Nigeria’s ‘unfavourable’ Petroleum Bill leads to loss of over $2b FDI inflows

Ghana Business

7 September 2011

Nigeria’s ‘unfavourable’ Petroleum Bill leads to loss of over $2b FDI inflows

Foreign direct investment inflows into Nigeria, Africa’s most populous nation, have dropped by $2.55 billion due to the uncertainty of the country’s Petroleum Industry Bill (PIB).

According to the latest world investment report 2011 prepared by the United Nations Conference on Trade and Development (UNCTAD), FDI inflows to the country fell from $8.65 billion in 2009 to $6.09 billion in 2011. The report cites uncertainty over the PIB, which is perceived as unfavourable to transnational corporations (TNCs).

The unresolved political problem in the Niger Delta is also said to be a cause for the decline.

“In Nigeria, uncertainty over the Petroleum Industry Bill, which is perceived as unfavourable for TNCs and the unresolved political problem in the Niger Delta, discouraged foreign investors and, for instance, allegedly led Shell to sell a number of its onshore licences,” said the report.

Oil investors, the largest contributors of FDI inflows into Nigeria are unwilling to invest because the PIB seems to impose heavy taxes on such companies.