Unic Press UK: The Nigerian National Petroleum Corporation (NNPC), on Thursday, proposed an amendment to the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act, aiming to optimize the collection of royalties and other revenue in the deep water oil production activities.
In a presentation to the House of Representatives on the basis for an amendment of the PSC Act and an Act to establish the National Oil and Gas Museum and Research Centre in Oloibiri, the NNPC’s proposed amendment included that:
- The calculation of what is due to government shall be based on production and price to guarantee fairness and balance between PSC contractors and Government.
- For Royalty based on production within a tranche of 50, 000 barrels of crude per day, the NNPC is proposing a royalty tranche rate of 8.0 per cent.
- Under a production tranche of 50, 000 to 100, 000bopd, the royalty tranche rate would increase to 15.5 per cent and would escalate to 28.0 per cent once the production surpasses the 100, 000 bopd mark.
- To calculate royalty based on price, NNPC proposed that under a $ 50 per barrel price regime, the tranche incremental royalty rate shall be zero per cent but the rate would increase to 0.30 per cent if the price hovers between the $50 to $100 mark. In the same vain, a price regime of $100-$130 would attract royalty of 0.20 per cent while an increase of price between $130 -$170 translate to royalty rate of 0.10 per cent. A price regime of $170 and above would attract zero per cent royalty payment.
- On the provision of investment tax credit, investment tax allowance and associated cost uplift and capital allowances to PSC contractors, the NNPC proposed an outright scrapping of the incentives.
