15 January 2017, Lagos – The Nigerian National Petroleum Corporation, NNPC, has proposed that the Minister of Petroleum Resources be empowered to set payable royalties.
Bello Rabiu, NNPC Chief Operating Officer, Upstream, made the proposal in a presentation to the Joint House of Representatives Committees on the amendment of the PSC Act and an Act to establish the National Oil and Gas Museum and Research Centre in Oloibiri.
Mr. Rabiu said the minister should be empowered to set royalties payable for acreages located in deep offshore and inland basin production sharing contracts through regulations based on established economic parameters.
A statement by the corporation’s spokesman, Udu Ughumadu, quoted Mr. Bello as saying that it was important to effect increment in royalties across all categories to increase government take.
The NNPC chief made the proposal as part of key amendments to the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act to enable the Federal Government optimize the collection of royalties and other revenue in deep water oil production activities.
“It is our opinion that the proposal to increase the royalty rate for terrains beyond 1000 metres, from zero per cent to three per cent, is commendable. But it is necessary to also make corresponding adjustments in other categories,” he said.
The statement noted that under the proposed PSC royalty regime, the calculation of what is due to government shall be based on production and price to guarantee fairness and balance between PSC contractors and government.
“For Royalty based on production within a tranche of 50, 000 barrels of crude per day, the NNPC is proposing a royalty tranche rate of 8.0 per cent.
