…Warns of $3bn yearly loss in oil revenue
15 August, Sweetcrude, Abuja – Nigerian Extractive Industry Transparency Initiative (NEITI) has asked the National Assembly not to pass the Petroleum Industry Bill (PIB) in its current form noting that the country could lose $3 billion annually over the next five year if passed into law.
NEITI in a statement, said the strong core values of transparency and accountability in oil revenues, as well as instilling international best practices in the Nigerain oil sector which the Petroleum Industry Bill (PIB) seeks to achieve, could be eroded if parliament passes the amended version of the bill currently before it.
“NEITI is therefore of the view that if the NASS passes the bill as it is now, the Nigerian oil and gas sector will be in serious danger of not achieving the desired national goals of promoting greater indigenous participation and increased revenue generation for national development,” the agency said.
“NEITI does not see the rationale for passing a bill that is designed to reduce government revenue from petroleum operations by a minimum of $3bn annually through inappropriate and unfavorable adjustment to the fiscal provisions,” it stated.
According to the agency, the current version of the piece of legislation with the parliament provides for fiscal terms that would rapidly erode Nigeria’s petroleum revenues in the next five years.
NEITI revealed that the fiscal terms in the PIB had been altered such that Federal government share of oil revenue dropped from a minimum of 56% to 45% for deep offshore oil production, while government take was also slashed from 82% to 60% for joint venture production.
NEITI said the original draft of the PIB was aimed at raising Nigeria’s oil revenue to $9.3 billion annually as production increases, from $5.9bn earned now.
It would be recalled that foreign oil companies operating in the country had complained bitterly against the original draft of the PIB, on grounds that the fiscal terms proposed by the government would raise cost of operation as well as erode the companies’ margins.
The oil firms therefore, withheld billions of dollars in new investments in the Nigerian oil and gas sector.
This prompted the government to revisit the bill and establish several committees to reach compromise with the stakeholders.
NEITI further stated that the latest version of the bill if passed into law, could eliminate most functions of relevant agencies with respect to Nigerian hydrocarbon revenue flows; impede transparency in management of oil revenues and would fail to create a strong midstream agency required to provide cheap gas for the power sector.
