House of Reps approves new revenue sharing formula from Deep Offshore

 

The House of Representatives on Tuesday approved the new revenue sharing formula from the Deep Offshore and Inland Basin Production Sharing Contract between Federal Government and International Oil Companies (OICs).

The approval was contained in the recommendations adopted in the report on the Bill for an Act to end the Deep Offshore and Inland Basin Production Sharing Contract Act, Cap. D3 Laws of the Federation of Nigeria, 2004 and for other related matters.

In the bid to ensure strict compliance with the new legislation, the House approved the provision of new section (18) which provides that: “Any person who fails or neglect to comply with any obligation imposed by any provision of the bill commits an offence and is liable on conviction to fine not below N500 million or to imprisonment for a period not than five years or both.”

Under the new fiscal regime as contained in the amendment to section 5 of the Principal Act, the House approved that: “royalties of 10% in Deep offshore greater than 200 water depth and 7.5% in frontier/Inland basin”.

“Royalty price is adopted in order to allow for royalty reflexivity based on changing prices of crude oil, condensates and natural gas. This also replaces the necessity for section 16 of the Principal Act

“The royalty based on price shall be identical for the various water depths in Deep offshore (beyond 200m water depth) including frontier acreages for crude oil and condensates.

“The royalty rates shall be based on increases that exceed $20 per barrel and shall be determined separately for crude oil and condensates.”

ALSO READ:Volkswagen brings electric cars to Rwanda

These include: “from $0 and up to $20 per barrel – zero percent); above $20 and up to $60 per barrel – 2.5%; above $60 and up to $100 per barrel – 4%; above $100 and up to $150 per barrel – (8%) and above $150 – 10%.

The amendment also provides a new section 17 which states that: “The Minister shall cause the Corporation to call for a review of the Production Sharing Contracts every 8 years.”

Some of the lawmakers who spoke in favour of the bill are Deputy Speaker, Hon. Idris Wase, Hon. Ado Doguwa, Hon. Victor Nwokolo and Hon. Okon Archibong while deputy Minority Leader, Hon. Toby Okechukwu and Hon. Isiaka Ibrahim who opposed the provisions of the bill called for representation of the Petroleum Industry Bill (PIB) with the view to holistically address myriad of challenges bedevilling the oil and gas sector.

Recall that President Muhammdu Buhari had during the 2020 budget estimates to the joint session of the National Assembly informed the lawmakers of ongoing plans review upward government’s share and revenue worth $1.5 billion from oil sector between 2020 and 2021 through the review of the Deep Offshore and Inland Basin Production Sharing Contract, Act, 2004

According to the Explanatory Memorandum of the bill, “it seeks to amend the Deep Offshore and Inland Basin Production Sharing Contract Act, 2004 and to make provisions for price reflexive royalties, periodic review of royalties payable in respect of Deep Offshore and Inland Basin Production Sharing Contracts as well as offences and penalty for non-compliance.”

After the consideration of the report at the Committee of the Whole, the bill passed through 3rd reading.

In line with legislative practices, the clean copy of the bill will be transmitted by the Clerk of the National Assembly to the President for assent.

 

Source: Tribuneonline