African states need to take urgent action to protect local oil and gas businesses, providing a three-month tax holiday, the African Energy Chamber has said.
“It is a hard time for African oil and gas. And if the oil price does not see a hike soon, there is a likelihood that a lot of jobs will be lost in many petroleum producing countries and, those who were expecting to see first oil soon will be heavily impacted,” the African Energy Chamber’s executive chairman NJ Ayuk, and CEO of Centurion Law group, said.
Plans for new projects are also likely to be delayed or cancelled, he said, “which will have a massive effect on many African businesses and communities who view the industry as an opportunity to move from poverty to the middle class”.
Africa stands to lose more than $110 billion in the next three months in taxes, oil exports, jobs and contracts for local companies, the African Energy Chamber said. Finding a way to reduce the burden is of “great importance” for businesses.
The statement from the group went on to call for OPEC members to engage with Saudi Arabia and Russia in an attempt to tackle the over supply problem that the oil market is experiencing.
A tax holiday would allow employers to control revenue reductions, improve liquidity and prevent job losses.
Should the price war continue, the sector will suffer broadly, with marginal field producers going out of business, exploration halting and majors having to scale back operations.