FISCAL REGIMES OF OIL PRODUCTION IN NIGERIA

Abstract

This article used the analytical political economy method in the short survey of the nexus between fiscal policy and operations covering the different exploration and exploitation arrangements up to the Joint Venture Agreements (JVs) in the Nigerian oil industry including their tax regimes, how the challenges in the JV special purpose vehicles gave rise to the Production Sharing Contract (PSC) model, discussion of PSCs in some detail and the current tax regime governing them while a brief note was made of Service contracts. In the process, it was found that the opaque nature of the operation of the contracts calls for greater transparency to reduce the propensity to tax avoidance by the International Oil Companies (IOCs) and increase revenues to the government. Consequently, it was recommended that auditing of IOC operations (benchmarked against international best practices) should be more contemporaneous and cover profit and loss making operations instead of taking as long as three years to audit only profitable operations through which bloated costs of unprofitable operations are written off by the IOCs thereby sub - optimizing government revenue generation.