The Nigeria Extractive Industries Transparency Initiative (NEITI) on Sunday accused oil and gas companies of fleecing Nigeria of taxes, royalties and other accruable revenues following government’s failure to review the Production Sharing Contracts (PSC) agreements with them.
NEITI, in a statement in Abuja, disclosed that in the early years after the signing of the PSCs, also known as Deep Offshore and Inland Basin Production Sharing agreements, were contributing less than one per cent of the country’s crude oil production, but that since 2012, exploration and production companies under the PSCs, sensing government’s reluctance to review the agreements, had stepped up production to over 40 per cent of Nigeria’s output.
The organization expressed serious concern that now that the PSCs account for about 50 per cent of total oil production and major source of revenues, the delay or failure to review and renew the agreement meant that payment of royalty on oil production under PSCs would not be made while computation of taxes would be based on the old rates.
It clarified: “In an Occasional Paper released by NEITI which reviewed three years of NNPC’s financial and operations reports, NEITI has noted that crude oil production under the Production Sharing Contracts (PSCs) has since overtaken production under the Joint Venture arrangements.
“A careful look shows that Production Sharing Contracts (PSCs) accounted for 44.8 per cent of total oil production while the Joint Ventures (JVs) contributed 31.35%.
“A historical analysis of this development by NEITI shows that JV Companies accounted for over 97 per cent of Production in 1998 while PSCs contributed only 0.50 per cent. This trend continued until 2012 when PSCs accounted for 37.58 per cent while JVs contributed 36.91 per cent”, NEITI stated.
