The Nigerian Senate will today (Thursday) take the first reading of the bill to amend the Production Sharing Contract (PSC) Act of 1993.

Lawmakers, who spoke on the bill presented by Senator Ifeanyi Uba, said there was a need to review the bill in order to enhance earnings for Nigeria.

Production Sharing Contract is a term used in the oil and gas industry, referring to an agreement between contractor and government whereby the contractor bears all exploration risks, production and development costs in return for its stipulated share of (profit from) production resulting from this effort.

The lawmakers reached a resolution on the planned amendment after consideration of the motion titled: “Urgent need to review and recover additional revenue accruable to the government of the Federation from the Production Sharing Contracts pursuant to Section 16 of the Deep Offshore and Inland Basin Production Sharing Contract Act.”

In his comments, Senate President, Ahmed Lawan, said for long, Nigeria has been shortchanged, while the nationals themselves for that. “Since the price of crude went beyond 20 dollars, Nigerians should have benefitted from that Act by immediately ensuring that we review that Act, where we would have gotten 50% of the increase in the price of crude, and we are talking about billions of dollars,” Lawan said.

The Senate President said it was an opportunity that “we squandered ourselves. The oil companies would have no business telling us to review our laws. We know that the executive will be on our side.

“We lost about N350 billion to fund the 2019 budget, because it is not there. And even the N160 billion proposed in the 2020 budget is at risk. So we have to do everything possible to ensure that what is ours as a country comes to us.”

He said the Senate is inviting the Executive side of government work with the National Assembly. “This is a very important Act that we are about to amend. We expect that before the budget is passed, this Act would have been amended and signed into law by the President because we have to fund the 2020 budget properly,” Lawan said.

Lawan spoke while declaring open a public hearing convened by Senate and House of Representatives Joint Committees on Finance on 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).

Also at plenary yesterday, the Senate mandated its Committee on Petroleum Resources Upstream to investigate the reasons for the failure to review the provisions of the Production Sharing Contract (PSA).

Presenting the motion, Senator Ubah disclosed that “as a result of the non-review and amendment of the PSC Act, the Federal Government has lost about US$21 billion (about 7 trillion naira) over a period of 20 years.”

Ubah stated that Nigeria had lost trillions of naira due to non-review of the PSA Act stands to gain an additional sum above N30 billion monthly (N360 billion annually) if the Act is reviewed and amended.

Chibisi Ohakah

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