OrderPaperToday – The House of Representatives on Wednesday passed through second reading a bill for an act to amend the deep offshore and inland production sharing contract law.
The proposed legislation is an executive bill.
Leading the debate on the bill, the deputy majority leader, Idris Wase (APC, Plateau) noted that the Production Sharing Contract (PSC) between the Nigeria National Petroleum Corporation (NNPC) and the International Oil Companies in the Joint Operational Agreement (JOA) is already due for renewal.
He noted that the new amendment will ensure leakages are blocked, adding that Nigeria has lost an estimated $27billion to the lack of review of the law as stipulated by section 16 of the principal act.
Wase noted that the amendment will bring in the needed revenue to help reduce the budget deficit confronting the country.
According to the principal act, the 1993 PSC going by provision of Section 16 states, “(1)The provisions of this decree 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.
“(2) Notwithstanding the provisions of subsection (1) of this section, the provisions of this decree shall be liable to review after a period of 15 years from the date of commencement and every 5 years thereafter.”
The amendment is adding additional sections to Section 16, with subsection 3 (a,b) which reads: “(a) A royalty rate by price of 50% shall for additional revenue in the contractual area of production sharing contract under this act.
“(b) the additional revenue shall be determined by the product volume of crude oil and the difference between the actual nominal sales price of oil or condensable and the nominal value of $20 per barrel (1993 real term) shall be determined based on relevant US All Items Consumer Price Index (CPI) as published by the US Bureau of Labour Statistics.”
The bill however, did not scale through without opposition as several members called on the Speaker, Yakubu Dogara, to suspend the consideration till the next legislative day on the ground that they did not the compendium of the bill.
The Speaker responded by saying several members of the House already got the compendium through their electronic mail.
Leading the opposition to the consideration of the bill, Uzoma Abonta (PDP, Abia) noted that the bill is too important to be considered without members having the full details of the bill. He cited Order 12 of the Standing Orders of the House but Speaker ruled him out of order on the ground that bill had been stepped down previously for same reason.
He jokingly accused Abonta of “not being ready to work.”
When the bill was put to question by the Speaker, the “ayes” had it, and the committee on petroleum upstream was charged with further legislative action.