FG: IOCs Using Subterfuge to Avoid Payment of Outstanding $62.1bn Revenue

Abubakar Malami

The federal government has accused International Oil Companies (IOCs) of plotting to deprive Nigeria of $62.1 billion Production Sharing Contract (PSC) accrual by instigating unnecessary media conversation over the five per cent recovery fee.

A senior government official raised the alarm yesterday over the alleged plot by the IOCs to frustrate the bid to recover the oil revenue arrears.

The Office of Minister of Justice and Attorney General of the Federation had recently asked the affected oil companies to settle their unpaid arrears estimated at $62.1billion.

It said since the signing of the Deep Offshore and Inland Basin Production Sharing Contracts Act CAP D3 Law of the Federation of Nigeria 2004 (as amended) 2019 for oil exploration in deep offshore and inland basis, the federal government was to get more shares of the oil revenue, which the IOCs did not pay.

The arrears of what the IOCs were yet to remit to the federal government was estimated, as at 2018, at $62,190,679,793.

But of recent there has been controversy over the five per cent professional legal fee charged by Trobell International Nigeria Limited, appointed by the minister, to recover the arrears.

However, the senior government official confided in THISDAY that “it is obvious that the judgement debtors (IOCs) are doing their best to distract attention of the general public by dwelling on the five per cent professional fee.”
Defending the charge recently, the Office of Attorney General of Federation (AGF) had said the five per cent as a recovery fee was a product of innovation introduced by the federal government upon the assumption of office of President Muhammadu Buhari as against the 30 per cent and above, which was the traditional fee by the previous administration.

The AGF had explained that it did not accord with ‘’reason and logic’’ for the federal government to overlook, forgo and condone the loss of $64.1billion on account of ‘’meagre’’ five per cent fee payable upon recovery.
“The accumulation of over $62.1billion in unpaid arrears of revenue due to the federation plus interest under the deep offshore production sharing contracts and the subsequent steps taken to recover the amount from the oil producing companies have sparked national interest and media debate.

“What appears apparent from the imbroglio was the fact that such Nigerian revenue, assets and resources were left at the mercy of winds and tides with little or no efforts in the past to recover the huge amounts.

“It is interesting to note that since January 19, 2017, Trobell International Nigeria Limited had identified the accrued and unpaid revenue arising from the profit sharing contracts as a huge recovery prospect and sent a proposal to the Federal Ministry of Finance applying to be engaged as recovery agent to recover the accrued revenue,’’ the source explained.

The source added that Trobell’s motives for sending the proposal were ‘’purely altruistic’’, aimed at serving Nigeria’s interest by helping to recover huge amounts of revenue due to the federation, against the backdrop that the agencies of government responsible for the recovery of these revenues accruing since 2003 had for some unknown reasons either ignored the matter or chose not to act on it.

‘’Moreover, Trobell was convinced that with Muhammadu Buhari in office as Nigeria’s president and Minister of Petroleum Resources, there was no better leader with the courage and conviction to confront the big oil companies and recover all the monies due to the federation, especially at a time when the Nigerian economy was in a very bad shape due to recession and government finances were in dire straits with no alternatives but to go borrowing through floating costly bonds,’’ the source added.

He said despite the glaring prospect of recovery of additional revenue to the federal government and ‘’for reasons unknown’’, the firm’s proposal was neither processed by the Federal Ministry of Finance nor forwarded to the Attorney General of the Federation who as the custodian of public interest, has been vested with constitutional responsibilities for further action.

‘’One year after Trobell’s proposal to the Minister of Finance, and precisely on January 19, 2018, the firm forwarded same proposal to the office of the Attorney General of the Federation requesting to be engaged as agents to recover the diverted proceeds of the Government of Nigeria due from the share of profit oil under the various production sharing contracts made pursuant to Section 16(1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act Cap D3 Laws of the Federation of Nigeria 2004.

‘’These two letters were written by Trobell to both the federal ministries of finance and justice, wherein the firm had reported how the Government of the Federation had been losing billions of dollars as a result of certain infractions arising from the negligent non-compliance with the provisions of S. 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act by the contracting parties’’, the source stated.

He said the action conformed with the procedure of engagement of recovery agents in the Office of the Attorney General of the Federation when whistle-blowers report cases of fraudulent activity or similar issues of contravention of the law that are detrimental to the Government of the Federation. Engagement of recovery agent is triggered by such disclosures in deserving cases, he added.

‘’Worthy of note also is the fact that in April 2017, the Attorneys General of three oil-producing states of Rivers, Bayelsa and Akwa Ibom (as plaintiffs) brought an action against the Federal Government of Nigeria and the Attorney General of the Federation.

‘’The implication of which was that the Attorney General of the Federation being the chief law officer of the country was sued by the three attorneys general representing their individual states.
‘’The plaintiffs sought two declarations and a consequential order compelling the second defendant-AGF, Abubakar Malami SAN, to recover and pay immediately all outstanding statutory allocation due to the plaintiffs from August 2003’’, the source added.

According to him, having established a valid claim, in November 2017, the parties applied for amicable settlement, which was granted by the Supreme Court in October 2018.

He said: ‘’One of the classical orders of the Supreme Court in the ruling is that the AGF should establish a body, which will be the vehicle for the recovery.
‘’Hence, the major flanks of the settlement reached by the parties at the Supreme Court were constituting a body to be set up by the AGF with representation from the three oil-producing states and the plaintiff’s solicitors to jointly pursue recovery of the amounts in contention.”

‘’And that no liability on the part of the federal government to pay a kobo to the plaintiffs until recoveries are made; meaning that liability of the federal government is contingent on recovery.’’

He stated that on the strength of the Supreme Court judgment, the AGF constituted a body with the attorneys general of Rivers, Bayelsa and Akwa Ibom states, solicitors to the plaintiffs, representatives of the office of the AGF as members and Trobell as the chair and lead consultant. And Trobell then engaged the services of a consortium of experts including legal, accounting, engineering and oil and gas industry experts for the purpose of the recovery.
‘’These consortium of experts have worked assiduously to establish the facts and figures; these experts have also been engaging with the oil producing companies in the Federal High Court in Lagos and Abuja.

‘’The question therefore is more or less about foregoing a recovery of $62bn so as to avoid the payment of 5% professional fee, which at any rate is contingent on recovery.

‘’An engagement that is more or less no success no fee in its implication and imports. Clear case of a penny wise pound foolish playing out in the circumstances’’, the source said.

He added that the judgement debtors are doing their best to distract attention of the public by dwelling on the 5% professional fee.

However, an official of one of the IOCs who spoke off the record because he said that his company was not mentioned in any allegation, told THISDAY that “We don’t know where the allegation is coming from and we don’t respond to speculation. Having said that, the issue of payment of $62bn, to the best of my knowledge, is being challenged by the IOCs. It is subjudice to comment further because it is a subject of litigation at the various courts, including in a Suit Number: FHC/ABJ/CS/154, filed at the Federal High Court in Abuja”.

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