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Senate passes amended oil production sharing contract law

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*Targets N1.5bn annual revenue
*Slams N500m penalty/5yrs jail term on defaulters 
Senate yesterday passed the Deep Offshore and Inland Basin Production Sharing Contract Act, 2004 (Amendment) Bill, 2019 with expected revenue projection of N1.5billion annually.
This was as the upper chamber has raised the penalty for defaulters of this law from N20million fine or one year imprisonment to N500million fine or an option of Five years imprisonment.
President Muhammadu Buhari had  at the commencement of Tuesday’s plenary, transmitted a letter to the President of the Senate, Ahmad Lawan seeking amendment of the Act for urgent assent.
The President’s letter coincided with the Senate consideration of the report of Senate’s joint Committees on Petroleum (Upstream), Gas, Finance, and Judiciary, Human Rights and  Legal Matters on the Bill for final passage.
Passing the bill titled: “Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2019 “for second reading Tuesday, the Senate introduced sections 17 and 18 into it for appropriate penalties against violation of section 16  of the Act.
In his  report, chairman of the joint committee, Senator Albert Akpan Bassey (PDP Akwa Ibom North East), explained that the committee’s recommendation “alters the royalty payable by the PSC contractors such that whenever oil and gas price increases, the share of government also increases automatically with the inception of the newly introduced royalty by price mechanism.
 The bill, he informed provides that whenever oil price goes above US$20 per barrel, the royalty by price shall kick in so that government can participate in reaping the benefits of increase in oil price.
“Another significant recommendation contained in our report is that every PSC company operating in our deep offshore shall pay appropriate royalty to government irrespective of the terrain or water depth in which they operate.”
Consequently, he noted: “This will mark the end of zero royalty in our deep offshore and will greatly improve government revenue.
“The Joint Committee report also contains recommendations for 10 yearly review of the PSCs as well as offences and penalty clause to ensure compliance with the provisions of the Act. This means that Nigeria will never lose revenue again just because no one cared to activate the provisions of the extant law.
“Mr. President and Distinguished Colleagues, the Joint Committee report contains this long-awaited amendment of the Deep Offshore and Inland Basin Production Sharing Contract Act Cap 03 LFN 2004. This amendment will ensure that the share of the Federal Government of Nigeria (FGN) in the additional revenue is adjusted to the extent that the PSCs shall be economically beneficial to Nigeria.”
The Bill which most senators considered he fastest ever passed on the floor of the Senate went through clause by clause consideration and finally scaled through third and final passage.
Fielding questions from journalists after passage of the bill, Senators Akpan and Ubah said the adjustment in the penalty for defaulters of the law when assented to by President Buhari ranges  from one jail term or a fine of N20million by the joint committee to five year imprisonment or N500million fine was by committee of the whole.
It would be recalled that Senator Ubah had on October 2,2019 brought to he consciousness his colleagues at plenary  through a motion on the loss  of a whooping sum of N7trillion to the nation’s economy through the multi-National oil companies on the  non-review of Production Sharing Contracts by the Joint Ventures Companies, JVC.
Senator Ubah, in the motion which was co-sponsored by 27 other lawmakers, informed the Senate that salient provisions of the contractual agreements between Nigeria and the affected oil firms , have not been adhered to by parties concerned  which according to him, had bled the nation’s economy to the tune of $21billion, equivalent of N7trillion.
The N7trillion loss, according to him, were revenues that supposed to have accrued  into the federation account from shares Nigeria supposed to have gotten from the oil firms anytime oil price rises above $20 per barrel as provided for in section 16 of the Production Sharing Contract Oil.
He added that the required periodic reviews that are supposed to be done on the Act in 2008, 2013 and 2018 as provided for in the Act, were not carried out with attendant further loses on the part of Nigerian government .
Consequently, an amendment bill seeking for penalties against the fraud , was tabled and passed for first reading on the floor of the Senate on Thursday last week was sponsored by Senators Akpan and Ubah respectively.
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