Business

NNPC Gives IOCs Conditions For Divestment From Nigeria

Published

4 years ago

March 1, 2022

The Group Managing Director of Nigerian National Petroleum Company Limited (NNPC), Mallam Mele Kyari, has said international oil companies (IOCs) that divest from Nigeria’s upstream sector must address issues of abandonment and decommissioning of oil assets.

Kyari said this on Monday in Abuja, at the opening session of the fifth edition of the Nigerian International Energy Summit.

The comment by the NNPC boss comes about six months after he had highlighted key guidelines that would guide the evaluation of would be replacement of divesting partner in the oil and gas industry.

The GMD had in August last year, while speaking at the Nigeria Annual International Conference and Exhibition said learning from previous experiences, the NNPC had developed requisite divestment policy that will provide clear guidelines and criteria for divestment of partners’ interest in all its joint venture and production sharing contracts arrangements.

To ensure that the NNPC sustains a prosperous business environment for Nigeria, he had said the national oil company would pay particular attention to abandonment and relinquishment costs; severance of operator staff; third party contract liabilities; and competency of the buyer.

On the wave of divestment of international oil companies from Nigeria’s upstream sector, the NNPC boss told participants at the conference that while the country understands the right of companies to freely divest, it was, however, critical to ensure that the right thing is done so as to avoid disruption.

He further said that issues and obligations related to abandonment and decommissioning must be fully addressed and discharged in line with global best practices, regulations, convention, and law. He said,

“Companies that are divesting, they are leaving our country literarily and that’s the way to put it. But they are not leaving because opportunities are not here, these companies are shifting their portfolios where they can add value and not just that but where they can add to the journey of net carbon zero emission.

“We understand this very perfectly. But also, we cannot afford to realise that this country must benefit from the realities of today.

“We will work with our partners, we understand the necessity for their investments, we do know that there are issues, we understand that this must take place, but also it must be done in such a way that we are able to deal with issues around abandonment and decommissioning.

“We will also make sure that whatever arrangement that is put in place, will show that we are also alive to the energy transition journey that we have embarked on.”

The NNPC CEO acknowledged the need for cleaner energy globally, but said that the African continent must shape its narrative to reflect on its realities, including the high level of energy poverty, deficiency of critical infrastructures for electricity and transportation.

He confirmed that NNPC with partners were working together to ensure the attainment of Nigeria 2060 target for carbon neutrality.

He gave some of the measures so far taken to include adoption of low carbon technology across operations, deepening natural gas utilisation to reduce energy poverty – via the National Gas Expansion Programme, and intensifying the use of petrochemicals.

He also stated that the NNPC was making concerted efforts in the gas sector through various projects – NLNG Train 7, AKK, OB3, ELPS and others. He added that the expansion and integration of domestic/ regional power grids and growing the domestic gas markets via Autogas/ Compressed Natural Gas/ Liquified Petroleum Gas to power vehicles remain key to revitalising the industry.

He noted that passage of the PIA remained a key enabler and laudable reform in the Nigerian energy sector clearly delineating various stakeholders’ roles to enhance value realisation in the sector.

The NNPC GMD explained further that government has also intensified policies to increase gas utilisation and eliminate flaring in recognition of the transition from carbon intensive production towards cleaner alternatives.

Within the last decade, the Nigerian upstream sector had witnessed significant transactions involving the sale of interests in oil licences.

Some of these transactions were concluded in the time of high oil prices and in some instances involved asset transfers from international oil companies with long years of carrying on exploration and production activities in Nigeria, to smaller indigenous companies with limited experience in the upstream sector.

Expectedly, decommissioning obligations and the potential liabilities are also transferred to the new holder of the licence.

In August last year, Shell launched divestment of its 30 percent stake in Shell Petroleum Development Company of Nigeria Limited subsidiary.

Few days ago, Seplat Energy Plc announced an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28 billion.

The transaction entails the acquisition of ExxonMobil Nigeria’s entire offshore shallow water business. According to the deal, ExxonMobil Nigeria’s shallow water business is an established, high-quality operation with a highly skilled local operating team and a track record of safe operations, producing 95 kboepd in 2020 (92 percent liquids).

Shell Petroleum Development Company of Nigeria and ExxonMobil are presently faced with huge remediation costs over their failure to properly decommission and cap oil and gas assets across the Niger Delta, especially the ones sold to Nigerians in recent divesture programmes.

The situation has created severe environmental risks and pollution to host communities in the oil-rich Niger Delta.

The recent case of Aiteo’s Nembe wellhead blowout has also brought to the fore the need to enforce the relevant laws and to ensure that the multinationals that sold the assets to the Nigerian companies pay remediation charges.

Findings revealed that many of the oil and gas assets sold to Nigerians, mostly by the international oil companies, are rarely decommissioned or properly abandoned, a development that clearly breaches existing laws regulating the industry.

Business

Naira Records Highest Depreciation Against US Dollar

Published

17 hours ago

January 10, 2026

Editor

The Naira recorded the highest depreciation against the United States dollar at the official foreign exchange on Friday to end the week on a negative note.

Central Bank of Nigeria data showed that the Naira extended its dip on Friday to N1,423.17 against the dollar, down from N1,419.72 traded on Thursday.

This represents a N3.45 depreciation against the dollar on a day-to-day basis, the highest in the week under review and in 2026 so far.

Meanwhile, at the black market, the naira remained at N1,490 per dollar on Friday, the same rate recorded on Thursday.

In the other week, the Naira recorded three gains and two losses against the US dollar and other currencies.

The development comes amid the continued rise in the country’s external reserves, which hit $45.67 billion as of January 8, 2026.

Business

KPMG Flags Five Major ‘Errors’ In Nigerian Tax Laws

Published

1 day ago

January 9, 2026

Editor

Fresh apprehension has surfaced over Nigeria’s newly implemented tax framework after KPMG Nigeria highlighted what it described as “errors, inconsistencies, gaps, and omissions” in the new tax laws that took effect on January 1, 2026. The professional services firm in a recent statement cautioned that failure to address these issues could weaken the overall objectives of the tax reforms.

Nigeria’s tax overhaul is built around four major legislations: the Nigeinpieces of legislation:ria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (NRS) Establishment Act, and the Joint Revenue Board (JRB) Establishment Act. The laws were signed by President Bola Ahmed Tinubu in June 2025 and formally commenced in 2026. However, the reforms have continued to attract controversy since they were first introduced in October 2024.

Despite the concerns, government officials have consistently described the reforms as essential to improving Nigeria’s low tax-to-GDP ratio and modernisingpieces of legislation:modernizing the country’s tax system in line with evolving economic conditions.

In a detailed review, KPMG outlined several areas of concern.

Capital gains, inflation modernizing inflation and market response

KPMG flagged Sections 39 and 40 of the Nigeria Tax Act, which require capital gains to be calculated as the difference between sale proceeds and the tax-written-down value of assets, without adjusting for inflation. According to the firm, this approach is problematic given Nigeria’s prolonged high-inflation environment.

Data from the National Bureau of Statistics shows that headline inflation has remained in double digits for eight consecutive years, averaging over 18 percent between 2022 and 2025. Over the same period, asset prices have been significantly influenced by currency depreciation and general price increases.

Market data also reflects investor sensitivity to tax policy changes. Although the NGX All-Share Index gained more than 50 percent over the year and market capitalisation inflation,capitalization approached N99.4 trillion, equities experienced sharp sell-offs in late 2025. In November alone, market value reportedly declined by about N6.5 trillion amid uncertainty surrounding the new capital gains tax regime.

KPMG warned that taxing nominal gains in such an environment could result in investors paying tax on inflation-driven increases rather than real economic gains. The firm recommended introducing a cost indexation mechanism to adjust asset values for inflation, noting that this would reduce distortions while still enabling the government to earn revenue from genuine capital appreciation.

Indirect transfers and foreign investment concerns

Attention was also drawn to Section 47 of the Nigeria Tax Act, which subjects gains from indirect transfers by non-residents to Nigerian tax where the transactions affect ownership of Nigerian companies or assets.

This provision comes at a time of subdued foreign investment. Figures from the United Nations Conference on Trade and Development indicate that foreign direct investment inflows into Nigeria remain below pre-2019 levels, reflecting ongoing investor caution.

While similar rules exist in other countries, KPMG noted that they are often supported by detailed guidance and clear thresholds. The firm advised Nigerian tax authorities to issue comprehensive administrative guidelines to clarify scope, thresholds,capitalizationthresholds, and reporting obligations inorder to reduce disputes and limit potential negative effects on foreign investment.

Foreign exchange deductions and business impact

Another issue identified relates to Section 24 of the Act, which restricts businesses from deducting foreign-currencyforeign currency expenses beyond their naira equivalent at the official Central Bank of Nigeria exchange rate.

In reality, limited access to official foreign exchange forces many companies to source FX at higher parallel market rates. Under the current rule, the additional cost becomes non-deductible, effectively increasing taxable profits and overall tax liabilities.

KPMG observed that although the provision aims to discourage FX speculation, it does not adequately reflect supply constraints. The firm recommended allowing deductions based on actual costs incurred, provided transactions are properly documented, to avoid penalisingforeign currencypenalizing businesses for factors outside their control.

VAT-related expense disallowances

Section 21(p) of the Nigeria Tax Act also came under scrutiny for disallowing deductions on expenses where VAT was not charged, even if the costs were entirely business-related.

Given Nigeria’s large informal sector and persistent VAT compliance gaps, analysts argue that the rule unfairly shifts part of the VAT enforcement burden onto compliant taxpayers. KPMG advised that the provision be removed or significantly amended, stressing that expense deductibility should be based on whether costs were wholly and necessarily incurred for business, while VAT compliance should be enforced directly on defaulting suppliers.

Non-resident taxation uncertainties

KPMG further highlighted ambiguities around the compliance obligations of non-resident companies. While the Nigeria Tax Act recognizespenalizingrecognizes withholding tax as the finalthe final tax for certain nonresident payments in the absence of a permanent establishment or significant economic presence, the Nigeria Tax Administration Act does not clearly exempt such entities from registration and filing requirements.

Nigeria’s network of double taxation treaties, including agreements with the UK, South Africa, Canada, and France, generally supports the principle that final withholding tax extinguishes further obligations. Experts warn that inconsistencies between the laws could create uncertainty and discourage foreign participation.

KPMG recommended harmonizing the relevant provisions of the NTA and NTAA, with explicit exemptions for non-resident companies whose tax obligations have been fully settled through withholding tax. The firm noted that such alignment would ease compliance and enhance Nigeria’s appeal for cross-border transactions.

As Nigeria undertakes its most extensive tax reform in decades, KPMG concluded that the success of the overhaul will depend on clarity, consistency, and alignment with international best practices. Without timely amendments, businesses may face higher costs, foreign investors could remain cautious, and capital markets may continue to experience volatility.

Recall that KPMG concerns come after a lawmaker, Abdulsamman Dasuki, raised alarm over alleged alterations to the gazetted tax laws.
(DAILY POST)

Business

Naira Records First Depreciation Against US Dollar In 2026

Published

1 day ago

January 9, 2026

Editor

The Naira recorded its first depreciation against the United States dollar in the official foreign exchange market on Thursday, the first time in 2026 so far.

The Central Bank of Nigeria’s data showed that it weakened on Thursday after days of gains to N 1,419.72 per dollar, down from N 1,418.26 on Wednesday.

This means that for the first time this year, the Naira dipped by N1.46 against the dollar on a day-to-day basis.

Similarly, the Naira also depreciated by N10 at the black market to N1,490 on Thursday, down from the N1,480 recorded the previous day.

This comes despite the continued rise in the country’s foreign reserves to $45.64 billion as of Wednesday, 7th January 2026.

DAILY POST reports that the Naira recorded a seven-day bullish run at the official foreign exchange before Thursday’s decline.