The Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, said Nigeria lost an estimated $21 billion in revenue in the last 20 years to non review of Production Sharing Contracts, PSCs.
Acting Chairman of RMAFC, Shettima Abba-Gana, said this in a statement issued by Mr Ibrahim Mohammed, Spokesperson for the commission on Thursday, June 7, in Abuja.
Abba-Gana commended the Federal Government on the approval given by President Muhammadu Buhari to the Nigerian National Petroleum Corporation (NNPC) to enable it undertake a review of all PSCs between it and its various partners to reflect the current realities in the industry.
Abba-Gana, who described the move as a welcome development, said; “As the commission that has the constitutional responsibility of monitoring revenue accruals into and disbursement of revenue from the Federation Account, we have been consistently calling for the review of these contracts for the past seven years.
“These contracts had not been reviewed nine years after both conditions stipulated in the relevant provision of the Act have lapsed.’’
The statement recalled that the commission had earlier supported the proposed review of the PSCs approved by the Federal Executive Council (FEC) at its meeting held on Dec. 13, 2017.
It would be recalled that Dr Ibe Kachikwu, Minister of State for Petroleum Resources, recently announced that the government had approved steps to amend Section 17 of the Deep Offshore and Inland basin Production Sharing Contracts Act, 1999.
“It specifically provides that the 1993 PSCs should be reviewed once the price of crude oil exceeds 20 dollars per barrel or 15 years after the contracts, which is 2008.
“To this end, the commission advised that government should take appropriate steps to ensure the review of these agreements with due diligence.’’
According to Abba-Gana, in April 2016, the commission drew the attention of government to the fact that three main contract types namely Joint Venture, Production Sharing and Service Contracts are in use in the Nigerian Oil and Gas Industry.
“Having carefully examined the fiscal terms of each contract and the associated revenue inflow into the federation account therefore, the commission lamented that the PSCs as represented by the 1993 PSCs’ which should have been renegotiated as far back as 2008 has yet to be done.
“This caused the federation revenue losses due to the unfavourable terms of the contracts.’’
He, however, advised the Federal Government to restore production in Joint Venture Contract (JVC), to previous level of approximately 108 million barrels per day.