Non-review of PSCs causes Nigeria $16b loss- NEITI
The study, which was done in conjunction with Open Oil indicates that the losses could be up to $28b if, after the review, the Federation were allowed to share profit oil from two additional licenses.
NEITI in the policy brief stated that the Deep Offshore and Inland Basin Production Sharing Contracts provided for a review of the terms on two conditions: NEITI observed that this review should have been activated in 2004 when oil prices exceeded the $20 per barrel mark. Although the review was not done in 2004, the judgement of the Supreme Court in October 2018 had mandated the Attorney General of the Federation to work together with the governments of Akwa Ibom, Rivers and Bayelsa States to recover all lost revenues accruable to the Federation with effect from the respective times when the price of crude oil exceeded $20 per barrel.
However, the Law anticipates that the companies would have recouped their investments when oil price increases and after many years of operations, hence the two trigger clauses in the Act. “Putting the losses in project terms, NEITI reported that the lower threshold loss of $16.03bn to the Federation Account would have funded the Port Harcourt – Maiduguri rail line put at between $14bn to $15bn. Other projects that the lost revenue could have been used to fund include the “Mambila Power Plant of 3,050 MW at $5.72 billion, while the estimated cost of the Ibadan-Ilorin-Minna-Kano Standard Gauge Line is $6.1 billion.
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