Nigeria lost N7.6 trillion to faulty pacts with IOCs, says Kachikwu

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, yesterday disclosed that Nigeria lost about $21billion (N7.6 trillion) to International Oil Companies (IOCs) operating in the country as a result of non-implementation of the Production Sharing Contract (PSC) Act of 1993.

Consequently, the Federal Executive Council (FEC) at its meeting yesterday presided over by Vice President Yemi Osinbajo approved an amendment to Section 15 of the PSC law.

The minister told State House correspondents after the meeting that “once the price of crude oil exceeds $20 per barrel, the government will take steps to ensure that the premium element is then distributed at an agreed level for the nation to get more from her oil.

“But over the last 20 years, nothing really was done. From 1993 till now cumulatively, we have lost $21 billion 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 go through in terms of going to council to get approval.

“One of the things we have done in the last one year is to work very hard to get that amendment because once we do, the net effect for us is close to $2 billion extra revenue for the federation.”

On how government plans to tackle the problem or recover the monies, Kachikwu said: “I doubt it for the simple reason that the provision of the Joint Operating Agreement (JOA) on Section 15 is that government will need to do something, which is what we have just done today.”

The FEC also approved the award of contract of over $2.7 billion to three consortium that will finish up the AKK (Abuja, Kaduna, Kano) gas pipeline to ease movement of gas from the southern corridor to the north for power generation.

According to Kachikwu, “we presently have trapped power, trapped gas all in the southern corridors that is going nowhere because of lack infrastructure. That has now been awarded.

“FEC also awarded a contract to a consortium for the Odidi pipeline from the Warri and the Southern marshlands which will move the additional gas we have been able to produce through the NDDC, about 364 million cubic meters of gas, to be feed into the AKK pipeline.”

On the petrol scarcity in parts of the country and the need for new refineries, Kachikwu said: “The refineries can be fixed, we came up with a model to find private sector funding into these refineries and that is being done.

“We expect that before the end of this year, we will at least get to the final contracting stage in terms of announcing those who are going to take this up. It takes about six months to do this and do it thoroughly but that requires raising close to $2billion from the private sector participants to get this done.”

Minister of Transportation, Chibuike Amaechi said the award of contract for railway project in the South East was dependent on when the government would secure loans, assuring that the zone would not be left behind in the projects.

“FEC approved award of contract for the Ikorodu lighter terminal. Another contract was approved to provide security at the water front and patrol boats for NPA . There was approval of $500 million contract for rolling stocks, coaches, wagons, locomotives for the lagos Ibadan railway and Itekpe Warri railway.”

On the duration of the contract, he said: “All I can tell you is that they will be available on the completion of the construction of the rail tracks by 2018 December. It is a big risk that I am taking by insisting it must be completed by 2018 December. I have said it to the public, the contract is actually for three years but we think they should complete it in 2018 December.”