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

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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