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We didn’t benefit from improper tax waivers –Seplat

By on May 17, 2015

Seplat Petroleum Development Company Plc, a Nigerian indigenous oil and gas company listed on both the Nigeria Stock Exchange and London Stock Exchange, said it had fully re-invested the tax savings from the pioneer tax incentive granted to it by the Federal Government.

The company, in a statement on Friday, noted that recent press coverage suggested that it benefitted from improper tax waivers in relation to it being granted the pioneer tax incentive by the government.

“While it is Seplat’s policy to not comment ordinarily on press statements or business dealings with the government, on this occasion it is deemed necessary to clarify Seplat’s position on this matter.”

Seplat said it applied for pioneer tax incentive in 2013 through the Nigerian Investment Promotion Council as the government body responsible for investment promotion.

It said it followed the prescribed process for application and provided all the information and documentation required in support of the application.

“At the time of the application, Seplat was aware that in line with the objective of the NIPC Act, the government intended to promote investments in certain areas of the Nigerian economy and particularly in relation to indigenous participation in the oil and gas industry.”

The company said it was subsequently granted the pioneer tax incentive and the Federal Inland Revenue Service duly acknowledged the grant as applicable to the company for five financial years.

Seplat noted that this was part of an industry-wide exercise and that the company is one of 15 oil and gas companies that were granted the pioneer tax incentive.

According to the company, it has utilised the savings and benefits arising to date from the pioneer tax incentive to increase in gas supply to the domestic market; increase in oil production; in funding of the NPDC/Seplat JV despite substantial outstanding cash calls and for employment and community development.

Seplat has invested over $300m in gas development over the tax holiday period to date. The company has built and installed a new gas processing plant and drilled multiple additional gas wells.

It said the investments had taken gross gas production from an average of 90 million standard cubic feet per day to a current level of around 200 MMscfd, increasing to a projected 300 MMscfd by the end of the year.

“It is important to note that all of Seplat’s gas production goes into the domestic market, supporting the government’s drive for improved power generation in the country.

The company said its royalty payments to the government had increased from an average of $40m per annum in 2010 to about $340m since the pioneer period became effective, as its oil production rose from a daily average of 14,000 barrels in 2010 to the current daily rate of over 70,000 barrels.

“Seplat has continued to fund the NPDC/Seplat JV to drive this significant growth in oil and gas production despite being owed substantial sums in unpaid cash-calls from Nigerian Petroleum Development Company.”

The company said over the tax holiday period to date it had created over 300 new jobs and delivered several community development projects in its operating areas, adding that the multiplier effect of its $700m plus in annual expenditure through Nigerian contractors added over 1,000 additional jobs.

 

[Punch]