the petroleum industry fiscal framework (PIFF) to provide a forward-looking fiscal framework that is based on core principles of clarity dynamism and fiscal rules of general application and the inclusion of grandfathering provisions for existing oil andj gas arrangements provides the fiscal options to ensure that existing investors are protected.
The retreat was
themed “Petroleum Industry Act 2021 and Its Impact on Federation Revenue
