The Senate on Tuesday commenced move to amend the Production Sharing Contract Act, following consideration of a bill to that effect.
The bill titled “Deep Offshore and Inland Basin Production Sharing Contract 2004 (amendment) Bill 2019” passed the second reading on Tuesday.
It was consequently referred to the Senate Committees on Petroleum (Upstream) and Finance for further legislative work.
Senator Albert Bassey Akpan (PDP, Akwa-Ibom North East), the sponsor, said the bill seeks to amend section 5 of the PSC Act to bring the provisions of that section into conformity with the generality of the provisions of the Act and into congruence with the intendment and essence of Production Sharing Contracts.
He added that “The PSC arrangement was offered by the Federal Government of Nigeria as a contractual arrangement for the exploration and production of petroleum in the 1991 licensing round.”
He explained that the fiscal incentives from the arrangement are distinct and absent from the provisions of the Petroleum Act and the Petroleum Profit Tax Act which regulates the fiscal regime of other types of petroleum exploration and production arrangements.
Senator Akpan further stated that “the Act provided in section 16 that where the price of crude oil exceeds US$20 per barrel, the PSC Act will be reviewed to 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 the FGN and that in any event, the PSC Act shall be liable to be reviewed after 15 years from its commencement in 1993 and every 5 years thereafter.”
“This amendment alters the royalty payable by the PSC contractors so that whenever oil and gas price increases the share of government increases with the automatic inception of the newly introduced royalty by price mechanism”, Senator Akpan added.