NEITI: Nigeria lost $16bn to non review of production sharing contracts

 OrderPaperToday – The Nigeria Extractive Industries Transparency Initiative (NEITI)
has revealed that the country lost at least $16b over a ten-year period (2008 – 2017) due to non-review of the 1993 Production Sharing Contracts (PSCs) with oil companies.

This discovery stemmed from a quantitative study, titled, ‘‘1993 PSCs: The Steep Cost of Inaction’’, done by the agency in conjunction with Open Oil, a Berlin-based extractive group.

The study also shows that the losses could increase to $28bn if unchecked.

NEITI explained the importance of the review in a statement released on Sunday by Orji Ogbonnaya Orji, the director, communications and advocacy.

It noted that oil production from PSCs has surpassed production from Joint Ventures (JVs).

“Thus, productions from PSCs now contribute the largest share to federation revenue.”

According to NEITI, the review should have been activated in 2004 when oil prices exceeded the $20 per barrel mark.

The following recommendations were given: “The FG through its appropriate agencies should commence urgent process to review the PSC agreement with oil companies now not later.

“That the FG should note that the affected contractors have expressed willingness to negotiate these terms and therefore they and the state governments should be carried along in the review process.

“The NNPC should follow international best practices and make the contracts with oil companies public in other to ensure transparency and maximum government take, as Nigerians can properly scrutinize such contracts and draw attention to areas of improvement.”

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