The Nigerian government has approved steps towards the amendment of section 15 of its oil Production Sharing Contract (PSC) of the Deep Offshore Act over huge revenue losses said to be about $21 billion over the last 20 years.
Dr Ibe Kachikwu, Minister of State for Petroleum Resources said because previous governments failed to exploit the opportunity of the Deep Offshore Act that made provision for a premium element to be shared once the price of crude exceeds $20 a barrel the country has lost about $21 billion over a 20 year period.
Dr Kachikwu told journalists in Abuja, Nigeria’s capital, that the Federal Executive Council (FEC) has approved steps to amend the Section to reflect current realities and ensure better take for the country.
“The first and most substantial for me is the decision to work with the Attorney-General of the Federation to amend Section 15 of the PSC of the Deep Offshore Act. Under the Deep Offshore Act, there was a provision in 1993 that once the price of crude exceeds $20 a barrel, the government will take steps to ensure that premium element is then distributed at an agreed premium level for the federal government so that we get more for our oil” Dr Kachikwu said.
”But over the last 20 years, nothing really was done. From 1993 to now, cumulatively, we have lost a total of $21 billion just because the government did not act. We did not exercise it. In 2013 there was a notice to oil companies that we were going to do this but we didn’t follow through in terms of going to council to get approval.
“One of the things we’ve worked on very hard over the last one year is to get that amendment because once we do, the net effect for us is close to $2 billion extra revenue for the federation. Let me just say that however, we do it, we would definitely try to see whether a possibility exists for claw back some advantages,” he added.