SPE-193453-MS

Replacing Petroleum Profit Tax with a Dual Petroleum Tax System:

Implication on Petroleum Project Economics in Nigeria

Joseph C. Echendu, Emerald Energy Institute- International Institute for Petroleum, Energy Law & Policy;
Omowunmi O. Iledare and Adeyemi J. Akinlawon, EEI; Adekunle J. Idowu, African University of Science and
Technology

Copyright 2018, Society of Petroleum Engineers

This paper was prepared for presentation at the Nigeria Annual International Conference and Exhibition held in Lagos, Nigeria, 6–8 August 2018.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
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Abstract
The paper evaluates the impact of the single tax system at its current rate in comparison to the proposed
dual tax system in the National Petroleum Fiscal Policy in Nigeria on project economic performances. The
paper also expounds on the arguments between two schools of thought (single tax and dual tax proponents)
towards understanding the rationale underlying the divergent viewpoints. The methodological approach
applies the discounted cash flow modelling framework to evaluate the performances of terrain based projects
using selected metrics such as internal rate of return (IRR), discounted payout (DPO), net present value
(NPV) and government take (GT) under the two tax systems. It calibrates the unit technical cost (UTC)
for typical deep water projects in Nigeria and imposes the current and proposed fiscal terms. Varying cost
treatment options and alternative allowable/incentives are investigated in the modelling framework using
global best practices. The paper concludes that whichever tax system is adopted, it is possible to achieve
equivalent economic metrics. However, the dual tax system presents a better flexible option over the single
tax system as one of the split rates – especially the hydrocarbon resource tax – could serve as an instrument
to incentivize investment, promote conservation, expand resource base through technology innovation more
easily without denying the mineral owner an outright revenue via taxation. In a classical case like Nigeria,
where national fiscal budget is largely financed using hydrocarbon revenue, the dual tax system seemingly
offers a better option for revenue sharing among the stakeholders – the resource owners and the Federal
Government than the current single upstream tax system. This paper bridges the gap between the divergent
viewpoints on taxation system in Nigeria by proffering a pathway. It suggests that the overall objectives
of stakeholders could be achieved using the same metrics if the mechanics in designing a fiscal system is
better understood. This will lead to progressive application in achieving the divergent expectations.

INTRODUCTION
Designing petroleum fiscal system is very critical as it helps investors and mineral owners have an
understanding of the distribution of accrued value derived from the endowed hydrocarbon resources.
However, the determination of a fair and equitable division of the accrued value is the major challenge.
2 SPE-193453-MS

This challenge has led to the prolong delay in the passage of a new petroleum industry reform in the last
18 years after about 5 decades of using the existing petroleum profit tax Act. Consequently, there have
been stunted growths in reserves and production capacity (BP 2015), low attraction of investments into the
upstream petroleum sectors, dwindling rig activities (BH 2015), fiscal budgeting challenges (Iledare 2015;
Olorunsola 2015; Echendu and Iledare 2015a, 2015b) and many more. As a result, the need to balance the
stakes of both the investors and mineral owners in the design of the proposed fiscal policy is imperative and
the divergent views of the fiscal policy experts have to be aligned to achieve the desired objectives.

Single or Dual Tier Tax System: Diverse Perspective

Lately, there has been a debate among petroleum fiscal policy experts in Nigeria on the proposed
replacement of petroleum profit tax with a dual tier tax system (DTS) – Companies Income Tax and a
national resource tax – in the design of fiscal systems. The single tier tax system (STS) school of thought
believes enough complexity already exist in tax computations toward ascertaining the payable tax due to the
government, especially the petroleum profit tax (PPT) in Nigeria. They argue that the encumbrances in the
determination of tax deductibility and allowable and the challenge of high cost of extraction should mitigate
the perceive burden of a dual tax system. In addition, this school of thoughts believes that the single tax
system within the provisions of the existing petroleum profit tax (PPT 1969) Acts guarantees early revenue
to government by accruing revenue to government much earlier in the period relative to the Companies
Income Tax (CIT) timing of computation. On administration, it is also argued that the cost of administering
the dual tax approach, which entails double filing of tax returns, would be higher when compared with
the single system approach of filing one tax return. There is also the debate on cost aggregation concept.
The STS is perceived to make cost aggregation easier as against the DTS with different stipulations for
deductibles and non-allowables. The proponents of the STS reinforce that the government philosophy on
ease of doing business in Nigeria necessitates the need for the STS over the DTS which is perceived to be
cumbersome in its mechanism and also seen as an increment in tax liabilities. Consequently, keeping the
tax system supposedly simple is preferred to the DTS school of thought.
On the other hand, the DTS school of thought posits that a split in the tax system into a resource tax and
companies income tax (NPFP 2017) is not necessarily a tax increase in the aggregate sense. This is hinged on
the point that the taxable income differs for the two schemes and the proposed resource tax is not deductible
for the company income tax computation (CIT 1977). As a result, the effective tax rate for the DTS is lower
when compared to the STS. However, a key factor for consideration would be the proposed rates for the
schemes. The DTS proponents are of the opinion that there are lots of mechanisms in the existing fiscal
scheme leading to little or no revenue accrued to the mineral owner. The zero royalty rate specification for
operations in water depth greater than 1000 meters and the high unit technical cost per barrel of project
execution in the nation are some of the key considerations for the DTS that necessitate the proposed payment
of CIT. They added that it also exonerates the oil and gas industries from the notion of being exempted
from paying company income tax – enshrined in the Company and Allied Matter Acts 1990 as a registered
corporate entity in Nigeria. There is also the viewpoint that splitting the existing PPT into a resource tax
and a company income tax would be a progressive approach. This position is premised on the point that, it
would be flexible to be able to suspend or reduce the resource tax instrument without necessarily denying
the central government a share of revenue (through the CIT) whenever there is oil and gas production.
This paper evaluates the impact of the single tax system at its current rate in comparison to the proposed
split rates in the dual tax system on project economic performance. Though, the proposed split rates are not
additive as the taxable income base differs, the paper attempts to propose the split rates that could engender
the same economic metrics as the single tax rate system.
SPE-193453-MS 3

Methodology and Assumptions

For the purpose of petroleum project evaluation in the paper, the discounted net cash flow (DNCF) modelling
framework is adopted because of its time vale of money consideration (Johnston 1994, 2010; Mian 2002;
Iledare 2010; Echendu, Iledare and Onwuka 2015; Echendu & Iledare 2016). The generalized form of the
net cash flow (NCF) can be represented as:

The DNCF framework accounting for net present value (NPV) is estimated using equation 2:

Where NCF(t) is the estimated net cash flow

r is the discount rate and
t is the year of reference.
Tables 1 and 2 show the detailed summary of the review and applications of the terms and instruments of
the petroleum profit tax Act of 1969 (PPT 1969) governing the tax regulations of existing petroleum fiscal
arrangements (either concessionary or contractual) and the proposed National Petroleum Fiscal Policy of
2017 in Nigeria (NPFP 2017). These fiscal terms help to basically determine and compare the performance
of the evaluated projects. The basic input variables and assumptions are shown in Table 1. The same
field development plan is imposed on both (PPT and NPFP) fiscal terms and instruments to determine the
performances on project economics. Similarly, the same final investment decision (FID) and technical cost
outlay is imposed but the cost treatment for capitalization and expenses are as specified in the different
fiscal arrangements.
Applying the discounted cash flow modelling framework, selected metrics such as internal rate of return
(IRR), discounted payout (DPO), net present value (NPV), government take (GT) and government access
to revenenue (GAR) which is government take as a percentage of gross revenue provide a good guide for
project performance comparisons under the two systems.

Table 1—Project Development Input Data

Fiscal Arrangement PSC / R&T

Terrain DEEP

Royalty PROGRESSIVE

Fluid Type CRUDE OIL

Ultimate Recovery 913 MMBBL

Peak Production 200000 BOPD

Production Period 24 Years

Project Period 32 Years

Total CAPEX 9968 $MM

Total OPEX 6624 $MM

Technical Cost 16592 $MM

Discounted UTC 28.71 $/bbl

Undiscounted UTC 18.17 $/bbl

4 SPE-193453-MS

Discount rate 10.00% %

Disc. Unit CAPEX 23.11 $/bbl

Disc. Unit OPEX 5.60 $/bbl

Oil Price 60.00 $/bbl

Nominal 2017

Table 2—Summary of Nigeria's 1969 PPT Act and proposed 2017 NPFP Fiscal Terms and Instruments

PPT Act 1969 NPFP 2017

Volume of oil lifted / delivered to terminals

Measurement Point Volume of oil lifted / delivered to terminals (shipments)
(shipments)

Cost recovery limit : 100% Cost recovery limit : contractual

Sharing basis: cumulative production Sharing basis: unchanged

Production Sharing
NNPC Profit Share: 20 - 60% Profit Petroleum before NHT

Profit oil: shared after PPT

Deepwater / Frontier: JV/Sole Risk in Onshore/shallow offshore:

Petroleum Profit Tax / NHT of 20% NHT of 30%
PSC PPT Rate: 50%
Nigerian Hydrocarbon
JV/Sole Risk PPT Rate: 85% NHT for PSCs in Onshore/shallow
Tax
offshore:30%

Royalty by volume Based on water depth Based on terrain and production rates

Royalty by value Not applicable Based on oil price

Investment Tax Credit / PSC 2005 Tax

PSC 1993 Tax credit
Investment Tax allowance for PPT: na na
for PPT: 50%
Allowance 50%

Depreciation: yr1 - yr4 20%, yr5 19%, 1% Depreciation: yr1 - yr4 20%, yr5 19%, 1% retention; intangible drilling
Depreciation
retention; IDC expensed cost expensed

Crude oil and Condensate

$3 per bbl of daily Cum prod <= 50

Onshore production mmbbl

N/A Cum. prod >50 mmbbl

Production Allowance:
Crude oil and not applicable $3 per bbl of daily Cum prod <= 50
condensate Shallow offshore production mmbbl

N/A Cum. Prod. <50 mmbbl

Deep offshore / inland $7 per bbl of daily Cum. Prod. <= 500
basins production mmbbl

CIT rate, CIT JV CIT rate of 30%, consolidated

not applicable
depreciation PSC CIT rate of 30%, consolidated

Wholly, exclusively and necessarily incurred for Non-deductible: non Nigerian overhead, 20% other non-Nigerian costs,
Cost deductibility
petroleum operations interests and certain other costs (demurrage) for NHT

NDDC Levy 3% of total budget 3% of total budget

Education tax 2% of assessable profits 2% of assessable profits

Result and Analysis

Table 3 shows the summary of deterministic profitability indicators grouped under key indicators, value
distribution, royalties and taxes for the two broad petroleum fiscal arrangements – contractual (production
sharing contract) and concessionary (royalty and tax) systems.
SPE-193453-MS 5

Table 3—Summary of Deterministic Profitability Indicators

PPT NPFP PPT NPFP

Key Indicators Production Sharing Contract Royalty & Tax System

Net Present Value, NPV $MM $3,020.28 $2,389.70 $573.10 $3,395.17

Internal Rate of Return, IRR % 18.71% 16.83% 12.12% 18.86%
Profitability Index, PI ratio 1.41 1.33 1.08 1.46
Value Distribution

Undiscounted Govt. Take, UGT % 65.42% 69.22% 83.55% 60.63%

Undiscounted Contr. Take, UCT % 34.58% 30.78% 16.45% 39.37%
Disc. Payout Period, DPO years 11.99 13.27 17.06 12.55
Project Gross Revenue $MM 72865.44 72865.44 72865.44 72865.44
Govt. Total Revenue $MM 35130.20 38825.91 44870.20 33991.93
Govt. Access to Revenue, GAR % 49.98% 55.42% 63.83% 48.54%
Royalty

Royalty by Volume $MM 0.00 4659.16 0.00 4659.16

Royalty by Value $MM 0.00 7110.52 0.00 7110.52
Effective Royalty Rate % 0.00% 16.33% 0.00% 16.33%
Tax

Effective Tax Rate % 49.98% 37.13% 63.83% 30.50%

PPT/NHT $MM 24352.93 7553.48 42966.78 7553.48
Company Income Tax, CIT $MM 0.00 10924.43 0.00 12996.13
CRYPTO Taxes $MM 1903.42 1672.64 1903.42 1672.64
Profit Oil Split to Govt., POS $MM 8873.85 6905.67 0.00 0.00

Under the contractual production sharing scheme, the existing PPT terms gives an IRR of 18.71% which
is higher than the proposed NPFP terms’ IRR of about 16.83%. As a result, the expected NPV for the PPT
terms is also higher than that of the NPFP by about 20.88% margin which is about twice the 10.07% margin
difference between the IRRs. It can then be inferred that with the assumed hurdle rate, investment into
petroleum projects under the existing or proposed fiscal in Nigeria will yield a higher return of about 68
percent above the cost of capital, ceteris paribus. The IRR helps provide a fair basis to evaluate the value
that is obtainable from the cost of capital. As long as the cost of capital is lower that the IRR, a project is
deemed viable, ceteris paribus. Consequently, within the assumed hurdle rate and other variables, there will
be returns on every dollar invested under the fiscal propositions.
It is also observed from Table 3 that the discounted payout (DPO) period for the PPT is lower by about
15 months relative to the DPO for the NPFP. It will take about 11.99 years to recover invested capital under
the PPT and about 13.27 years under the proposed NPFP. The earlier period observed for the PPT could be
attributed to the instruments of the investment tax allowance/credit and the petroleum investment allowance
(PIA). The 50% percent ITC is typical of an uplift which is a measure put in place to encourage investment.
However, the proposed NPFP argues that the ITC is an incentive that rewards effort and not outcome. As a
result, an alternative incentive to encourage outcome tied to production which could be perceived as success
rate of investment is proposed in the production allowance. To further mitigate the impact of goldplating,
a tax inversion penalty of 5% is also stipulated on any investment in which the cost to price ratio exceeds
30%. These are possible reasons that could explain why the DPO and profitability index (PI) of the PPT
marginally perform better that the proposed NPFP, within the assumed variables.
6 SPE-193453-MS

The taxes under the contractual arrangement reveal a higher effective tax rate of about 50% for the PPT
as against 37% for the NPFP. The taxes are made up of the petroleum profit tax rate of 50% for the PPT as
against a proposed resource tax called Nigeria Hydrocarbon Tax (NHT) rate of 20% and companies income
tax rate of 30% for the NPFP. It also comprises of other crypto taxes (rentals, National Content Development
NCD levy, Niger Delta Development Commission NDDC levy, education tax, etc.) and the profit oil split
to the government. The accumulative effect of the proposed split (dual tier) tax rate on the effective tax
rate is about 68.29% which is lower than the 69.32% observed for the existing single tier system on the
effective tax rate for PPT. This implies that, though the proposed dual tier tax rate are 20% for the NHT
and 30% for the CIT, it does not translate to an aggregate 50% tax rate as with the existing single tier PPT
tax rate of 50%. The latter could aggregate a total of about $24.3 billion as against an aggregate of about
$18.5 billion accrued by the dual tier tax system proposed. This could be explained by the different taxable
income bases for the CIT and NHT which differ from the taxable income base for the single tier system. The
mechanics for treatment of cost in the design which lead to possible production allowance, ITC or otherwise
also contributes the varied accruals in the different fiscals. Overall, the proposed NHT contributes about
28% of the effective tax rate and the CIT accounts for about 40% of the effective tax rate for the NPFP.
The contributions of profit oil split to the effective tax rate are about 25.26% and 25.52% for the PPT and
NPFP respectively.
The proposed NPFP introduces a progressive royalty schemes to address early revenue loss to the
government as a result of current provisions of no royalty payment for deep water petroleum operations at
water depth above 1000 meters. The proposed royalty schemes are royalty by volume tied to production and
is terrain based and a royalty by value tied to oil price but targeting perceived windfall profits. The proposed
NPFP royalty schemes account for an effective rate of about 16.33% with the royalty by volume accounting
for approximately 40% and royalty by value accounts for about 60%. The higher rate of the royalty by value
is attributed to the benchmark trigger price of $50 per barrel stipulated in the proposed fiscals. Consequently,
with an assumed base price of $60 per barrel the effect of the value royalty is weightier than if the assumed
based oil price were lower than $50 per barrel. Though, the current provisions for royalty rate tantamounts
to no royalty payment the increased access to gross revenue available to be taxed leads to a higher value
obtained with the PPT tax rate. This also explains the higher effective tax rate for PPT when compared to
the NPFP as the accrued $11.8 billion from royalty payments is no longer available to be taxed under the
proposed NPFP scheme.
The value distribution under the contractual fiscal arrangement is premised on the preceeding discussions.
Overall, it is observed that whether the single or dual tier tax system is used it is possible to have the
combined effects of the effective royalty and tax rates to give an average government take of about 65%
for the current PPT and 69% for the proposed NPFP fiscals. However, the mechanics of the fiscal design
leads to an overall government access to revenue (GAR) to be about 50% for the PPT and about 55% for
the proposed NPFP. This implies that of the total project gross revenue of about $73 billion for an estimated
ultimate recovery of about 910 million barrels of oil, the existing PPT accounts for a possible accrual of
about $35.1 billion to the government while the proposed NPFP estimates a possible accrual of about $38.8
billion to the government, ceteris paribus. The approximately 10.5% point difference of the NPFP fiscal
GAR yields about $3.7 billion more to the government accrual over that of the current PPT fiscal.
On the other hand, under the concessionary fiscal arrangement there is a sharp decrease in IRR from
18.71% observed for contractual arrangement to 12.12% for PPT terms while the IRR in the proposed
NPFP increases from 16.83% observed in contractual arrangement to 18.86%. Likewise, the NPV for the
existing PPT terms decreases to $573.10 and that of the NPFP increases to about $3.4 billion relative to
what is obtainable in contractual arrangements. The profitability index for the PPT terms performs lower
at 1.08 when compared to the PI of the contractual arrangement at 1.41 but the PI of the NPFP for the
concessionary system is observed to be 1.46 which is higher than the 1.33 observed in the contractual
arrangement. Though the observed IRR in the concessionary arrangement for the PPT terms is higher than
SPE-193453-MS 7

the assumed hurdle rate, it is however lower by about 35% in terms of performance when compared to the
contractual arrangement. This lower IRR performance could be attributed to the increased PPT tax rate of
85% stipulated for concessionary arrangement in the PPT Act. However, with the proposed NPFP with no
changing tax rates for both the NHT and CIT in any fiscal arrangement, the IRR is about 89% basis point
higher than the assumed hurdle rate.
In the taxes for concessionary arrangement, the PPT tax rate accounts for approximately 95.76%
contribution to the effective tax rate of about 63.83% while in the proposed NPFP the contibutions of the
NHT and CIT to the effective tax rate of 30.50% are 33.99% and 58.48% respectively. Combined, the dual
tier tax rate contributes about 92.47% of the effective tax rate in the proposed NPFP provisions. The effective
royalty rates remains unchanged for both concessionary and contractual arrangements as it remains a first
line charge on gross production.
The value distribution attributed to the PPT terms in the concessionary arrangement reveals government
take statistics of about 83.55% and 60.63% for the proposed NPFP terms. The deviation of the take statistics
from the average value observed in the contractual arrangement could be credited to the higher tax rate
for the PPT and no profit oil sharing in the project. The net effect of the higher tax rate increased GAR to
about 63.83% for the PPT terms but, in the proposed NPFP the constant dual tier rate and the no profit oil
split effectively reduced the GAR to about 48.54%, ceteris paribus. An important and observable difference
between the two fiscal systems is the profit oil sharing available in a typical contractual arrangement but not
in the concessionary arrangement. Consequently, within the assumed variables, it is critical to design fiscal
systems to be able to capture the perceived 25% contribution by profit oil sharing in either arrangement.
Figures 1 and 2 reveal the plots of achievable IRR for different resource tax (NHT) rate at varying oil price
in typical arrangements. At the base oil price of $60 per barrel, Figure 1 for contractual arrangement shows
that the highest IRR that could be achieved is about 18% for NHT rates less than or equal to 15%. However,
for the concessionary arrangement it is possible to achieve about 20% for same NHT rates. Also, at the
same base oil price it possible to realize an IRR value that is less than 10% for the contractual arrangement
but IRR values would be higher than 10% for the concessionary arrangement within the assumed NHT
rates. These reveal the impact of the profit oil split and as such it is important to be wary of administering
same rate for the different fiscal arrangements in order not to skew the balance of stakes. Transiting from
an existing PPT to a proposed NPFP concessionary arrangement, Figure 2 reveals that the possible NHT to
be proposed for a balance stake relative to the existing PPT at the assumed base oil price is 50%.
8 SPE-193453-MS

Figure 1—Impact of varying NHT rate on IRR at different oil price for typical contratual arrangement

Figure 2—Impact of varying NHT rate on IRR at different oil price for typical concessionary arrangement
SPE-193453-MS 9

Figures 3 and 4 reveal the sensitivity analyses for both fiscal arrangements. It is clearly seen that cost
and oil price are very key components in evaluating petroleum projects economics irrespective of the fiscal
arrangements. There is an inverse relationship between capital investment and project IRR. A 20% reduction
in CAPEX leads to an approximate 20% increase in the project IRR. But, increasing CAPEX by about 20%
would lead to about 15% reduction in IRR value. Further reduction in CAPEX by 20% basis point improves
the investment IRR by approximately 30% basis point; whereas higher cost of extraction by another 20%
basis point would erode the efficiency of the investment IRR by about 10% basis point. It could be inferred
that reduction by mitigating high cost of extraction improves the IRR at higher proportion than increasing
the cost of extraction, ceteris paribus.
Another high sensitivity impacting factor on the project economics is observed to be the price of oil per
barrel. There appears to be a linear correlation between oil price and project viability. It is observed that a
percent reduction in oil price leads to a corresponding percent reduction in the value of IRR while a 20%
increase in oil price wold lead to an approximate 15% increase in IRR. A further 20% basis point increase
in oil price gives about 10% basis point increase in the project IRR, within the assumed variables. Other
sensitivity factors of interest are the rates (NHT and CIT) and the trigger point for the proposed royalty by
value for capturing perceived windfall profit during oil price booms.

Figure 3—Sensitivity analysis of fiscal instruments on IRR for typical contratual arrangement
10 SPE-193453-MS

Figure 4—Sensitivity analysis of fiscal instruments on IRR for typical concessionary arrangement

Conclusion
This paper concludes that whichever tax system is adopted, it is possible to achieve equivalent economic
metrics. However, the dual tax system presents a better flexible option over the single tax system as one
of the split rates – especially the resource tax – could serve as an instrument to incentivize investment,
promote conservation, expand resource base through technology innovation more easily without denying
the mineral owner an outright revenue via taxation. Also, with the dual tax system mechanism in Nigeria,
it offers an opportunity to be able to balance the revenue stake especially when fiscal system is designed
with the same rates for both concessionary (R/T) and contractual (PSC) agreements, as discussed in the
result section, ceteris paribus. This helps to capture the missing effect/contribution of the profit split in the
R/T system to achieve an equitable and fair access to gross revenue. In a classical case like Nigeria, where
national budget is largely financed using hydrocarbon revenue, the dual tax system seemingly offers a better
option for revenue sharing among the stakeholders – the resource owners and the Federal Government than
the current single upstream tax system.
SPE-193453-MS 11

Table 4—Concessionary System Internal Rate of Return (IRR) Sensitivity

on Varying Resource Tax (NHT) and Oil Price (Base IRR = 18.86%)

Oil Price Nigeria Hydrocarbon Tax (NHT)

($/bbl) 10% 15% 20% 25% 30% 35% 40% 45% 50% 60% 70% 80%

20 4.28% 4.19% 4.03% 3.86% 3.69% 3.51% 3.32% 3.13% 2.93% 2.52% 2.07% 1.56%
25 7.17% 7.08% 6.78% 6.47% 6.15% 5.80% 5.43% 5.02% 4.59% 3.65% 2.51% 1.09%
30 9.70% 9.62% 9.22% 8.80% 8.35% 7.86% 7.32% 6.75% 6.14% 4.70% 2.84% 0.15%
35 11.96% 11.88% 11.39% 10.85% 10.28% 9.68% 9.03% 8.32% 7.55% 5.75% 3.32% -0.55%
40 13.97% 13.93% 13.42% 12.81% 12.15% 11.44% 10.68% 9.86% 8.96% 6.84% 4.01% -0.55%
45 15.67% 15.66% 15.07% 14.38% 13.64% 12.86% 12.02% 11.11% 10.11% 7.76% 4.61% -0.54%
50 17.13% 17.11% 16.48% 15.72% 14.91% 14.05% 13.12% 12.12% 11.02% 8.44% 4.95% -0.93%
55 18.45% 18.43% 17.75% 16.93% 16.06% 15.13% 14.13% 13.05% 11.86% 9.08% 5.32% -1.20%
60 19.62% 19.61% 18.86% 17.98% 17.05% 16.06% 15.01% 13.86% 12.61% 9.66% 5.67% -1.38%
65 20.63% 20.63% 19.83% 18.91% 17.94% 16.90% 15.79% 14.59% 13.28% 10.19% 6.02% -1.49%
70 21.55% 21.55% 20.70% 19.73% 18.70% 17.60% 16.43% 15.16% 13.78% 10.50% 6.03% -2.39%
75 22.38% 22.38% 21.51% 20.51% 19.44% 18.31% 17.09% 15.78% 14.35% 10.98% 6.39% -2.36%
80 23.14% 23.14% 22.26% 21.22% 20.13% 18.96% 17.71% 16.37% 14.90% 11.45% 6.75% -2.26%
85 23.82% 23.82% 22.90% 21.83% 20.69% 19.48% 18.19% 16.79% 15.27% 11.68% 6.77% -2.99%
90 24.43% 24.43% 23.51% 22.42% 21.26% 20.03% 18.71% 17.29% 15.74% 12.11% 7.15% -2.71%
95 24.96% 24.96% 24.01% 22.88% 21.69% 20.43% 19.07% 17.61% 16.02% 12.27% 7.15% -3.27%
100 25.43% 25.43% 24.45% 23.30% 22.08% 20.78% 19.39% 17.90% 16.27% 12.42% 7.16% -3.74%
105 25.84% 25.84% 24.89% 23.72% 22.49% 21.19% 19.79% 18.29% 16.65% 12.80% 7.55% -3.14%
110 26.20% 26.20% 25.22% 24.03% 22.78% 21.45% 20.03% 18.50% 16.83% 12.91% 7.55% -3.39%
115 26.50% 26.50% 25.50% 24.29% 23.02% 21.67% 20.23% 18.67% 16.98% 12.99% 7.56% -3.51%
120 26.74% 26.74% 25.73% 24.51% 23.22% 21.85% 20.38% 18.81% 17.09% 13.06% 7.56% -3.53%
125 26.94% 26.94% 25.91% 24.67% 23.37% 21.98% 20.51% 18.91% 17.18% 13.11% 7.56% -3.44%
130 27.08% 27.08% 26.09% 24.87% 23.57% 22.20% 20.73% 19.15% 17.43% 13.42% 7.98% -2.43%
135 27.17% 27.17% 26.17% 24.94% 23.63% 22.25% 20.77% 19.19% 17.46% 13.42% 7.98% -2.19%
140 27.20% 27.20% 26.20% 24.96% 23.65% 22.26% 20.78% 19.19% 17.46% 13.41% 7.98% -1.89%
145 27.18% 27.18% 26.18% 24.94% 23.63% 22.23% 20.75% 19.15% 17.42% 13.38% 7.98% -1.53%
150 27.11% 27.11% 26.11% 24.87% 23.55% 22.16% 20.68% 19.08% 17.35% 13.33% 7.98% -1.19%

Nomenclature
CAPEX = Capital Expenditure
CIT = Companies Income Tax
CPR = Cost Price Ratio
CRL = Cost Recovery Limit
DPO = Discounted Pay Out
DTS = Dual Tier Sustem
FID = Final Investment Decision
GAR = Government Access to revenue
IRR = Internal Rate of Return
NHT = Nigerian Hydrocarbon Tax
NPFP = National Petroleum Fiscal Policy
NPV = Net Present Value
12 SPE-193453-MS

OPEX = Operating Expenditure

PA = Production Allowance
PI = Profitability Index
POS = Profit Oil Split
PPT = Petroleum Profit Tax
PSC = Production Sharing Contract
R/T = Royalty and Tax
Roy_Value = Royalty Value
STS = Single Tier System

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