The controversial tax remittance disputes between General Electric and Arco Group Plc have continued to generate ripples, even as the company awaits final resolution.
Documents made available to our source show that GE, a multinational company operating in Nigeria, had engaged Arco, an indigenous Nigerian oil servicing company, for the supply of local personnel.
But Arco in one of its letters dated June 5, 2018, claimed that GE deducted 10 per cent as withholding tax for the contract between 2006 and 2015, against the five per cent stipulated by Nigerian law.
The company said the applicable tax rate should be five per cent in line with the FIRS Circular No. 2006/02, dated February 2006.
The firm however alleged that GE insisted that the rate is 10 per cent in line with the contract for technical services.
In June 2017, Arco wrote GE demanding compliance based on the position of the Lagos State director of FIRS, with claims that the tax filings of both companies fall within Lagos jurisdiction and that the office is competent to give official interpretation of any circular issued by the FIRS.
But in its response, GE directed the firm to write to the Abuja office of the FIRS.
According to Fasilat Ransome-Kuti, who replied on behalf of GE, only such clarification could give the firm comfort’.
“We will not take action on any letter from any other tax office,” she added.
On July 11, 2017, Arco wrote the FIRS seeking clarification on the controversial remittance.
“Our interpretation of the contract of supply is that the applicable WHT rate should be 5% in line with the Federal Inland Revenue Service Circular No. 2006/02 dated February, 2006,” said the firm in the letter signed by Nejoh John.
“However, section 3.5 of the circular (Lines 8-11) referred to what should be classified as technical services states: “…the use of industrial machinery/equipment to provide a service does not render it to be technical because industry position requires that only arrangements that involve a transfer of technology, should be classified as technical,” wrote Arco in a letter seeking clarification from the Federal Inland Revenue Service, FIRS.
The firm also argued that other IOCs it worked for in the past applied WHT rate of five per cent on services rendered to them by Arco.
The FIRS in its response dated November 2, 2017, said the only part of the contract where 10 per cent tax applies is office rent which is to be deducted by Arco and remitted to the FIRS.
GE in its response letter dated January 18, 2018, seen by PREMIUM TIMES, said it would engage its consultant, Price Waterhouse Coopers (PwC), to confirm the technical basis of the conclusion and advise it as appropriate.
Arco in its response, said there was no basis for GE’s attempt to clarify FIRS’ clarification and thus demanded immediate payment of its outstanding invoices underpayments.
“What we are requesting now, is the refund of 50% of total WHT deducted from Arco’s invoices from the period 2006 to 2015 as earlier communicated to you in our letter dated November 6, 2017, following the FIRS’ clarification as follows,” wrote Ben Omotomiye, Group Head Finance and Admin, Arco.
“1. €56,577.61 (Fifty-six thousand, five hundred and seventy-seven euros, sixty-one cents).
“2. $2,923,642.36 (Two million, nine hundred and twenty-three thousand, six hundred and forty-two dollars and thirty-six cents).
“3. N360,482,041.19 (Three hundred and sixty million, four hundred and eighty-two thousand, forty-one naira and nineteen kobo).”
Beginning from the second week of July, several weeks-long efforts by PREMIUM TIMES to get GE’s side of the story proved abortive.
In the last week of July, a spokesperson of the company, Obagbemi Olusegun of BHGE Communications Sub-Saharan Africa, promised to reply our reporter’s email but failed to do so after numerous reminders.
PREMIUM TIMES’ reporter later visited the head office of GE in Victoria Island but was prevented from speaking with officials of the IOC.
Similarly, the FIRS declined to speak on the case as several emails sent to the agency were not replied.
The Guardian later reported that the tax authority has said it will refund the N360 million and $2 million excess withholding tax (WHT) deducted from Arco through its business dealings with General Electric (GE).
The paper said the details were contained in a letter it obtained, dated July 26, 2018, and directed to PricewaterhouseCoopers (PwC) Limited, (tax advisers to GE) with reference number FIRS/TPAD/GEN/272/V.IX/.
“In respect of the treatment of excess WHT deducted from Arco and remitted to FIRS, Arco has either of the following two options: To formally apply to FIRS for the refund of the excess WHT deducted so long as there is evidence of remittance to the FIRS account; or to use same to offset its future tax liabilities,” the FIRS letter reportedly read.
‘Renewable Energy Waste Crisis Is Much Worse Than You Think’
Waste disposal is not a popular topic of discussion in the media when it comes to renewable energy. Most of the coverage that solar and wind power is getting is strongly positive, with a focus on falling costs and rising efficiencies, as well as government plans for huge increases in installed capacity. Yet problems tend to lurk and wait to spring up. Now, the waste problem is springing up.
TheInternational Renewable Energy Agency (IRENA) estimated in 2016 that unless we made significant changes to our treatment of solar panels, they could add up to 78 million tons of waste. The IRENA did not phrase it this way. It said that “recycling or repurposing solar PV panels at the end of their roughly 30-year lifetime can unlock an estimated stock of 78 million tonnes of raw materials and other valuable components globally by 2050.”
The thing is that most panels do not live to see their 30th birthday, as an article in the Harvard Business Review from June pointed out. Solar waste, it said, is growing much faster than it should have, theoretically. This is because another thing that you wouldn’t see widely publicised is solar panels beginto lose efficiency from the moment they are installed.
Meanwhile, new, more efficient panels are being developed. Even if the loss of efficiency is minuscule, at an average 0.5 percent, that figure is off the top of a typical efficiency rate of less than 30 percent (light-to-electricity conversion), so when offered a higher efficiency installation, many residential solar owners would consider it. The authors of the article, dubbed The Dark Side of Solar Power, point to the continuous improvements in solar panel technology as a reason for shorter actual lives for residential panels. They note that thanks to these improvements, both in cost and efficiency, consumers are a lot less likely to wait for their panels to turn 30 before they replace them. As a result, these early replacements could lead to 50 times more solar panel waste than IRENA had forecast.
It’s worth noting that IRENA’s forecast for the 78-million-ton opportunity from solar panel waste was made in 2016. A lot of things have changed over the past five years, including the rate of growth in solar panel installations. Unfortunately, what hasn’t changed a lot is the economics of recycling solar panels.
Grist reported recently that, according to researchers and recycling industry insiders, the cost of recycling a solar panel varies between $12 and $25. Meanwhile, the income from recovering certain elements from it comes in at about $3. According to the National Renewable Energy Laboratory, recycling a solar panel costs between $20 and $30, while sending it to a landfill costs $1-2. And while the EU has put in place recycling mandates, the U.S. has no such mandates on a national level.
This massive difference in the cost of recycling versus the cost of dumping panels at landfills hints at an unpleasant truth that we are seeing in the EU already. There are recycling mandates there. The countries with the highest solar capacity pay the most for their electricity. This could, of course, be a coincidence, but that’s quite unlikely: recycling costs money, and somebody has to foot that bill.
It is this bill that busts the myth of the cheap solar power that can fuel the whole world because the sun is there and shines for free. This is true. But once you add the costs of recycling to the total cost of solar energy, as the Harvard Business Review authors note, the cost of solar jumps four times.
The future, in the absence of quick action, looks bleak, according to the researchers who penned the HBR article.
“If we plot future installations according to a logistic growth curve capped at 700 GW by 2050 (NREL’s estimated ceiling for the U.S. residential market) alongside the early replacement curve, we see the volume of waste surpassing that of new installations by the year 2031,” Atalay Atasu, Serasu Duran, and Luk N. Van Wassenhove wrote.
“By 2035, discarded panels would outweigh new units sold by 2.56 times. In turn, this would catapult the LCOE (levelised cost of energy, a measure of the overall cost of an energy-producing asset over its lifetime) to four times the current projection. The economics of solar so bright-seeming from the vantage point of 2021 would darken quickly as the industry sinks under the weight of its own trash.”
This sounds bad enough. It’s even worse because there are only a handful of companies in the U.S. that recycle solar panels. But there is also wind turbine blade waste that is building up, and while, unlike solar panels, it does not contain toxic materials, the sheer size of the blades makes it a significant waste problem. Wind turbine blades are not recyclable yet, and tons of them are coming to landfills over the next 20 years; more than 720,000 tons in the U.S. alone.
“Because there are so few options for recycling wind turbine blades currently, the vast majority of those that are no longer able to be used are either stored in various places or taken to landfill,” says CEO, and co-founder of CruxOCM, Vicki Knott.
“While the waste stream represents only a tiny portion of municipal solid waste, it’s clearly not an ideal scenario. As wind turbines are being replaced, there’s certainly a need for more creative recycling solutions for used blades,” Knott also said.
It all sounds like a waste nightmare scenario, and it pretty much is.
While many residential solar panels will live out their lives, many others will not. But this is only the beginning of the problem. Recycling costs must be brought down and capacity built before the current wave of utility-scale solar farm additions subsides because anything done later would be playing catch-up with little chance to win.
Slav writes for Oilprice.com
By: Irina Slav
Oriental Energy Resources Announces New Managing Director
Mustafa Indimi has been appointed the new Managing Director of Oriental Energy Resources Limited.
Mustafa takes over from Mr Ignatius Ifelayo, who served the company meritoriously for seven years.
Prior to the new appointment, Mustafa was the Executive Director (Technical) and a member of the company’s Board of Directors. He brings with him an in depth knowledge of the business and he is well positioned to drive the company forward.
A Master’s Degree Holder in Petroleum Production engineering from Robert Gordon University, Aberdeen, Mustafa has an impressive track record of leading teams to deliver outstanding performance and results.
On his new challenge, Mustafa commented: “It is an exceptional privilege to be appointed as Managing Director at a time that provides great opportunity to take the company to new heights. I am looking forward to working with the board, management and staff to strengthen and grow the company by building on the solid foundation to generate significant value for all stakeholders.”
“Underpinning everything is my commitment to the company’s vison to set the standards that all other E&P companies in the Nigerian oil and gas industry will be compared against.’’
MoniPulo Empowers 70 In Akwa Ibom
A total of 70 indigenes of Mbo Local Government Area of Akwa Ibom State, host to an indigenous oil firm, Moni Pulo Petroleum Development, have benefited from the 2021 community empowerment programme of the company.
The empowerment programme, which is in the 12th cycle, saw to the distribution of 70 motorcycles to the benefiting members of the host communities.
Speaking, the Chairman and Chief Executive of Moni Pulo, Dr. Seinye O.B. Lulu-Briggs, said the company has had a very healthy relationship with the people of Mbo LGA and has left positive footprints since 1999.
Lulu-Briggs said the company believes that provision of an economic-enabling environment, sustainable employment, secured opportunities and human capital development in Mbo LGA, remain the guiding principle for social transformation.
She emphasised that the company has a passion for transforming communities and catalyzing personal and communal growth in a sustainable manner, which is why corporate social responsibility is her cherished core corporate value.
“MPLs Corporate Focal Responsibility package is structured along four core areas: Educational Development, Skill Acquisition and Empowerment, Infrastructural Development, Sports and Social welfare.
“It is believed that capacity building will ameliorate the Niger Delta region’s economic challenges and reduce the incidences of youth restiveness. Thus, MPL takes this gesture further to empower Mbo and Effiat Community youths with high class motorcycles.
“This is the 12th cycle of our Community Empowerment Programme, and it is designed to empower 70 business Start-Ups from within Mbo Local Government Area in Akwa lbom State.”
Lulu-Briggs represented by the Head pf Administration and Community, Alabo Clifford Daerego, said MPL’s empowerment programme provides opportunites for entrepreneurs to set up and establish businesses that will help increase the employment rate in Akwa lbom State and in the country.
“A review of the social responsibility projects we have carried out in Mbo Local Government Area, reveals that our activities have aligned with the current global Sustainable Development Goals. This Community Empowerment Programme hinges on SDG Goal 8, which is to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
Despite the socio-economic challenges that we, like everyone else, have had to weather, we have continued to invest in the wellbeing of our host communities through empowerment exercises and sustainable development projects. We have done and will continue to do this because we know that ultimately our work is about people the men, women, youth and children of Mbo and Effiat.”
Also speaking, Akwa Ibom State Commissioner for Power and Petroleum Development, Dr. John James Etim, who commended Moni Pulo for being a good corporate citizen, expressed delight to witnessed the empowerment programme.
Etim disclosed that upon his assumption of office, he was briefed that the company has trained many members of her host communities in several skills and also awarded university scholarships to many.
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