The Nigeria Extractive Industries Transparency Initiative (NEITI) has commended President Muhammadu Buhari and the national assembly for taking prompt action on the amendment of the Deep Offshore and Inland Basin Production Sharing Contract.
In a statement released in Abuja on Tuesday, Waziri Adio, NEITI’s executive secretary, described the amendment as long overdue.
Adio said the amendment was in line with NEITI’s agitation for urgent amendment of the law to forestall further revenue losses to the federation.
In March 2019, NEITI published a policy brief titled “the 1993 PSCs: the steep cost of inaction,” which showed that Nigeria lost between $16.0 billion and $28.61 billion within ten years for non-review of the terms of PSC agreement in 2008 as was required by the law governing the PSCs.
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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”.
Adio also expressed confidence that the government will witness improved revenue generation from PSC arrangement with oil companies with the amendment.
The production sharing contract allows an oil company to bear all production costs in exchange for an agreed share of the profit.
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The deep offshore and inland basin production sharing contracts act was enacted on March 23, 1999, with its commencement backdated to January 1, 1993.
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