Facts have emerged on the real reasons President Muhammadu Buhari signed the Production Sharing Contract bill into law on Monday.
PMB’s action on the bill comes just a month after the Senate, Nigeria’s upper legislative arm, held first reading for the amendment on October 3.
According to findings by SaharaReporters, the move showed the aggression with which the Presidency was seeking out sources of revenue to fund its spending plans.
The government is hoping it would raise $1.5bn or N457.65bn in a year from new taxes levered into the fiscal terms of the contract.
According to the Senate version of the Deep Offshore and Inland Basin Production Sharing Contract Act, which was signed in less than two weeks, a new royalty stream was added to the provisions made in Section 5 of the act – while the existing one was amended.
Under the previous fiscal regime, offshore projects of between 200m to 400m paid 12 per cent.
Projects from 401m to 800m paid 8 per cent, while those from 801m to 1,000m paid four per cent.
Deep offshore projects above 1,000m did not pay any royalties.
The 2019 amendment bill, which has now become law, prescribes a flat rate of 10 per cent across board.
The new royalty added by the senate will see oil firms executing deep offshore projects in Nigeria pay different percentages based on the price of a barrel of oil at the time.
Only when oil sells for $20 and below will the new royalty seize to apply.
Section 16 of the repealed act provided for a review of the PSC’s, the first of which were signed in 1993, after 15 years and every other five years.
The Senate increased the re-adjustment window to eight years without stating if this particular clause will apply to new projects like the Total-operated Egina field, the Shell and Eni-operated Etan/Zaba Zaba field and the Bonga South-West block, which Shell is yet to take a final investment decision on.
A Reuters report published on Wednesday said international oil companies made depositions to the National Assembly seeking to make the terms less stringent.
Their arguments were however, turned down.
According to the British news agency, the House of Representatives brought the review period back to five and increased the minimum price at which the IOC’s would pay royalties to $35.
In an analysis sent to the National Assembly by the Oil Producers Trade Session, they argued that the country would lose $55.5bn in deep offshore investments if they went ahead with the version of the bill sent to the President.
They also contended that the country would forfeit $10.4bn in revenue by 2030.
In what is a clear rush to raise funds, the National Assembly appears not to have set-up a harmonisation committee to go through any discrepancies between the versions signed by the upper and lower chambers.
PMB’s signing of the bill into law, comes just two working days after the lower legislative arm voted on the amendment.