Home NEWS Reps to investigate $21bn revenue loss to oil companies

Reps to investigate $21bn revenue loss to oil companies

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The House of Representatives has resolved to investigate the loss of over $21billion revenues to International Oil Companies (IOC) operating in the country.

The decision followed a motion moved by Sunday Kaltung (PDP, Kaduna) during plenary on Thursday.

While leading the debate on the motion, Mr. Kaltung explained that, “the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 (PSC) was enacted in response to the problems posed by the joint venture arrangement as well as the desire of the federal Government to open up the sector to more foreign participation and further benefit the Nigerian economy.

He said that “the said PSC governs the understanding between the Nigerian National Petroleum Corporation (NNPC) and all new participants in the new inland deep and ultra-deep water acreages by which the contractor bears all costs of exploration and production without much cost being reimbursable if no find is made.”

He noted that “the PSC also provided for the recovery of the cost of exploration of crude oil in the event of commercial find, with provisions made for tax oil, cost oil, and profit oil following which the balance, after these (3) deductions are made, is shared between the NNPC and the contractor in an agreed proportion,” adding that the “PSC was amended by deep Offshore and Inland Basin Production Sharing Contracts (Amendment) act of 1999.”

The lawmaker however said that a revelation by the Minister of State for Petroleum Resources, Dr. Ibe Kachiku, on the 13th December, 2017, while briefing State House correspondents after the Federal Executive Council meeting that “Nigeria lost about $21 billion (N7.6trillion) to International Oil Company  (IOCs) operating in the country due to non-implementation of the PSC” is disheartening.

He also said that during the same briefing, Kachiku also stated that from 1993 up till date cumulatively, Nigeria had lost the colossal sum of $21Billion because of the Federal Government’s failure to act in the national interest.

According to him, in 2013, there was a notice to oil companies that government would take steps to correct the anomaly but eventually nothing was done, adding that “these act of negligence, omission, incompetency, if not outright collusion and conspiracy with a view, possibly to corruption have been perpetrated over such a long period of time when Nigeria has had well paid legal and technical experts in place.

“Anguished that this is a sad reminder of how the wealth of Nigeria, Africa’s largest oil producer, derived from her God given natural resources ends up in foreign lands while her economy and lot of her citizens continue to dwindle as evidence by, amongst other things, her economic recession and pervasive and acute poverty in the country.

“These reckless incidents that have resulted in massive depletion of both our nation’s resources and the revenue accruing from them have gone on for far too long and that there is a need for this National Assembly to come to Nigeria’s rescue in interest of the common man and take adequate measures to bring them to a halt.”

The House therefore resolved to investigate the operation of the PSC as between the NNPC and the IOCs towards determining the reasons for the loss of the aforesaid $21billion; and determine why the appropriate steps were not taken in the first place or promptly taken over such an inordinately long period to remedy losses and the possibility of recovering the revenue lost.

The House also resolved to require the Minister of Petroleum Resources to provide details of financial transactions between the NNPC and the IOCs during the period when the losses were incurred; and called for a review the PSC of the joint operating agreement and other relevant agreements with a view to regularizing all the anomalies that led to the aforesaid loss of revenue.

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