According to the latest world investment report 2011 prepared by the United Nations Conference on Trade and Development (UNCTAD), FDI inflows to the country fell from $8.65 billion in 2009 to $6.09 billion in 2011. The report cites uncertainty over the PIB, which is perceived as unfavourable to transnational corporations (TNCs).
The unresolved political problem in the Niger Delta is also said to be a cause for the decline.
“In Nigeria, uncertainty over the Petroleum Industry Bill, which is perceived as unfavourable for TNCs and the unresolved political problem in the Niger Delta, discouraged foreign investors and, for instance, allegedly led Shell to sell a number of its onshore licences,” said the report.
Oil investors, the largest contributors of FDI inflows into Nigeria are unwilling to invest because the PIB seems to impose heavy taxes on such companies.
The PIB is to establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry, to establish guidelines for the operation of the upstream and downstream sectors, and for purposes connected with the same. It is also supposed to rewrite Nigeria’s decades-old relationship with its foreign oil partners and alter everything from fiscal terms to the structure of the state-oil firm.
The Reuters News Agency on August 15, 2011 reports that foreign oil companies, including Royal Dutch Shell, Exxon Mobil and Chevron, complained that the original PIB proposal imposed higher tax and royalty levies that would deter investment in deep offshore projects, the future for exploration in Nigeria, Africa’s biggest crude exporter.
The ThisDay publication also says Russian gas giant, Gazprom may suspend a proposed $2.5 billion investment into the country’s oil and gas industry due to the continued delay in the passage of the PIB.
Already the Nigeria Extractive Industry Transparency Initiative (NEITI) has cautioned that the country could lose $3 billion petroleum revenue yearly if the National Assembly passes the Petroleum Industry Bill (PIB) as amended by law makers.
According to another Nigerian publication, The Nation, NEITI said the limit of government’s share of oil revenue being set by the House of Representatives is below internationally competitive rates, as such, it would result in the erosion of government petroleum revenue.
But the Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engr Austen Oniwon addressing the 3rd Triennial National Delegates’ Conference of the Petroleum & Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja, said the Federal Government’s decision to transform the nation’s oil sector through a transparent legislative framework is in the best interest of Nigerians.
These low investments have had a major effect on Nigeria’s oil production as the country intends to import crude oil from Niger. Chronic gasoline shortages have also hit the country badly.
Nigerian President Goodluck Jonathan has been speaking to President Mahamadou Issoufou of Niger Republic at the opening of bilateral talks between delegations of the two nations at the State House in the capital Abuja, OilPrice.com said citing The Daily Trust.
Issoufou told Jonathan that he wanted agreements signed under the auspices of the Nigeria-Niger Joint Commission, which will see Niger beginning to export crude oil by the end of the year to Nigeria and that Nigeria’s northern states could begin getting their supply of petroleum products from a refinery under construction in Zinder, Niger.
The Zinder refinery, when completed has a projected capacity of one million tons per annum, or 20,000 barrels per day, and is expected to come online next year at a projected cost of $600 million.
UNCTAD said decline in FDI inflows into Nigeria affected FDI flows to Africa which fell by 9% in 2010. The continent recorded a $55 billon FDI inflow.
Outflows from Nigeria was $923 million in 2010 from $1.54 billion in 2009. The outflows were concentrated in finance, leading to the establishment of banks in the West African region.
Nigeria has 42 international investment agreements. 22 are bilateral investment treaties, 15 are double taxation treaties and five other agreements.
By Ekow Quandzie