The House of Representatives ad hoc
Committee investigating alleged loss of $21 billion by Nigeria to
expired agreements on Production Sharing Contracts (PSCs)......
with the
international oil companies (IOCs) has blamed the Department of
Petroleum Resources (DPR) for failing to renegotiate the terms of the
contracts when they were due as provided in the agreements.
The committee has also resolved to write
the embassies and high commissions of the home countries of the
affected IOCs to help the federal government to recover its lost
revenue.
The Deep Offshore and Inland Basin PSC
Act had provided that the terms of the contracts should be renegotiated
when crude oil price reached $20 per barrel to enable Nigeria collect
higher royalties from the IOCs.
But the federal government failed to
activate the relevant clause in the PSC Act when oil price reached $20
per barrel, leading to the estimated loss of $21 billion by the country.
At an interactive session with
stakeholders which included relevant government agencies and IOCs in
Abuja Thursday, the committee argued that it was the responsibility of
the DPR to regulate the country’s oil sector, and hence should have
triggered the terms in the PSC Act which stipulated that calculation of
royalties due to the federal government should be reviewed upwards once
the price of oil reached $20 per barrel or after 10 years of the Act in
practice.
Speaking to reporters at the meeting,
the Chairman of the committee, Hon. Daniel Reyenieju, explained that the
failure by the federal government to activate the clause was the fault
of the DPR.
Reyenieju noted that if the DPR were
sensitive to its regulatory functions, it would have activated the
relevant clause and save the country from losing such huge amount of
money.
“The DPR will be held responsible for
the PSCs delay. No, I’m not impressed but that is a process, we are just
building up and will get to a status where we will mandate all of
them,” said Reyenieju, who took time to ask questions the government
agencies either parried or provided inadequate answers to.
“We are a parliament and one of our
responsibilities is to oversight, and oversight government spending and
incomes. What actually triggered it is the need for parliament to
continue to oversight the government and all agencies that generate
revenue for government.
“One of our members spotted that there
is a particular section in the PSC Act of 1993 and 2003, and that the
Act has outlived its usefulness, specifically Section 16 (1) of the Act
which states that the moment the price of crude oil exceeds $20 per
barrel, it be renegotiated so that government can have a higher take in
terms of revenue but for 20 years, nobody, not even the enforcers of the
Act which is the DPR, not the NNPC, or the ministry of justice has
talked about it. Even the IOCs are also liable because it is a mutual
business.”
The Minister of State for Petroleum, Dr.
Ibe Kachikwu, had stated that Nigeria lost a whopping $21 billion to
its failure to implement the premium element governing the PSCs as
provided under the Act.
He had also added that the government
has initiated moves to amend the Act which was enacted in 1993 to
provide the fiscal framework for foreign investments in deep offshore
and inland basin acreages in the oil and gas sector.
Reyenieju acknowledged that while the
country might have lost close to $21 billion on account of, the ad hoc
committee would work to ensure it is recovered.
According to him, the committee will
write the embassies and high commissions of the home countries of the
affected IOCs in this regards.
Asked what impacts that would make,
Reyenieju said: “Most of the IOCs are funded greatly by various
international companies that are represented by their embassies here in
Nigeria and if we are talking about $21 billion, and they are not even
responding to queries and invitations, then we must get back to their
home countries and this is the point we are going to.”
At the session, the DPR stated in a
presentation it made on the royalty earnings due to the government
between 2003 and 2017 for oil produced and sold beyond $20 per barrel
was $6,055,077,636.48.
It however, refused to take
responsibility for not activating the clause, but rather inferred that
it was the Nigerian National Petroleum Corporation (NNPC) that should, a
claim the committee rejected.
The representatives of the ministry of
finance told the committee that they were not aware of Section 16(1) of
the Act which made provisions for the clause.
The ministry said it relied on the revenue remitted to the Federation Account in collaboration with other parties.
On its part, the FIRS said it wrote to
the National Assembly on the issue but could not act further because it
was rather a royalty affair, which fell within the purview of the DPR.
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