100% of Zero is Zero: What NLNG Teaches Us About the Bonga SW Tax Incentive
Babs Omotowa Bloomberg recently reported that the Federal Government has agreed to an $11.5-per-barrel tax incentive to enable Shell's $20 billion Bonga South West project to finally proceed. Some commentators have described the tax incentive as "unusually generous" — reportedly double the standard fiscal terms for deepwater projects in Nigeria. They argue that a previous Executive Order had capped such tax credits at 20% of a licensee’s annual tax liability. It is a fair question to ask. But before we answer it, it is worth starting with a simple truth: an untamed river does not irrigate any farm; a locked vault, however full, pays no one's school fees. That is the essence of "100% of zero is zero." The Bonga South West field — 150,000 barrels a day, discovered in 1995 — has sat stranded since 2010. This is nearly two decades of idle oil that has paid no dividends, created no jobs, and funded no roads, simply because it has never been allowed t...