Multiple agency levies outpacing fiscal incentives promised by PIA, IPPG warns

The Independent Petroleum Producers Group (IPPG) has decried the sheer weight and multiplicity of fees, levies, and statutory charges imposed across the Nigerian oil and gas value chain, stating that the fees from multiple agencies threaten to outpace fiscal incentives introduced under the Petroleum Industry Act to attract and retain investment.

Speaking at the NOG conference in Abuja on Tuesday, Adegbite Falade, chairman, IPPG, said that the Nigerian oil and gas industry remains the most taxed and levied in the country, and perhaps globally, with over 270 separate fees, taxes and levies.
He explained that for smaller producers and operators of mature assets with thinner margins, this burden of multiple fees is a direct threat to project viability, investment decisions, and in some cases, asset abandonment.

For him, it has become imperative for the government to shift from being a collector to a catalyst.

“These fees from multiple agencies and the cumulative burden threaten to outpace fiscal incentives introduced under the Petroleum Industry Act to attract and retain investment.

“We therefore urge the government to undertake a comprehensive harmonisation of all fees and levies across all agencies to eliminate duplication, ensure transparency in how these charges are computed and applied, and align the overall fiscal burden with the incentive-driven spirit of the PIA.

“A predictable, streamlined, and globally competitive cost environment is a prerequisite for the very growth, job creation, and production gains this administration seeks to achieve,” he said.

Falade, who noted that the Nigerian Petroleum industry does not operate in isolation but is shaped in part by geopolitics that are beyond national control, stressed the need for infrastructure to be seen as a strategic national shield and not just as an economic asset.

He explained that when the Russia- Ukraine crisis disrupted European gas & refined product supplies from 2022, global buyers scrambled for alternatives, but Nigeria, despite having the tenth-largest gas reserves in the world, was held back by capacity constraints.

“And delayed FID meant we could not scale exports quickly enough to fully take advantage of that window. Then came the US – Iran and the wider Middle East
conflict earlier this year, another window of opportunity, which kept Brent trading at record figures that were well above our budgeted benchmark. Our limited production spinning reserves curtailed our ability to maximise the potential windfall revenues.

“The lesson from both crises is the same—the next geopolitical shock is not a question of if, but when. Let’s borrow a leaf from The Dangote Refinery by prioritising upfront
investment in potent capacity,” he said.

He decried that for decades, Nigeria has measured the industry’s success largely by barrels produced, cargoes lifted, and revenues collected, stating that while those measures are important, they do not translate into harnessing the true potential of the nation’s vast hydrocarbon resources.

” For Nigeria, the key question is whether we have the courage, discipline and urgency to convert these resources into national value, industrial development and shared prosperity. A country that produces crude but cannot refine at scale is exposed. A country that produces gas but cannot process, transport and utilise it efficiently to drive growth is constrained. A country that exports raw molecules but imports finished energy products has not yet captured the full value of its resources. Nigeria’s hydrocarbon development must go beyond merely extracting crude oil and gas.

“Our national production aspiration is commendable, but we must focus beyond production to the level of national development derived from the entire energy value chain. We must ask deeper questions on what this incremental production will translate into -How many jobs are created for Nigerians? How much local capacity is built? How much crude is refined locally?

“How much gas is processed into LPG, CNG, power, fertiliser, petrochemicals and industrial feedstock? How many communities are connected to real
economic opportunities? How many Nigerian engineers, technicians, welders, geoscientists, process operators, traders and project managers are developed into world-class professionals?”.

He explained that for Nigeria to fully benefit from its hydrocarbon resources, there is a need to build an industry that is resilient and investable before the next opportunity arrives.