NCDMB, FIRS, task oil industry stakeholders on increased R&D investment to boost performance
By Habeeb Adamu
The Nigerian Content Development and Monitoring Board (NCDMB) and the Federal Inland Revenue Service (FIRS) have charged oil and gas companies desirous of reducing their tax burden and growing profitability to consider increasing investments in research and development (R&D), with a view to taking advantage of the incentives provided in existing fiscal laws.
Simbi Kesiye Wabote, executive secretary, NCDMB, and Muhammad Nami, executive chairman, FIRS, highlighted the relevance of R&D to the oil and gas sector during the one-day Nigerian Oil and Gas industry suppliers’ tax awareness workshop, held recently in Yenagoa, Bayelsa State.
Wabote said the government has provided a $50 million local content research and development fund meant to drive basic research, commercialisation research breakthroughs, establishment of centres of excellence and sponsor university endowments.
He, however, insisted that the government should not be the sole financier of R&D, pointing out that the bulk of R&D funding should come from the private sector who are business owners and will ultimately benefit directly from the research outcomes.
The NCDMB executive secretary said the low level of private sector funding in R&D by private companies is partly linked to inadequate information on available incentives and benefits of funding.
“The consequence is not only significant capital flight in the acquisition of technology required for oil and gas projects and operations; but also players in the sector are tied to the apron and direct control of foreign supply chain who control the technological advances arising from their research and development activities,” he added
Wabote further noted that investments in R & D will change the gross underfunding of research in Nigeria, which is currently estimated at less than 0.2 per cent of the national budget.
He also stressed that operators can no longer neglect R&D, insisting that it is key to local content development, enhancement of future tax revenue to the government, development of home-grown solutions and retention of industry spending within Nigerian financial institutions.
Citing analysis of budgets of leading Fortune 500 companies such as Apple, Walmart, Amazon amongst others, Wabote observed that they commit between 5- 10 per cent of their annual budgets on R&D and in return, produce innovative products that has enabled them to make significant tax returns to government, create more employment opportunities than most governments and remain market leaders.
“This is our dream for Nigerian oil and gas service companies,” he noted.
The executive secretary expressed optimism the workshop would serve its purpose to highlight the inherent benefits of investing in research and development and showcase the mutual benefits to both the private sector and the government.
He added that the board is leveraging the enabling business environment pillar of its 10-year strategic roadmap, to collaborate with the FIRS in creating a platform for engaging oil and gas industry stakeholders, with a view to highlighting the inherent benefits of investing in R&D, for the private sector and government entities.
Speaking in the same vein, Muhammad Nami, the executive chairman,FIRS,represented by Gabriel Ogunjemilusi,his senior special assistant, reiterated that research and development has been identified as a veritable means for companies that want to remain competitive and profitable in today’s rapidly changing business environment.
Nami stressed that research and development is essential for the growth and sustainability of the Nigerian oil and gas industry.
“By investing in R&D, the industry can improve exploration and production, reduce environmental impact, develop local content, and improve safety and security. This can help the industry remain competitive and contribute to the country’s economic development,” he said.
The FIRS chairman assured participants at the workshop that the agency will continue to support all companies in Nigeria to take advantage of available fiscal incentives provided by the Nigerian tax laws.