Petroleum Taxation Reform and Revenue Optimization: An Analytical Assessment of the PIA 2021 Fiscal Regime

This study provides an analytical assessment of the new fiscal regime for upstream petroleum operations introduced by the PIA 2021, evaluating whether the revised taxation structure optimises government revenue take while maintaining investor attractiveness across onshore, shallow offshore, and deepwater terrain. The PIA 2021 replaced the Petroleum Profits Tax Act with a differentiated income tax framework under the Hydrocarbon Tax, and introduced revised royalty and rent provisions. Using an analytical modelling methodology, the research applies a government take analysis model to seven hypothetical field development scenarios across Nigeria's different terrain categories, drawing on publicly available NUPRC block data and FIRS petroleum tax assessment records from 2021 to 2024. The model estimates effective government take percentages and compares these against the pre-PIA regime and comparable fiscal frameworks in Ghana and Angola. Findings indicate that the new regime offers improved government take in high-production scenarios but introduces disincentives for marginal and frontier field development. The study recommends targeted royalty holidays for frontier basins and a graduated hydrocarbon tax rate for sub-threshold production fields. Keywords: petroleum taxation, PIA 2021, fiscal regime, government take, revenue optimisation.