Senate President Ahmad Lawan has declared the Federal Government would be $1.5billion richer next year following the passage of the Deep Offshore and Inland Basin Production Sharing Contract (PSC) (Amendment) Bill by the Senate.
The Senate also adjourned plenary for two weeks to enable its Standing Committees engage Ministries, Departments and Agencies for the defence of their annual budget proposals.
Lawan said that the Upper Chamber would resume plenary on October 29.
He warned that any agency that refuses to appear before relevant committees to defend its budget during the period would not have revenue allocated to it for next year.
Lawan said: “By passing this (PSC) Bill, Nigeria will be at least $1.5billion richer in 2020 as a result of passing this act.
“I want to congratulate the joint committee and the President on the executive side of Government because in the initiation and process of amending this bill, both sides of Government have worked together tirelessly.
“Our committees together with the NNPC worked together till 5am this morning to put together this report.
“I want congratulate the sponsors and number one sponsor is President Buhari who mentioned the need to amend the Bill in his budget speech of 2020 to us last week.
“We also received an executive communication from him.”
Lawan however allayed the fears of those in oil business in Nigeria the amended Bill is not meant to discourage investment in the sector.
The sponsor of the Bill and Chairman Senate Committee on Petroleum (Upstream), Albert Bassey Akpan, listed the highlights of the amendment to include “provisions for payment of royalty which requires that all licences and leases holders in the deep offshore shall payment stipulated royalties irrespective of the water depth or terrain of their operation;
“Adoption of a regime of royalty by price to ensure that royalty payable is reflexive in accordance with the changes in the price of crude oil, condensates and natural gas;
“Inclusion of clause mandatory periodic review of the PSCs, and inclusion of an offences and penalty clause to deter persons from flouting the provisions of the Act.”
He added: “Our recommendation alters the royalty payable by the PSC contractors such that whenever oil and gas price increases, the share of government also increases automatically with the inception of the newly introduced royalty by price mechanism.
“The bill provides that whenever oil price goes above US$20 per barrel, the royalty by price shall kick in so that government can participate in reaping the benefits of increase in oil price.
“Another significant recommendation contained in our report is that every PSC company operating in our deep offshore shall pay appropriate royalty to government irrespective of the terrain or water depth in which they operate.
“This will mark the end of zero royalty in our deep offshore and will greatly improve government revenue.
“The Joint Committee report also contains recommendations for 10 yearly review of the PSCs as well as offences and penalty clause to ensure compliance with the provisions of the Act.
“This means that Nigeria will never lose revenue again just because no one cared to activate the provisions of the extant law.
“The Joint Committee report contains this long-awaited amendment of the Deep Offshore and Inland Basin Production Sharing Contract Act Cap 03 LFN 2004.
“This amendment will ensure that the share of the Federal Government of Nigeria (FGN) in the additional revenue is adjusted to the extent that the PSCs shall be economically beneficial to Nigeria.”