The National Assembly have passed a bill aimed to amend the petroleum production sharing contract (PSC) act.
The bill which seeks to review the sharing formula to accrue more benefits for the federal government, was passed by the Senate Tuesday.
It was resubmitted by President Muhammadu Buhari about two weeks ago after the past assembly failed to pass it.
Nigeria is projected to earn an additional income of $1.4 billion annually from international oil companies operating in the country if the bill is passed into law.
Section 16 of the act states: “(1) The provisions of this 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.”
Most of the lawmakers, including Mohammed Monguno from Borno state and chief whip of the house, endorsed the review adding that it is long overdue.
“Section 16 of the act is very clear, once the price of crude oil is above $20 per barrel, the sharing formula is to be reviewed, but over the years, we have gone into deep slumber, now we have woken up,” Monguno said.
But Isiaka Ibrahim from Ogun state expressed reservations over the review which he warned could scare away investors from the oil sector.
He said: “It is far expensive to explore offshore today, unlike before where it was only Nigeria that has oil in abundant, we have other countries we are competing with.
“I don’t know if we are taking into consideration if these companies will not leave Nigeria, if we can measure the longterm effect of review.”
‘$28BN LOST IN TEN YEARS’
The Nigeria Extractive Industries Transparency Initiative (NEITI) recently said Nigeria lost about $28 billion over a period of 10 years as a result of the failure to review the PSC act.
It said the review was necessary because oil production from PSCs has surpassed production from joint ventures, and now contributes the largest share to federation revenue.
The country signed the first set of PSCs in 1993, while the DOIBPSC was enacted in 1999