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PIB Designed to Reduce Government’s Revenue – NEITI

By on August 15, 2011

The Nigeria Extractive Industry Transparency Initiative (NEITI) has warned that Nigeria will lose $3 billion petroleum revenue yearly if the National Assembly passes the Petroleum Industry Bill (PIB) as amended by law makers.

NEITI said the limit of government’s share of oil revenue being set by the House of Representatives is below internationally competitive rates, as such, it would result in the erosion of government petroleum revenue

In a statement yesterday in Abuja, NEITI stated: “Sadly, the House of Representatives  Report establishes fiscal terms with a government share of oil revenue below internationally competitive levels and with a structure that will result in rapid erosion of government petroleum revenue during the next five years.”

It pointed out that under  current rates, government’s share of revenues stand as follows: Production Sharing Contract (PSC), 48 per cent; Joint Venture (JV), 82 per cent while international rates of government’s share of oil revenue hovers at a minimum of 56 per cent and a maximum 90 per cent.

But the House of Representatives proposal, which is the subject of NEITI’s contention, provides for a  maximum of 45 per cent of government’s revenue for PSC and 60 per cent for JV, as against the existing 48 per cent and 82 per cent.

The extractive industry watchdog noted that the downgrade, “translates to a loss of about $3 billion annually,” stressing:  “This is dangerous to our already fragile economy that is oil revenue dependent.”

NEITI said it made the urgent call on the Federal lawmakers for protection of the national interest in the on-going PIB debate by the National Assembly because it appears that some crucial facts and data were either not presented to the members or if made available, were not thoroughly understood by them to enable them to make informed decisions on the PIB.

It further submitted: “For instance, NEITI does not see the rationale for passing a Bill that is designed to reduce government’s revenue from petroleum operations by minimum of $3 billion annually through fiscal provisions.”

While commenting on the Senate’s position, NEITI said the report on the provisions of the upper chamber on fiscal regime,  will also have the effect of reducing the government’s revenue from the sector during the next five years.

The agency said: “The picture for revenue flow to Nigeria from royalty,  profit and  oil, will be as follows: Current terms $9 billion; PIB terms as presented  by the Federal Government during Public Hearing in  2009-$9.3 billion; Senate terms $5.8 billion.”

Continuing, the statement warned: “NEITI is, therefore, of  the view that if the NASS passes the bill as it is now, the Nigerian oil and gas sector will be in serious danger of not achieving the desired national goals of promoting greater indigenous participation and increased revenue generation for national development.

“In view of the fact that oil is the mainstay of the Nigerian economy, the NASS owes all Nigerians a responsibility to promote Nigeria’s interest in the bill, protect our corporate sovereignty and secure the future of  generations yet unborn.  The Report of the PIB now before the NASS, if passed into law, will do havoc to Nigeria’s national interest.”

NEITI, according to the statement, promised to appear before the lawmakers with  data to validate its position.

TheNation