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Balancing the Interests of Parties in Contractual Relationship: How Fair is the Nigerian Petroleum Tax System to the State and the Oil Majors?

Author

Listed:
  • Adam Konto Kyari

    (Department of Accounting, College of Business Administration, Imam Abulrahman Bin Faisal University, P. O. Box 1982, Dammam, Saudi Arabia.)

Abstract

Securing a fair share of oil wealth to the host government at the same time providing adequate incentives to the oil majors are two objectives that underpin the design of a fair petroleum tax system. These objectives are competing rather than complementing and thus the need for compromise by both the government and the oil majors to achieve fair contractual relationship. This study investigates whether the Nigerian petroleum tax system has fairly captured the interests of both the government and the oil majors. Guided by the economic rent theory, the study revealed, among others, that the tax system was fair in securing the government its fair share of oil wealth. Similarly, the tax incentives to the oil majors were adequate in positively influencing their investment decisions. The study concludes that the Nigerian petroleum tax has fairly captured the interests of both the government and that of the oil majors.

Suggested Citation

  • Adam Konto Kyari, 2020. "Balancing the Interests of Parties in Contractual Relationship: How Fair is the Nigerian Petroleum Tax System to the State and the Oil Majors?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 49-56.
    • Handle: RePEc:eco:journ2:2020-01-8
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    More about this item

    Keywords

    petroleum; fair; tax;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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