The Nigeria Extractive Industries Transparency Initiative (NEITI) has welcomed with enthusiasm the passage of the Deep Offshore and Inland Basin Production Sharing Contract Amendment Bill by the National Assembly.
In a statement yesterday in Abuja, the Executive Secretary of NEITI Waziri Adio described the amendment as long overdue and commended the 9th National Assembly and the Presidency for breaking the jinx with the prompt action taken to amend the law at record time.
The Executive Secretary noted with satisfaction that the development was quite consistent with NEITI’s agitation for urgent amendment of the law to forestall further revenue losses to the federation.
Mr Adio recalled that in March 2019, NEITI published a policy brief titled “the 1993 PSCs: the steep cost of inaction,” which revealed that Nigeria lost between $16.0bn and $28.61bn within ten years for failure to review the terms of PSC agreement in 2008 as was required by the law governing the PSCs.
According to NEITI, the two triggers for reviewing the Act were met in 2004 when the price of oil crossed $20 per barrel and in January 2008 after 15 years that the 1993 PSCs. Section 16 (1) of the Deep Offshore and Inland
Basin Production Sharing Contracts Act Cap. D3. LFN 2004 stipulates that:
“the provisions of the Act shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, real terms, the share of the Government of the Federation in the additional revenue shall be adjusted under the Production Sharing Contracts to such extent that the Production Sharing Contracts shall be economically beneficial to the Government of the Federation.”
The NEITI Executive Secretary expressed confidence that with the amendment, the revenue generation for the federation in the PSC arrangement in the oil and gas industry will witness significant improvement.
Mr Adio renewed his appeal to the National Assembly and the Presidency to pay similar priority attention to all other pending legislations required to push the much-desired reforms in the oil and gas industry.
The Deep Offshore and Inland Basin Production Sharing Contracts Act was enacted on March 23, 1999. However, implementation was backdated to commence on January 1, 1993.