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Fiscal concerns biggest worry for investors – Expert

Fiscal concerns biggest worry for investors – Expert

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’Femi Asu

A Partner and Africa Oil and Gas Industry Leader at PwC Nigeria, Pedro Omontuemhen, has said tax or fiscal concerns are the biggest worry for investors in the Nigerian oil and gas industry.

He said dealing with host communities was also a critical issue though oil and gas companies had over time evolved various ways of dealing with communities.

“A proper governance structure for the sector is important because it is important to make sure that the minister is not too powerful – not both judge and jury – and that the NNPC is not both player and regulator. The tax regime is very important too,” he said in an interview with The Oil and Gas Year.

He added, “As an international investor, you want to make sure that you are getting the most value for your dollar. You can take that dollar to Mexico, Australia or Indonesia, so you want to know how much you will get in return for a dollar invested here. Until investors have that certainty, the market will remain in a watch-and-wait mode.”

According to Omontuemhen, Nigeria faces competition from Mozambique, Ghana, South Sudan, and North Africa.

He said, “People are looking for oil everywhere else in Africa. The competition is only going to increase; so the quicker Nigeria puts her laws together to retain as much value as possible, the better.

“There are loads of opportunities for investors in the oil and gas industry here, whether in the upstream, midstream or downstream. Opportunities exist regardless of whether you want to play in the services space, the refining space or transportation. That is manifested in a number of foreign-owned companies in Lagos, Abuja or Port Harcourt.”

The PwC expert stated that Nigeria could do a lot better to become very competitive.

He said, “Mozambique just launched their Liquefied Natural Gas plant and there is huge investment in that country at the moment. Here in Nigeria, we are still debating over the PIB (Petroleum Industry Bill), which has been going on for 15 years.

“If you are an investor and you are not sure what the rules are, you may be concerned. Good returns drive investment and this is subject to a stable policy environment. If the returns are not good and there is so much uncertainty, you will go somewhere else.”

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