It took almost fifteen years for the Nigerian parliament to adopt a new oil law, which should better protect the country’s and local community interests. The two chambers of parliament adopted the text on Thursday, “an important victory” stressed the Speaker of the Nigerian Assembly.
However, Nigeria’s largest oil producer, Nigeria, is struggling to develop the sector due to both significant corruption and bureaucracy. In addition, residents of the Niger Delta, the most important oil basin, complain about the low local fallout from oil exploitation.
A problem that the new law – adopted after fifteen years of work and months of debate this year alone – hopes to solve with two main goals: to maximize oil revenues and better distribute revenues at the local level.
The new text actually regulates the tax system that companies operating in Nigeria are subject to. Taxes on production will increase, taxes on profits will decrease and companies will see tax deductions reduced. However, the law only applies automatically to new licenses that are granted.
Another reform point, the charter of the NNPC, the public oil company. That will change and the NNPC, often accused of inefficiency and corruption, will have to devote 30% of its profits to oil exploration.
But the most important point in this new law concerns the redistribution of income to the communities living in the extraction zones. These require that 10% of the resources return to them, according to the law, 2.5% is proposed. This point has not yet been decided, as it crystallizes the debates. Especially since a former armed militant group, the Niger Delta Avengers have recently reappeared and threatened to take up arms again if the percentage granted to the communities was not sufficient.
.
