Minister of State for Petroleum Ibe Kachikwu has stated the intention of the Federal government to amend the Deep Offshore Act. Kachikwu disclosed this after yesterday’s Federal Executive Council (FEC) meeting in Abuja.
“The first and most substantial for me is the decision to work with the Attorney General to amend section 15 of the PSC of the Deep Offshore Act. Under the Act, there was a provision in 1993 that once the price of crude exceeds $20 per barrel, the government will take steps to ensure that that premium element is then distributed at an agreed premium level.
Why is the Act being amended ?
Aside the monetary losses rising from the non enforcement, offshore crude oil production has increasingly become prolific. On shore production has often been frought with shut ins due to militant attacks and communal restiveness.
Nigeria is dependent on crude oil earnings for foreign exchange income as well as Federal revenue. A fall in oil prices and crude oil production volumes, pushed the economy into a recession last year.
How much has Nigeria lost ?
Kachikwu also disclosed that Nigeria has lost an estimated $20 billion by not enforcing the Deep Offshore Act. The estimated losses could even be much more since crude oil has traded at over $20 per barrel for over a decade. He however expressed optimism, that some of the funds could be recovered.
Why has Nigeria failed to enforce this section of the Act despite having a succession of experienced Ministers of Petroleum cum Special advisers from 1993 till date ? Is the delay in amendment due to a lack of capacity in the ministry or a deliberate Act ?
Time is of the essence
An impending cabinet reshuffle as well as general elections means politics is gradually taking centre stage.