Lack of stability in the fiscal environment is impeding the development of the Nigerian petroleum industry, particularly the upstream sector, the Nigerian National Petroleum Corporation (NNPC) said in a statement on Tuesday.
The Group Managing Director of the state-owned corporation, Mele Kyari, gave the revelation while hosting a party of House of Representatives Committee on Petroleum Resources (Upstream) members, who visited the corporation recently.
Mr Kyari observed that the confidence of foreign investors in the country’s oil and gas sector was fading away, and called for the legislators’ intervention.
“We need to act quickly to move from this unstable situation to a very stable one and the only way is for us to get the Petroleum Industry Bill (PIB) to work so that countries and investors can work with us.”
He stated that foreign capital was required in the upstream sector and the only approach to attracting it was to deploy stable legislation as well as an amiable ambience suitable for cost recovery and reasonable return on investment.
Kyari added that the uncertainty in the sector triggered by the long delay in the passage of the Petroleum Industry Bill has set a number of divestments from the country in motion.
Africa’s top oil producer has at last moved to deregulate its oil and gas sector, which provides about 90% of its foreign exchange earnings, with the recent proscription of a fuel subsidy regime that consumed N8.94 trillion in 10 years.
Nigeria “spends four times more money subsidizing fuel than building new schools, health centers and equipping new equipping new science labs. Fuel subsidies swallowed 648 billion naira ($1.8b) last year as the country kept prices pegged at 145 naira ($0.40) a liter, figures from the Budget Office and state-owned oil company show,” Bloomberg said.