a. Five Activities of the Nigerian Petroleum Development Company (NPDC):

1. Exploration and production of crude oil and natural gas.
2. Development and operation of petroleum assets on behalf of the Nigerian government.
3. Partnership with private entities in joint venture arrangements for oil exploration and production.
4. Management and operation of Oil Mining Leases (OMLs) and Oil Prospecting Leases (OPLs).
5. Implementation of gas utilization projects for domestic and export purposes, including gas-to-power initiatives.

b. Importance of Oil Mining Lease (OML) and Oil Prospecting Lease (OPL):

1. Oil Mining Lease (OML):
   An OML grants the holder the rights to explore, produce, and sell petroleum within a defined geographical area after an OPL matures into production. It is critical for commercial petroleum operations.
2. Oil Prospecting Lease (OPL):
   An OPL grants the holder exclusive rights to explore for petroleum within a specified area. It is the preliminary stage before obtaining an OML.

c. Computation of Adjusted Profit, Chargeable Profit, and Chargeable Tax for Joji Petroleum Company Limited:

Financial Extracts:

i. Adjusted Profit:
Adjusted profit is the taxable profit after accounting for expenses and incomes not directly related to production operations.

Calculation:

1. Petroleum Profits Tax Payable: ₦1,336,000
2. Add: Royalties not included ₦1,638,000
3. Add: Custom duty ₦125,000

Adjusted Profit: ₦1,336,000 + ₦1,638,000 + ₦125,000 = ₦3,099,000

ii. Chargeable Profit:
Chargeable profit is derived by subtracting allowable deductions such as capital allowances and losses brought forward from the adjusted profit.

Calculation:

1. Adjusted Profit: ₦3,099,000
2. Less: Capital Allowances (Current and Previous Years): ₦6,080,000 + ₦8,901,000 = ₦14,981,000
3. Less: Loss Brought Forward: ₦6,250,000

Since deductions exceed adjusted profit, Chargeable Profit = ₦0.

iii. Chargeable Tax:
Chargeable tax is computed by applying the petroleum profits tax rate (85%) to the chargeable profit.

Calculation:

• Chargeable Tax = Chargeable Profit × Tax Rate
• Chargeable Tax = ₦0 × 85% = ₦0

Explanation of Significance:

1. Adjusted Profit: Reflects the profitability of operations before allowable deductions, essential for assessing operational efficiency.
2. Chargeable Profit: Determines the taxable income after accounting for tax reliefs and losses, ensuring fair compliance with tax laws.
3. Chargeable Tax: Represents the fiscal obligation of the company to the government, which is influenced by effective utilization of tax incentives and allowances.