President Muhammadu Buhari, on Monday assented to the Bill amending the Deep Offshore (and Inland Basin Production Sharing Contract) Act, which is expected to boost the nation’s revenue generation by an estimated $500m next year, and over $1bn, beginning from 2021
The Act amends legislation on agreements related to offshore oil production, changing the 1993 Deep Offshore and Inland Basin Production Sharing Contract, by adding two new revenue streams.
The first is a flat 10% royalty on all projects over 200 meters deep and the other is a 7.5% royalty on frontier and inland basins.
In a series of tweets via his personal twitter handle, the President blamed previous failed attempts that delayed amend the law on a “combination of complicity by Nigerian politicians and feet-dragging by oil companies (that has) for more than a quarter-century, conspired to keep oil taxes to the barest minimum.
“Today these changes, for the first time under our amended law, 200 million Nigerians will start to receive a fair return on the surfeit of resources of our lands. Increased income will allow for new hospitals, schools, infrastructure and jobs.”
He described Monday’s assent to the bill as “a landmark moment for Nigeria,” expressing appreciation to “the National Assembly for the cooperation that produced this long-overdue amendment.”
He recalled that during his 2020 Budget Presentation Speech before the National Assembly in October highlighting the need to urgently review “the fiscal terms for deep offshore oil fields, to reflect current realities and to ensure increased government revenues.”
Continuing, he said, “today marks a new and beneficial relationship with our oil company partners: one that benefits all – starting with the Nigerian people.”
Following the signing of the Bill, assisted by Mallam Abba Kyari, his chief of staff, Buhari said “Nigeria will now receive its fair, rightful and equitable share of income from our own natural resources for the first time since 2003,” pledging continued cooperation with the National Assembly to deliver on all “promises to ensure inclusive growth and enhance the welfare of all Nigerians.”
While offshore oil projects are among the most challenging for companies to develop, they have helped boost oil output in the last few years from Nigeria, Africa’s top crude producer.
Contrary to the hopes that the Act would boost Nigeria’s earnings from oil in just two years, Reuters quoted an unnamed oil industry group as warning that the two new revenue streams highlighted in the Act could render billions in planned offshore oil investments unprofitable and cut nearly 30% from the potential offshore output.
The Bill was earlier passed into law by the legislature a few weeks ago, an unusually quick pace for a country that has had a petroleum industry bill pending for more than a decade (READ MORE).