Amended PSC law will bring significant improvement in revenue for Nigeria ~ NEITI
The recent Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill when signed into law will usher in significant improvement in oil revenue for Nigeria, the Nigeria Extractive Industries Transparency Initiative (NEITI) said on Tuesday.
The agency commended the presidency and the National Assembly for the speedy manner, the amendment process was handled.
The bill has been passed by the lawmakers and is expected to be signed into law when it gets to the president’s table.
The Executive Secretary of NEITI, Waziri Adio, said in Abuja that the amendment of the law was long overdue.
“We commend the 9th National Assembly and the Presidency for breaking the jinx with the prompt action taken to amend the law in record time,” Mr Adio said.
The development, he said, was quite consistent with NEITI’s agitation for urgent amendment of the law to forestall further revenue losses to the federation.
He recalled that in March 2019, NEITI had published a policy brief titled “the 1993 PSCs: the steep cost of inaction,” which revealed that Nigeria lost between $16 billion and $28.61 billion in ten years for failure to review the terms of the agreement in 2008 as required by the law governing the PSCs.
The official said there were two notable triggers for the review of the Act in 2004 when crude oil price crossed the $20 per barrel mark, and in January 2008 after 15 years of the 1993 PSCs.
Section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act Cap. D3. LFN 2004 spelled out the conditions under which the PSCs should be reviewed.
The provisions of the Act stipulates that the law shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, the share of the revenue to the government of the federation shall be adjusted under the PSC.
The essence of the adjustment of the sharing formula was to ensure that the Production Sharing Contracts shall be economically beneficial to the government.
The official expressed confidence that with the amendment of the law, the revenue generation for the federation in the PSC arrangement in the oil and gas industry will witness significant improvement.
The Deep Offshore and Inland Basin Production Sharing Contracts Act was enacted on March 23, 1999, with its commencement backdated to January 1, 1993.
Of late, the federal government through the Office of the Attorney General of the Federation and Minister of Justice, Abubakar Malami, has been making a case for the recovery of over $62 billion from the international oil companies.
These are arrears of revenues that should have accrued to Nigeria over the years that oil sold above $20 a barrel.
Mr Malami had accused the IOCs of frustrating efforts in the past for the government to negotiate the review of the PSC.
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