Shell Nigeria Exploration and Petroleum Company has advised that federal government should be considerate on what it take as royalty from deep water projects so as not to discourage investors from putting -in the necessary resources to achieve the potentials in such terrains.
Bayo Ojulari, managing director of the company in a interview with BusinessDay opined that stakeholders are debating the issue of royalty and tax with the National Assembly (NASS), in respec of investment in the oil industry and that Nigeria should fast track business activities.
He said the issue around Production Sharing Contract, PSC, is also before NASS and may soon be resolved by all stakeholders to make it convenient for operators in Nigeria’s oil and gas space.
He said: “for every barrel, you pay royalty, you pay cost for doing business and tax as well. You have to take out these three and whatever is left, if the government takes 50% from it, the investors can as well pack their bags signifying the end of business.
When there is a high royalty there is no profit and if government says there is royalty which is taken from production and another 50% taken what is left cannot cover cost?”.
He however said these issues are currently ongoing at NASS, and all stakeholders have made their views known about the issues. “This is democracy and we should not bastardize what we have. Since the debate is on, it is hopeful that the final passage of the bill will be something that will work for the nation. But NASS cannot be forced to pass bills”.
The Shell boss said when we think about issues around policy, we should know that as a country, we are competing against other countries which are what gives him concern. He said by the privilege he has working with an international company, he knows what is happening in other areas and also wishes that things should be done faster so that we don’t lose out in investments.
The money will not be kept in the bank forever. Nigeria needs to move faster and the process we are following is the right process but we need to move faster in order not to delay investment, he said.
Shedding more light on the general believe that Nigeria government is not benefitting from PSC contracts, he explained.
“Today, for production we do at the Deepwater we will pay tax. Tax and EBT, then you deduct your cost, after it has been deducted, Nigerian National Petroleum Corporation, NNPC, takes its own share and it gives contractor a percentage. So, anybody saying in terms of PSC, Nigeria is not getting anything does not understand the process. The question is that Nigeria should get more and people are clamouring for more,” he said.