ENERGY
RENEWABLE ENERGY SERVICES
The global demand for renewable energy services is increasing as fossil fuels increase in price and concern grows about the economic and environmental impact. Solar Energy Seychelles has an innovative approach, incorporating renewable technologies with energy efficiency strategies that provide our customers with long-term, sustainable solutions.
Seychelles present a unique opportunity for investments in renewable energy. And market for it is fast growing. Term “ Blue Economy” become well known around the world. Republic of Seychelles took one of the leading roles in advancing this concept of responsible management of resources in Small Island Developing Countries.
Electrical power on the islands of Seychelles is provided by the government-owned Public Utilities Corporation (PUC). The Corporation is not only responsible for the supply of electricity but also for supplying water and sewage treatment services to the islands.
Under the Electricity division of the PUC, the Generation section ensures continuous production of electrical power from four generating stations. The stations are made up of diesel-powered generators and are situated on the islands of Mahé and Praslin. The Distribution and Transmission section is responsible for and oversees the distribution and transmission of electricity within Seychelles. This section consists of a 33kV/11kV distribution network on the island of Mahé and 11 kV network on the island of Praslin and La Digue.
In Seychelles electrical power is based solely on fossil fuel generators with an output of 160 million Kwh. This working capacity has been proven to be sufficient for the needs of the islands.
In 2004 260m Kwh of electrical power was generated and 192.9m Kwh of power was consumed, of which, 64.8m Kwh was for domestic use, 80.7m Kwh was used for commercial or industrial purposes, 23.2m Kwh was for governmental use, 0.7m Kwh used for street lighting and 23.5m Kwh of power was exported.
In 1984 the Seychelles Government established a national oil company, currently PetroSeychelles, to strengthen its capabilities to deal with exploration and other activities related to the development of the petroleum potential of the State.
Petroleum is a very important commodity in Seychelles. Currently the country depends entirely on petroleum products as a source of energy. The total domestic consumption for petroleum in 2011 was 133,070 Mtons of which over 50% was used for the generation of electricity. Over the years we have seen an increase in consumption, a trend which is likely to continue as the country progresses on its economic developments. As the prices of petroleum products continue to remain high, the Government is more committed to expedite petroleum exploration in its EEZ. A discovery will not only ensure security of supply, but will also generate much needed revenue for the country. The Government is therefore putting in place fiscal and regulatory incentives that would attract and facilitate technically able and financially sound oil companies to explore and exploit hydrocarbons in the Seychelles EEZ.
The main policy objectives are to:
Promote petroleum exploration in Seychelles EEZ by putting in place fiscal and regulatory incentives that will attract oil companies, expedite exploration and have an early commercial discovery. A discovery will provide the country with its indigenous energy source and as the population is small only a small quantity of the hydrocarbon produced will end up in domestic consumption. The international oil company will have the large balance for export.
Ensure Energy security at a time when world prices are very volatile and demands from countries like India and China are continuously on the increase.
Attract Foreign Direct Investments and stimulate ancillary economic growth. The industry will need services from other sectors which will create further inflows of Foreign Exchange.
Build capacity and facilitate technology transfer are other policy objectives. This is to enable the eventual establishment of a Directorate of Petroleum that will be necessary to supervise and co-ordinate exploration, field development and production programmes and enhance the effective management of the resources.
Ensure the maximization of the economic benefit at minimum risk to safety, the environment and to capital investment.
Systematically build up a comprehensive data-base on all aspects of petroleum activity in Seychelles. This will entail proper collection, sorting, processing, storage and dissemination of data.
Promoting interest in petroleum exploration among the international oil companies will be at the highest level of priority of the policy objectives. In order to meet the policy objectives, Government created a national oil company, PetroSeychelles, to implement the petroleum policy and strengthen Government capabilities in dealing with the exploration for, the exploitation of, or other activities related to enhancing the value of the petroleum resources in Seychelles.
Home Economic & Fiscal
Seychelles operates under concession type contracts as opposed to Production Sharing types of agreement common in neighbouring countries.
The economic and fiscal package comprises three principal revenue sharing mechanisms and these are summarized below:
Royalty
A royalty of 10% is levied on the market value of oil produced and saved during each month. Royalty for Gas is 5%. In the event of a discovery of a marginal field, the royalty may be reduced to 5%.
Petroleum Income Tax
The rate of the Petroleum Income Tax is 35% and it is paid in accordance with the Petroleum Income Tax Act of 2013.
Petroleum Additional Profits Tax (PAPT)
PAPT is a resource rent tax levied on cash flows. Currently the Model Petroleum Agreement provides for a two-tier structure for PAPT. The first tier of PAPT will become due once the Company has earned a particular threshold rate of return on its investment. The second tier of PAPT will be due after the company has earned an even higher post-tax rate of return.
PAPT is ring fenced field by field, and is calculated on cash flows denominated in US dollars.
The two threshold rates of return which trigger payment of the PAPT, as well as the rates of the taxes payable are as follows
Tier 1: Rate of 25% when ROR 15% is achieved
Tier 2: is negotiable at the time of negotiations of the Petroleum Agreement and companies can submit their Tax Rates and ROR in the proposal.
The Seychelles Revenue Commission (SRC) is the local body that will audit and collect tax revenues on hydrocarbon production and they operate on a self assessment principle.
About SEYPEC
Following the closure of the Shell Oil Company on the 15th July 1985, The Seychelles Petroleum Company Limited (SEYPEC) was founded, with one mandatory need in mind – fulfilling the country’s energy requirements through the supply of fuel. SEYPEC is a government owned parastatal and currently employing just fewer than 200 Seychellois citizens.
In a nutshell, SEYPEC’s operations revolve around the supplying fuel to the domestic market, bunkering of vessels, aviation refuelling activities and the management of its shipping arm.
Located at the New Port in Victoria, SEYPEC’s main fuel depot comprises of 28 storage tanks, with a capacity of 188,000 cubic metres all equipped with computer monitoring and state-of-the art fire-fighting technology. The products imported and stored include two grades of gasoil, two grades of fuel oil, motor gasoline, kerosene, Jet A1, AVGAS 100 LL, LPG and various brands of Lubricants.
With environmental awareness at mind, SEYPEC have been instrumental in the domestic market providing cleaner, lower sulphur content gasoil since 2007, allowing the application of newer emissions control technologies with a goal of significantly reducing emissions of particulate matter from diesel engines.
SEYPEC has in their possession a fleet of six tankers. These comprise of five Handy and Handy max tankers trading internationally – The Seychelles Pride, Seychelles Pioneer, Seychelles Progress, Seychelles Prelude and Seychelles Patriot. In addition, a smaller product and LPG tanker, Seychelles Paradise, trades regionally and is used for domestic supply.