Why FG must repeal waiver granted oil firms, by Falana



Threatens court action 

HUMAN rights activist and lawyer, Femi Falana (SAN) has alleged that Nigeria loses billions of naira yearly to a waiver granted oil companies carrying out exploration activities in the deep offshore and inland basins areas of the country.

Falana, in a statement, said the waiver stemmed from a decree enacted in 1999 which granted oil and gas firms operating in the deep offshore and inland basing exclusion from payment of royalties to the Federal Government on oil and gas got in excess of1000 metres depth.

He noted that oil firms operating in these areas are exploiting this waiver to the disadvantage of the Federal Government because, according to him, the largest chunk of the country’s oil production comes from the same deep offshore and inland basing, making Nigeria to lose huge revenue.

“In 1999, the Abdulsalami Abubakar military junta enacted the Deep Offshore and Inland Sharing Contracts Act Decree in order to give effect to certain fiscal incentives for the oil and gas companies operating in the deep offshore and inland basin under production sharing contracts between the Nigerian National Petroleum Corporation (NNPC) and other companies holding oil prospective licences or mining licences and various petroleum exploration and production companies.

Thus, by virtue of Section 5 of the Act, the payment of royalty in respect of the deep offshore production sharing contracts shall range from 4 to 12 per cent while no royalty shall be paid whatsoever in areas in excess of 1000 metres depth,” Falana said. Explaining how the country is losing out in the controversial pact, the senior advocate noted: “Since large quantity of the oil produced by Nigeria is located beyond 1000 metres depth, the multinational oil companies have taken advantage of the Act to avoid the payment of royalties to the Federation Account.

The fiscal incentives given to the oil companies have led to the loss of several billion of dollars by the Federal Government.” Falana, however, said all hope is not lost and that there are avenues provided to right the wrong. According to him, the ray of hope was based on an aspect of the pact which provides for a review after 15 years.

“Section 16 thereof provides for a review after a period of 15 years from the commencement and every five years thereafter.” The senior lawyer consequently urged the National Assembly to “amend or repeal the obnoxious law whose existence can no longer be justified by taking advantage of Section 16 thereof which provides for a review.

“In view of the fact that the 15-year period of non-payment of royalty expired last year, the National Assembly should amend Section 5 of the Act by deleting the section which provides for zero per cent royalty ‘in areas of 1000 metres.”

The human rights campaigner threatened that if the National Assembly fails to repeal or amend the pact, especially the portion on zero per cent royalty, he would recourse to the law court to compel it to carry out a review of the allegedly offensive portion.

“If the National Assembly fails to discharge its constitutional duty in the circumstance, we shall not hesitate to file an application for mandamus at the Federal High Court with a view to ensuring compliance with the law forthwith.”

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