By Jonathan Nda- Isaiah, Abuja and FIDELIS UGBOMEH, Lagos
The federal government hinted yesterday that it is seeking an amendment to the Deep Offshore Petroleum act.
The non-implementation of the said Act has resulted in loss of revenue to the tune of $21 billion since the past 24 years.
Minister of State for Petroleum Resources, Ibe Kachikwu, disclosed this after the Federal Executive Council (FEC) meeting presided over by Vice President Yemi Osinbajo.
According to Kachikwu, FEC directed that he should work together with the Attorney General of the Federation Minister of Justice, Abubakar Malami, to amend section 15 of the Production Sharing Contract (PSC) of the Deep Offshore Act.
The Deep Offshore Act provides that once the price of crude exceeds $20 per barrel, the government will take steps to ensure that premium element is distributed at an agreed premium level for the federal government.
Kachikwu regretted, however, that since the Act was enacted in 1993, government had failed to enforce it, leading to the loss of about $21 billion dollars that would have accrued to it.
He said, “The first and most substantial for me is the decision to work with the Attorney General to amend section 15 of the PSC of the Deep Offshore Act. Under the Act, there was a provision in 1993 that once the price of crude exceeds $20 per barrel, the government will take steps to ensure that that premium element is then distributed at an agreed premium level for the federal government so that we get more for our oil.
“But over the last 20 years, nothing really was done. From 1993 to now, cumulatively, we have lost a total of $21 billion just because government did not act. We did not exercise it. In 2013 there was a notice to oil companies that we were going to do this but we didn’t follow through in terms of going to council to get approval
“One of the things we’ve worked on very hard over the last 20 years is to get that amendment because once we do, the net effect for us is close to $2 billion extra revenue for the federation”.
On whether it would be possible to draw back on the loss, the minister said, “I doubt it for the simple reason that the provisions of the JOA on section 15 is that government would need to do something, which is what we have just done today. If it is not done then the oil companies are operating within the realms of what the law is.
“So, that is going to be difficult, but I love not to talk too much about that. I will be giving out what my strategies would be on national TV. Let me just say that however we do it, we would definitely try to see whether a possibility exists for clawing back some advantages. Let me just keep it at that. “
…To Prosecute 30 Contractors Handling East-West Road
Meanwhile, the federal government has commenced a compilation for the prosecution of about 30 contractors handling the East-West road project.
Minister of Niger Delta Affairs, Usani Uguru Usani, who disclosed this yesterday after the weekly FEC meeting, noted that the East-West road was designed to fail by previous administrations.
He was responding to a question on why N16 billion was approved for the Niger Delta Development Commission (NDDC) headquarters building when the fund would have gone a long way to complete the East-West road project.
He told State House correspondents that the present administration is doing everything possible to put the East-West road project back on track.
The minister had announced that FEC had given approval for his ministry to spend a whopping N16 billion for the construction of NNDC headquarters building in Port Harcourt, Rivers State.
On the rationale of spending N16 billion on NDDC headquarters while the east west road was yet to be completed more than 10 years after construction began, Usani said, “Some times when questions or concerns come from the public, you provoke our thoughts to get back to our sense of history.
“The East-West road is a project that has been messed up from inception, naturally designed to fail by all the agreements and designed concepts that we have seen. And here we are making sure that we put things in order so that we can see the terminal point of that project.
“The project started more than a decade ago and in 24 months we have made the progress we have made on that project, correcting even the construction deficits in the area. Then I think you should be able to appreciate what we are doing.
“When you talk of N16 billion as if it is so relevant in completing the East West road, I wish to tell you that the outstanding certificate on the East-west road amount to N30 billion. So if we put N16 billion there, in fact one and the other are not substitutes. Two of them are essential infrastructure projects that must go on. So, it doesn’t mean that if we put that money on the east west road then it satisfies the needs of housing the NDDC.
“The Niger Delta region has a prime position in our preference to develop the area and so there are no substitutes. Even if we are not going to do the NDDC headquarters it doesn’t mean we will complete the East West road. They are all important and I want you to get that into your mind.
On how much had been spent on the road so far, the Minister said, “We have spent N300 billion on the East-west road and yet the project has not made much progress.
“I’m doing a review of the entire contract of the East-west road because without that nothing will ever happen on that road talk less of completion. If you have spent N300 billion and you are where you are then the design, negotiations, contract everything is wrong.
“You designed a project of that nature and give it a lifespan of seven years and then no designs in some sectors and yet you are attributing cost to it. So, by what means did you have the elements of costing. These are verifiable facts at any time”.
He noted that his ministry was already making a compilation for the possible prosecution of the contractors, about 30 of them.
His words: “Right now I have gotten some of these contracts and I’m sending them to the EFCC, not just for the East-west road. I have got a minimum of 30 contractors that I am sending to EFCC. On the East-west road I have taken a private consultants to review the whole cost. So, some contractors will obviously refund money for which the present cost will be discounted.
“So, when you see contractors ganging up and publishing things against me, you should know the foundation. But as far as I am here I will do something that I feel is right”.
…Okays $2.7bn for Abuja-Kano Gas Pipeline, N3bn For Lagos Lighter Terminal.
Also, the federal government has approved $2.7 billion for the completion of Abuja-Kaduna-Kano gas pipeline.
The council also approved the sum of N3 billion for Ikorodu Lighter Terminal.
Another $500 million contract was also approved for rolling stocks, coaches, wagons, locomotives for Lagos- Ibadan and Itakpe-Wari railways.
Minister of State for Petroleum Resources, Ibe Kachikwu and the Minister of Transportation, Rotimi Amaechi disclosed these while briefing State House correspondents yesterday after the FEC meeting presided over by Vice president Yemi Osinbajo at the Presidential Villa.
Amaechi said, “FEC approved award of contract for the Ikorodu lighter terminal and the contractor is to carry out the rehabilitation ‘qua wall and qua apron.’ Another contract was approved to provide security at the waterfront and patrol boats for NPA.
Also speaking at Papalanto in Ogun State after the inspection of the on-going construction of the Lagos-Ibadan Standard Gauge Railway line yesterday, Amaechi noted that provision has been made in the 2018 budget for the completion of the project which was abandoned for the past 34 years.
The Minister said that the completion of the project will boost the manufacturing of steel at the Ajaokuta Steel Rolling Mill.
Regarding the Lagos-Ibadan Standard Gauge Railway line, he noted that the acquisition of the Right of Way will be completed by January next year, while the laying of tracks will commence by April (three months later).
According to him there have been various challenges faced in the clearing of the Right of Way such as gas pipelines, water logged terrains, high-tension electricity wires and overhead bridges.
He added that discussions are ongoing with the relevant agencies and organizations with a view to relocate the pipelines and reconstruct the bridges as the case may be.