The controversial Petroleum Act Amendment Bill 2019 is set for debate in the Lower House today amid jitters from a section of the legislators.
Already some of them have demanded that the proposed provisions be reviewed to streamline the initial contents as were contained in the law passed in 2008.
Among the thorny issues the legislators are pointing to includes the revenue sharing between the Federal Government and the regional government, an issue that had caused tension between the two centers of power.
Both Jubbaland and Puntland dismissed the Bill last week noting they were not consulted.
The law also seeks to cushion the state from unfair contractual pacts with international oil companies on areas such as Production Sharing Agreements, environmental protection among others.
Those calling for the revision also argue that Somalia does not have the capacity and requisite legal framework to engage international oil companies to start oil drilling.
Lack adequate laws and structures and revenue sharing agreements are among the sticky issues that that have delayed the process of exploration
According to a timeline released during the London Oil conference in February, Somalia will award oil blocks to bidders January 20, 2019.
The Federal Government of Somalia hosted a successful promotion of the Somalia Offshore Round at the Somalia Oil and Gas Conference in London on 7th February 2019. Spectrum Geo assisted the Somali Government in organizing the event.
Even with the passage of the current Petroleum Amendment Bill, The fiscal terms in the Petroleum Bill are not based on an existing law. The royalty, Corporate Income Tax, Profit-based Special Tax and other taxes were designed a long time ago and applied to this modern day where the market environment is very competitive and where the petroleum industry is changing everyday
Lack of a proper tax code also could jolt the ambitions as no international company would be comfortable inking a long term deal with the government.
Currently the Ministry of Finance and the IMF are developing tax codes which must be incorporated into the Petroleum Bill but that will be feasible as from mid-2019 when the Tax Bill will be tabled in Parliament.