The outlook of the Africa Oil and Gas industry follows the trend we are seeing globally. Crude oil prices are impacted by depressed demand due to the COVID 19 pandemic and supply glut as a result of the OPEC Plus group’s initial failure to cut output. This has resulted in an unprecedented slump in oil prices thereby putting pressure on the energy value chain across multiple dimensions.
Market instability and uncertainty triggered by the twin-shock has also put the industry at significant project, finance, business sustainability and value erosion risk.
For the power sector, the COVID-19 lockdown has led to the shut down of all but essential commercial activities by different countries across the continent. Consequently, the electricity demand from industrial and commercial customers has reduced significantly while the residential demand is expected to have increased. New investment in power generation will be impacted by the effects of COVID-19 and the resulting economic slowdown over the short to medium term.
African tax authorities have also introduced measures to reduce the impact of COVID-19. However, there will be a real pressure on governments across the continent to drive tax compliance and bridge the gap from falling oil revenues and looming recession.
Given the complex nature of the regulatory environment in Africa, investors have an increased need for clarity and certainty in making key investment decisions in the space.
At PwC, we have watched these industry developments in both spaces and analysed the effects from the perspective of how they will impact our clients. Using our expertise, we have developed ways in which we can best help companies prepare and manage changes.
This review of activity and developments in the African Energy and Utilities industry from a tax and regulatory standpoint is the second edition. If you wish to have a deeper conversation around the information and developments presented in this publication, please contact us.
Africa Energy & Utilities Tax Contacts