ABSTRACT
The abundance of oil and gas placed Nigeria at a considerable advantage for rapid economic development. Joining the Organization of Petroleum Exporting Countries in 1971, Nigeria gained the benefits of a stable oil market, yielding enormous levels of foreign exchange. Taxation and state participation are both designed to deliver benefits from the petroleum sector to the government. Under the Oil Taxation Scheme, the fiscal tools employed by the Nigerian government to extract economic rent from hydrocarbon activities are corporate income tax and royalties. The government of Nigeria participates in the exploitation of hydrocarbon resources in Nigeria through joint venture contracts and production sharing contracts. Like many other oil-rich developing nations, Nigeria depends hugely on fossil fuels such as crude oil and natural gas to provide energy for economic activities and household energy needs.
