Reps approve 3% royalty on oil exploration

by | May 17, 2017 6:22 pm

Ongoing efforts of President Muhammadu Buhari’s administration to increase the revenue generation gained a boost on Wednesday as the House of Representatives passed the bill for an Act to amend the Deep Offshore and Inland Basin Production Sharing Contracts, 2004 through third reading.

The bill seeks to extend Royalty regime for petroleum and gas to areas in excess of 1,000 meters water depth.

With the new amendment to section 5 of the Principal Act, three percent royalty is to be paid by the companies involved in exploration activities in excess of 1,000 meters depth.

“This amendment would ensure increase in revenue flows to the government from oil and gas exploration and production activities.

“These activities are in those areas which before now were non-existent as a result of the current zero royalty regimes applicable to Deep Water operations exceeding 1,000 meters water depth,” Victor Nwokolo, chairman of the Committee on Petroleum Resources (Upstream) informed the House while presenting the report.

According to the 3-page report of the Committee which was unanimously adopted by the House during Committee of the Whole, stakeholders who participated in the public hearing expressed overwhelming support for the amendment.

“We found support for the bill from stakeholders and the public. The support stemmed from the desire to increase revenues accruing to the government from exploration and production activities in the oil and gas sector,” he stressed.