NNPC: FG Ignored Advice to Review Expired 1993 PSC Terms  

By Chineme Okafor in Abuja

The Nigerian National Petroleum Corporation (NNPC) yesterday stated that it advised the federal government in 2008 to trigger the clauses in the 1993 Deep Offshore and Inland Basin Oil Production Sharing Contract (PSC) Act as well as review the Act to enable Nigeria take more royalties, but its advice was ignored by the government.

NNPC’s claims was sequel to an ongoing investigation by the House of Representatives’ ad-hoc committee probing how the country failed to collect about $21 billion of revenue from oil produced overtime from oil fields in the deep water basins of the country because of the failure to  activate a clause in the PSC Act. 

The committee had last week at an interactive session with stakeholders blamed the Department of Petroleum Resources (DPR) for the country’s losses in this regards, but top sources in DPR told the media that it was not responsible for the losses.

But in an interaction with the paper on the issue in Abuja, NNPC’s Group General Manager Public Affairs, Mr. Ndu Ughamadu, stated that the corporation did what was expected of it but the government at that time failed to sufficiently act on its recommendations.

Ughamadu said the current government has however submitted an executive bill to the National Assembly for the review to be done.

“NNPC’s responsibility was to advise the government and that was done in 2008. But the then government only issued a letter of intention to review the section. The current government has already forwarded an executive bill to the National Assembly for that purpose,”  Ughamadu said.


The contentious terms which ought to have been triggered is reportedly contained in Section 16 (1) of the Act, and it stated that calculation of royalties due to the government from oil production as covered by the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act should be reviewed once the price of oil got to $20 per barrel or after 10 years of the Act in practice.


This, was however not done, thus necessitating claims in 2017 by the Minister of State for Petroleum, Dr. Ibe Kachikwu, that Nigeria lost a whopping $21 billion to its failure to implement this premium element governing the PSCs.


And, while the Chairman of the ad-hoc committee, Hon. Daniel Reyenieju, insisted that since it was the responsibility of the DPR to regulate Nigeria’s oil sector, it was equally mandated to follow up and trigger the clause. Reyenieju, maintained the delay in activating the clause which was chiefly the fault of the DPR.


But top DPR sources who spoke to THISDAY said the DPR was only responsible for issues related to royalties on PSCs that were signed after 1999, and as such could not be held responsible for this.


“NNPC is in charge of PSC contracts, it is their responsibility to review to ensure that government gets its beneficial stake. The National Assembly is supposed to review the Deep Offshore and Inland Basins Act which is responsible for such things. PSCs that are pre-1999 are the ones that are affected by these royalties. The ones that are post-1999 attract royalties based on DPR regulations,” one of the sources said.

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