Governor of the Central Bank of Nigeria, Godwin Emefiele, has blamed international oil companies for the failure of the government to execute constitutionally mandated reviews to the Production Sharing Contracts signed in 1993.
Emefiele, who is part of a team of top government officials in London to attend another ruling on the asset seizure claim by Process and Industrial Development, told Reutersthat the multinationals intentionally refused to trigger a review that was to see the government get more proceeds once a barrel of oil rose above $20.
He said, “It stands for me to reason that the IOCs deliberately did not trigger event for review because it benefits them – and that is something that we kick against.
“You think it should be forgotten and we shouldn’t revisit it given that it resulted in substantial loss of revenue to the government?”
Former Minister of State for Petroleum Resources, Ibe Kachikwu, had at different times during his reign said that the country lost $21bn to the failure of government to review the PSC as required by the act.
He had also promised that the PSC will be duly reviewed.
Section 16 of the Deep Offshore And Inland Basin Production Sharing Contracts Act, which was first signed in 1993 and amended in 1999, provides for the contract to be reviewed every 15 years and for the oil companies, who operate the offshore fields to review the revenue sharing contracts to favour the Nigerian Government more once a barrel of oil sold for $20 and above.
The former condition was due in 2008, while the latter was due around 2003.
Neither the 1993 or 1999 amendment mandates the oil companies to trigger the review as Emefiele claimed.
The government signed more PSC’s under more stringent terms in 2000 and 2005.
Experts have however argued that the reviews provided for by the constitution, were bound to interfere with the life cycle of the financial projections of the oil fields.
They instead suggested that the government allow the 1993 contracts run down and then make reviews on renewals.
The Supreme Court had in October 2018 ordered the Nigerian Government to recover funds lost to the PSC and share same with the three tiers of government.