The non-implementation of the said Act has resulted in loss of revenue to the tune of $21 billion since the past 24 years.
Minister of State for Petroleum Resources, Ibe Kachikwu, disclosed this after the Federal Executive Council (FEC) meeting presided over by Vice President Yemi Osinbajo.
According to Kachikwu, FEC directed that he should work together with the Attorney General of the Federation Minister of Justice, Abubakar Malami, to amend section 15 of the Production Sharing Contract (PSC) of the Deep Offshore Act.
The Deep Offshore Act provides that once the price of crude exceeds $20 per barrel, the government will take steps to ensure that premium element is distributed at an agreed premium level for the federal government.
Kachikwu regretted, however, that since the Act was enacted in 1993, government had failed to enforce it, leading to the loss of about $21 billion dollars that would have accrued to it.
He said, “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 for the federal government so that we get more for our oil.
“But over the last 20 years, nothing really was done. From 1993 to now, cumulatively, we have lost a total of $21 billion just because government did not act. We did not exercise it. In 2013 there was a notice to oil companies that we were going to do this but we didn’t follow through in terms of going to council to get approval
“One of the things we’ve worked on very hard over the last 20 years is to get that amendment because once we do, the net effect for us is close to $2 billion extra revenue for the federation”.
On whether it would be possible to draw back on the loss, the minister said, “I doubt it for the simple reason that the provisions of the JOA on section 15 is that government would need to do something, which is what we have just done today. If it is not done then the oil companies are operating within the realms of what the law is.
“So, that is going to be difficult, but I love not to talk too much about that. I will be giving out what my strategies would be on national TV. Let me just say that however we do it, we would definitely try to see whether a possibility exists for clawing back some advantages. Let me just keep it at that. “