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NASS passes long-awaited Oil Production Sharing Bill  

The National Assembly passed the bill amending the offshore and Inland Basin Production Sharing Contract Act 2014.

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In an accelerated process during plenary, the National Assembly (NASS) passed the bill amending the offshore and Inland Basin Production Sharing Contract Act 2014. The lawmakers amended Section 5 of the Principal Act and added Sections 17 & 18 to the bill.

The amended Section 5 reads that:

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  • Royalties shall be calculated on a field basis. The royalty shall be at a rate per centum of the chargeable volume of the crude oil and condensates produced from the relevant area in the relevant period as follows: in deep offshore greater than 200 metres water depth – 10%; in frontier/inland basin – 7.5%.
  • Royalty by price is adopted in order to allow for royalty reflexivity based on changing prices of crude oil, condensates and natural gas. This also replaces the necessity for Section 16 of the principal Act.
  • The royalty based on price shall be identical for the various water depths in deep offshore beyond 200m water depth, including frontier acreages for crude oil and condensates.
  • The royalty rates shall be based on increase that exceeds $20 per barrel, and shall be determined separately for crude oil and condensates as follows: From $0 and up to $20 per barrel – 0%; above $20 and up to $60 per barrel – 2.5%; above $60 and up to $100 per barrel – 4%; above $100 and up to $150 per barrel – 8%.

[READ MORE: Senate rejects Niger Delta ministry’s N23 billion budget]

The newly inserted Section 17 states that: “The minister (of petroleum resources) shall cause the corporation (Nigerian National Petroleum Corporation) to call for a review of production sharing contracts every eight years.” 

The new Section 18 which makes any abuse of the law a criminal offence reads: “Any person who fails to comply with any obligation imposed by any provision of the bill commits an offence and is liable on conviction to a fine not below N500,000,000 or imprisonment for a period not (more or less: not indicated) than five years or both.” 

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Meanwhile, the passage of the bill is expected to increase the country’s revenue. According to Senator Ahmed Lawan (Senate President), Nigeria will be $1.5 billion richer in 2020 due to the passage of the bill. Nigeria Extractive Industries Transparency Initiative (NEITI) has commended NASS for the passage of the bill, emphasizing that Nigeria has been losing a lot of money without the amendment and the bill would increase revenue.

1 Comment

1 Comment

  1. Tope

    October 31, 2019 at 8:19 am

    What about the mineral resources like Gold mining in commercial volume in Zamfara. When will the FG move away from oil to Gold exploitation to soar the revenue of the country. Why is the North protecting its resources from being commercially exploited for the benefit of the country?

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Business News

Just In: PPPRA reduces petrol price to N121.50 per litre

“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price…”

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NNPC, Reduce funding oil subsidy - IMF to Nigeria , Oil marketers, PENGASSAN call for subsidy removal 

The Petroleum Products Pricing Regulatory Agency (PPPRA) has announced a new retail price band for oil marketers.

In a circular dated May 31st, as seen by Nairametrics, the downstream regulator said oil marketers are now expected to sell petrol within the price range of N121.50 and N123.50. Part of the circular said:

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“Please recall the recently approved pricing regime which became effective March 19, 2020, and the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations.

“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price with the corresponding ex-depot price for the month of June 2020, as follows; price band N121.50 – N123.50 per liter.”

Details later…

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Hedge funds, institutional investors rush to own stakes in Bitcoin

Hedge funds are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.

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Bitcoin users rise in Nigeria despite Senate, CBN campaign against it, Nigerians losing millions to crypto fraud, Investing in cryptocurrencies in this economic shutdown, Bitcoin could hit above $100,000 by August 2021, Hedge funds, Institutional investors rush to have a stake in Bitcoin

With global economic uncertainty gradually becoming a daily norm, institutional and hedge funds around the world have been rushing to have a stake in crypto assets which  all have been outperforming other financial assets in 2020).

Just recently, a popular hedge fund based in New York –Grayscale Investments –caught the investment world by surprise by buying up Bitcoin (BTC) at a great rate in recent months.

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Lennard Neo, the head of research at Stack Funds, told Cointelegraph that institutional investors have been seeking for other options, not just to provide returns, but also to hedge their existing portfolio from downside risks. Neo said:

“Similar to Grayscale, Stack has seen an uptick in investors’ interest — almost double that figures of pre-crash in March — in Bitcoin. I would not say they are ‘gobbling up BTC’ blindly but cautiously seeking traditional structured solutions that they are familiar with before making an investment.” 

(READ MORE:The Empirical Truth about an average Nigerian’s price point)

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In addition, Paul Cappelli, a portfolio manager at Galaxy Fund Management, explained in detail the reasons for this demand. According to him, “we’re seeing increased interest from multiple levels of investors’ wealth channels, independent RIAs, and institutions.

“The recent BTC halving came at an interesting time amid the COVID-19 outbreak and the growing unease about quantitative easing. He noted: “It clearly demonstrated BTC’s scarcity and future supply reduction as concerns deepened around unprecedented stimulus by the Fed with the CARES Act.” 

Also, Michael Sonnenshein, the Managing Director of Grayscale Investments, explained briefly why his firm uses Bitcoin as an option in hedging its firm’s portfolio position.

“All three are facing issues this time around. Bitcoin has emerged as an alternative hedge, operating independently of the dramatic monetary policies enacted by central banks,” he said.

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What you need to know about Hedge Funds

They are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.

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Measures introduced by Nigeria to ensure transparent use of the $3.4 billion IMF loan

Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.

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Kristalina Georgieva, IMF boss hints at 'synchronized slowdown' in global growth , IMF: 40% of African countries can't pay back their debts , Nigeria worse off, posts grows lower than LIDC benchmark - IMF, Measures introduced by Nigeria to ensure transparent use of the $3.4b IMF loan

Following the approval and disbursement of $3.4 billion Rapid Financing Instrument (RFI) to Nigeria, which is the largest COVID-19 emergency financing package so far released by the International Monetary Fund (IMF), the multilateral financial institution now expects transparent and accountable use of the funds.

The IMF’s financial assistance to Nigeria is meant to support the healthcare sector, stabilise the economy, and protect jobs and businesses that have been severely impacted by the pandemic.

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The Bretton wood institution has been disbursing funds to work closely with member countries to ensure transparent and judicious use of the financial support, while making sure they are used for the intended purpose.

The IMF’s mission chief for Nigeria, Amine Mati, during a conversation, pointed out the measures to be taken by Nigeria in order to enhance transparency and governance in the use of the $3.4 billion IMF emergency financing.

(READ MORE: Infrastructural financing in Nigeria: Why bonds are better than loans)

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According to the IMF chief, the Nigerian Government had committed to undertake an independent audit of crisis mitigation spending and related procurement processes, as well as to publish procurement plans and notices for all emergency response activities which include the names of companies that were awarded the contracts and the beneficial owners.

Mr. Mati also disclosed that special budget lines are to be created to record all crisis emergency response measures, which are published daily on Nigeria’s treasury online portal. These measures will not only ensure that financial assistance received as part of the COVID-19 response is used for its intended purposes, but will also significantly strengthen the oversight of the entire budget used for the government’s crisis response.

Implementing these measures will help to drastically reduce the governance and transparency challenges as well as corruption vulnerabilities of a country like Nigeria. Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.

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