Senate Makes History, Passes Amended PSC Bill

BY VICTOR BUORO, ABUJA – Determined to shore up Nigeria’s dwindling revenue earnings in the coming years, the Nigerian Senate on Tuesday passed the Deep Offshore and Inland Basin Production Sharing Contract Act 2004 (amendment) Bill 2019.

The bill was passed after consideration of the report submitted by Senate Joint committees on Petroleum (Upstream), Gas and Finance.

The development comes on the heels of a formal request from President Muhammadu Buhari to  the upper legislative chamber seeking an amendment of the existing Act.

With its passage, expectations are that Nigeria will reap about N400 billion in revenue due to the federal government from International Oil Companies (IOCs) operating in the country.

In its clause-by-clause consideration of the committee’s report, the Red Chamber however amended clause 17 of the Act, which recommended 10 years for a future review of the law.

Deputy President of the Senate, Ovie Omo-Agege, had during the report consideration, demanded explanation from the Joint committee on its recommendation that timeline for reviewing Production Sharing Contracts be amended from five (5) years to ten (10) years.

Responding on behalf of the joint committee, its Chairman, Senator Albert Bassey Akpan, said the Nigerian National Petroleum Corporation (NNPC) and International Oil Companies have continuously maintained that the current five-year period was insufficient to take certain final investment decisions.

“It takes about five years for an investor to take a Final Investment Decision oil investment (FID). So the NNPC and others are saying for you to review the law, you must give them a stable law; something they can project on”, he argued.

However, with some lawmakers, including: Senators Danjuma Goje (APC, Gombe Central) and Jibrin Barau (APC, Kano North), not swayed by the explanation, their insistence on retaining the existing five-year periodic timeline provided in the Act gained support until the intervention by Senator Ibikunle Amosun (APC, Ogun Central), who prevailed on his colleagues for a change of heart.

He thereafter moved a motion for an amendment of clause 17 to specify eight years as the timeline for reviewing PSCs. The motion was seconded by Senator Kabiru Gaya (APC, Kano South) and thereafter adopted through a voice vote by the Senate President, Ahmad Lawan.

Speaking on the bill, Senator Ahmad Lawan said the National Assembly has made history with its successful amendment of the PSC Act.

He lauded Mr President for his commitment towards ensuring the amendment of the Act, saying; “I must commend President Buhari, who mentioned the need to amend this bill in his speech when he presented the 2020 budget to the National Assembly last week, and of course, we also received an executive communication from him.”

According to him, “With the passage of this bill, Nigeria will gain at least $1.5 billion in 2020 as a result of this amendment. 

“The Senate will do more. We have done what could not be done since 2003 to date. Today marks a milestone in the history of the Senate, and particularly the National Assembly.”

Also acknowledging that the new law will create a level playing field for the government and International Oil Companies doing business in Nigeria, Senator Lawan said; “For the IOCs doing business in Nigeria, the amendment will not in anyway discourage investment. We expect that they will continue to do business in Nigeria.

“When we legislate at the National Assembly, we will always be mindful of the need to have a competitive environment.

“When we work on the Petroleum Industry Bill, maybe in January, we will ensure that it is a win-win situation for Nigerians and those doing business in the oil and gas industry.”

The Senate President had earlier read an executive communication from President Muhammadu Buhari requesting the amendment of the Production Sharing Contracts (PSC) Act.

The letter dated October 10, 2019, reads: “Pursuant to Section 58 of the Constitution of the Federal Republic of Nigeria 1999 (as amended),  I hereby present the Deep Offshore and Inland Basin Production Sharing Contracts (Amendment)  Bill,  2019 for consideration and passage into law by the Senate.

“This Bill seeks to reflect the current realities in the oil and gas sector, as well as to secure increased revenue for the Federal government to fund projected expenditure in the 2020 and subsequent budgets.

“While I trust that this bill will be expeditiously and favourably considered by the National Assembly, please accept, Distinguished Senate President, the assurances of my highest consideration.”