The Senate on Tuesday commenced the amendment of the Product Sharing Contract Act, following consideration of the bill.
Senate had last Wednesday resolved to investigate the sum of N7 trillion oil revenue lost by the federal government over a period of twenty years due to non-review of the PSC Act.
PSC is a contractual arrangement for petroleum exploration and production whereby the federal government as owner of petroleum resources engages a contractor to provide technical and financial services for an agreed share in profit oil after payments of royalty, coat and tax oil.
The bill titled “Deep Offshore and Inland Basin Production Sharing Contract 2004 (amendment) Bill 2019” passed second reading in Senate on Tuesday.
The bill was consequently referred to the Senate Committees on Petroleum (Upstream) and Finance for further legislative action.
Sponsor of the bill, Senator Albert Bassey Akpan (PDP, Akwa-Ibom North East) in his presentation said the bill “seeks to amend section 5 of the PSC Act to bring the provisions of that section into conformity with the generality of the provisions of the Act and into congruence with the intendment and essence of Production Sharing Contracts.”
He stated that “The PSC arrangement was offered by the Federal Government of Nigeria as a contractual arrangement for the exploration and production of petroleum in the 1991 licensing round.”
According to Akpan, the fiscal incentives from the PSC arrangement are distinct and absent from the provisions of the Petroleum Act and the Petroleum Profit Tax Act which regulates the fiscal regime of other types of petroleum exploration and production arrangements.
He further stated that “the Act provided in section 16 that where the price of crude oil exceeds US$20 per barrel, the PSC Act will be reviewed to ensure that the share of the Federal Government of Nigeria (FGN) in the additional revenue is adjusted to the extent that the PSCs shall be economically beneficial to the FGN and that in any event, the PSC Act shall be liable to be reviewed after 15 years from its commencement in 1993 and every 5 years thereafter.”
“This amendment alters the royalty payable by the PSC contractors so that whenever oil and gas price increases the share of government increases with the automatic inception of the newly introduced royalty by price mechanism”, Senator Akpan added.
Meanwhile, Senate on Tuesday urged the federal government to give priority attention to the development of the Oloibiri Oil and Gas Research Centre and Museum.
Also, it urged the Federal Government to direct PTDF and contractors to mobilise to site to commence the construction of the research Centre and Museum.
This followed a motion by Senator Biobarakuma Degi-Eremienyo (Bayelsa East) on the need to ensure immediate commencement of the Oil and Gas Research Centre and Museum, Oloibiri, Bayelsa State -Nigeria’s first oil field.
He explained that in exhibition of the importance of the first oil field and the need to develop the foreign exchange earning tourism potentials of the area, the idea to build a world class museum of oil and gas was conceptualised, designed and foundation stone laid by President Shehu Shagari in 1953.
According to him, though the federal government removed the project from the National Commission for Museum as rewarded and domiciled with the Petroleum Technology Development Fund in 2011, the project still remains moribund.
SOLOMON AYADO, Abuja