Senate to recover N7tr from faulty oil deals

The Senate yesterday commenced moves to recover about $21 billion (about N7 trillion) being the arrears of revenues lost to faulty clauses in oil production sharing contracts (PSCs).

Adopting a motion sponsored by Senator Ifeanyi Ubah (YPP, Anambra), the upper legislative chamber noted that Section 16 of the PSC Act provides that “where the price of crude oil exceeds $20 per barrel, the PSC Act will be reviewed to ensure that the share of the Federal Government in the additional revenue is adjusted to the extent that the PSCs shall be economically beneficial to the Federal Government and that in any event, the PSC Act may be reviewed after 15 years from its commencement in 1993 and every five years thereafter.”

It expressed concern that “in spite of the high contribution of PSCs to total production, the contribution of revenue per barrel of PSCs oil in terms of government take is significantly lower than the contribution of revenue per barrel of joint venture oil largely because of the harsh and inequitable terms of the production sharing contracts and the failure to review the salient provisions of the PSC Act.”

The Senate declared further that “as a result of the non-review and amendment of the PSC Act, the Federal Government has lost about $21 billion over a period of 20 years due to the failure to review and amend the PSC Act as at December, 2017.”

It also began legislative action with a view to imposing a tax on communication service. The levy is to replace the 2.2 per cent increase in Value Added Tax proposed recently by the Federal Government.

Sponsored by former Senate Leader Mohammed Ali Ndume, the Bill for an Act to Establish the Communication Service Tax was introduced on the floor of the chamber yesterday.

Briefing journalists shortly after the first reading, Ndume said the tax was a better means of distributing wealth without negatively affecting ordinary Nigerians. He observed that increasing VAT would have grave implications on the economy and could hike the prices of goods and services beyond the reach of the common man.

The bill, which stipulates a nine 9 per cent charge for using the service, reads in part: “There shall be imposed, charged payable and collected, a monthly communication service tax to be levied on charges payable by a user of an electronic communication service other than private electronic communication services.

“The tax shall be levied on electronic communication services supplied by service providers. For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of electronic communication service.”

The bill specifically provides that the tax shall be levied on such electronic communication services like voice calls, SMS, MMS, data usage both from telecommunication services providers and Internet service as well as pay per view TV stations.