Capital Allowances: Production Sharing Contracts - Expenditure on Plant and Machinery
The contractor will often incur substantial capital expenditure on plant and machinery during the exploration, appraisal and any subsequent production stages of the contract. It is a feature of most PSCs that ownership of such plant and machinery passes from the contractor to the host government at some point during the life of the contract. The point at which this happens varies from contract to contract. This may be when the assets enter the host country, when the contractor has recovered its full costs, gradually during the course of the contract, or when the contract is terminated.