Bloomberg recently reported that the Federal Government has agreed to an $11.5-per-barrel tax incentive to enable Shell’s $20bn Bonga South West project to finally proceed.
Some commentators have described the tax incentive as “unusually generous” — reportedly double the standard fiscal terms for deepwater projects in Nigeria. They argue that a previous Executive Order had capped such tax credits at 20 per cent of a licensee’s annual tax liability.
It is a fair question to ask.
But before we answer it, it is worth starting with a simple truth: an untamed river does not irrigate any farm; a locked vault, however full, pays no one’s school fees.
That is the essence of “100 per cent of zero is zero”.
The Bonga South West field — 150,000 barrels a day, discovered in 1995 — has sat stranded since 2010. This is nearly two decades of idle oil that has paid no
This post was originally published on this site.
