The Federal government has insisted that it would recover over $62 billion it claims as arrears of profits due it from 1998 under the production sharing contracts (PSCs) between the Nigerian National Petroleum Corporation (NNPC) and its joint venture partners.
The international oil companies have taken the matter before the Federal High Court in Lagos and are denying any liability.
The six international oil companies with joint operating agreements with the NNPC include Shell Petroleum Development Company, Mobil Producing Nigeria Unlimited and Chevron Nigeria Limited.
The others are Nigeria Agip Oil Company, TotalElf Nigeria and Pan Ocean Oil Company.
Under the terms of the 1993 PSC, the NNPC and the joint venture partners would review their profits sharing formula once crude oil prices rise above $20 per barrel.
But the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, said this review has not taken place since October 1998 when oil prices rose above the stated threshold.
Recently, the government decided to trigger the review and demanded huge arrears of profits. But the joint venture partners have been reluctant to pay or adjust the profit-sharing formula in their various operating agreements.
Malami was unable to say exactly how much Nigeria is claiming from the oil majors but he estimated the amount in excess of $62 billion.
Since the claim by the Nigerian government, the six JV partners with the NNPC have filed a suit at the Federal High Court in Lagos to contest the allegations of violation of their PSCs and indebtedness.
“Regardless of the jurisdiction you look at, the case is about the rule of law and compliance with the prevailing laws; about rights and entitlements as they relate to the contract between the parties,” the minister said.
Apart from Shell, which holds 55 per cent equity in Shell/NNPC joint venture, the other five control at least 60 per cent of the interests in the shares.
In 2014, crude oil prices at the international market averaged $100 per barrel.
The minister said the IOCs told the court they were not liable to the payment because Nigeria made no formal attempt to activate the PSCs review clause after crude oil prices rose above $20 per barrel.
But Malami said government filed a counterclaim that the activation was automatic.
“The concern of the IOCs is about the establishment of their respective rights. A case has been established about the right of the government to enforce its laws. If indeed there exists such a right, then the remedy must naturally follow.
“What matters is the reconciliation of the figures. The government went to court for the purpose of ascertaining the liability and the validity of the calculations of the claims,” he said.
On the argument that government may have slept on its right by not enforcing the review of the PSCs immediately crude oil price rose above $20 per barrel, Mr Malami said it does not matter when the government decided to seek the enforcement of its laws.
He said as far as the PSC was concerned, it remained a function of law to activate the review at any time, so long as the law remained “valid, subsisting, applicable and enforceable.”
“The fact that government did not take immediate steps to demand the review and payment does not invalidate its action now to make a claim of right, provided the claim of right is rooted in law.
“As far as the Nigerian government is concerned, it is a function of law as to whether the review is automatic or not. The liability and responsibility of right are mutual and operative.
“The parties are in court to interpret if the review of the PSC was automatic, or whether the Nigerian government slept on its right by not activating the right to review the sharing formula when it became due.
“That is a function of judicial interpretation. That is why the parties are in court. The existence or otherwise of liability as far as PSC agreement is concerned is a function of law and the parties are in court to determine as a function of law,” he said.
On the timing of the claims, Malami said insinuations that the government was targeting and squeezing foreign companies for funds to pull the country out of poor fiscal condition was lacking in substance.
He said apart from the IOCs, the government was still pursuing its agenda to recover looted asset from individuals and groups at home.
On the impact of the claims on investment in the country, he said the government was conscious of its obligations to promote good investment climate with regards to the prevailing laws and their enforcement.
He said despite the ongoing court action, the parties have continued to meet, engage and discuss, saying he was optimistic the engagements would eventually translate to settlement or full-blown negotiation process.
On alleged threats by the IOCs to withhold decisions on further investments in Nigeria until the matter is resolved, the Minister said the government was not worried about any backlash by way of negative business sentiment.
He said the action will instead create a win-win situation for all parties.
Gbajabiamila tasks NCC on SIM cards’ registration
Speaker of the House of Representatives, Femi Gbajabiamila, Wednesday tasked the Nigerian Communication Commission (NCC) to ensure the registration of all SIM cards in the country.
The Speaker said unregistered SIM cards have high-security risks, which should be taken seriously by the commission.
Gbajabiamila who spoke during a courtesy call by the management of the commission in his office said the House was ready to support the commission through adequate funding for effectiveness and efficiency.
He also affirmed that communication was the bedrock of any society, urging Nigerians has to keep up with the pace.
The Speaker said Nigeria’s population keeps growing by the day, which he said would lead to an increase in the number of mobile phone users, calling on the commission to expand its infrastructure.
He said, “The population is growing, and that will also mean that the number of users will grow. That means you have to expand your infrastructure. The National Assembly will then come in because there will be a need for funding. We will work with you to make sure you get whatever is necessary to make your job easier.
“I noted that you’ve licensed seven fibre companies. But I don’t know if one per zone is enough. In the future, you may need to increase the number.
“When you said there were about nine million unregistered SIMs at some point in Nigeria, we all know the implications of that. It has a lot of security risks. In the present situation in Nigeria, one is too many, not to talk of millions. We need to look for a way to address that.
“I don’t know why we have to leave the issue of SIM registration to the telecoms companies alone. NCC should be thinking of licensing indigenous companies to do the registration because our security will be at risk.
“I want to assure you that you have the support of the House in doing your job”.
The Executive Vice Chairman of NCC, Prof. Umar Danbatta, who led the delegation, also told the Speaker that the commission was working on a project to expand telecommunications infrastructure in the country.
For this purpose, he said, the commission granted licences to seven fibre companies for the six geopolitical zones, while Lagos has one on its own.
“We are soliciting for the support of the Speaker in translating this project to reality. To do this, we’ve already granted licences to seven companies in different parts of the country.
“We’ve made Lagos as a zone on its own. We’ve assigned infrastructure companies to each zone. At the end of the project, we would have added over 30,000 kilometres of fibres. We will have over 70,000 of fibres all over the country in the end.”
He said at the last check, the commission ensured that the number of unregistered SIM cards was reduced from nine million to about two million.
NSE market indices rose by 0.54 per cent after Eid-el Malud celebration
Nigerian equities market resumed trading for the week on Tuesday with a growth of 0.54 per cent after Monday public holiday declared by the federal government to mark 2019 Eid-el Malud celebration.
Specifically, the market capitalisation inched N69 billion or 0.54 per cent to close at N12.878 trillion against N12.809 trillion recorded on Friday.
Similarly, the All-Share Index improved by 141.90 points or 0.54 per cent to close at 26,456.39 compared with 26,314.49 achieved on Friday.
A breakdown of the price movement chart indicates that Cement Company of Northern Nigeria dominated the gainers’ table, gaining N1.60 to close at N19.10 per share.
Dangote Cement followed with a gain of N1.40 to close at N147.20, while Nigerian Breweries garnered 70k to close at N47.20 per share.
Access Bank added 35k to close at N9.55, while UACN gained 30k to close at N6.50 per share.
Conversely, Lafarge Africa recorded the highest price loss, shedding 55k to close at N14.15 per share.
FBN Holdings trailed with a loss of 20k to close at N5.60, while Ecobank Transnational lost 10k to close at N6.90 per share.
Ikeja Hotel was down by 9k to close at N0.88, while FCMB Group declined by 6k to close at N1.80 per share.
However, the volume of shares traded lower as investors staked 378.35 million shares valued at N7.15 billion in 4,798 deals.
This was against 432.47 million shares worth N5.58 billion transacted in 4,002 deals on Friday.
Zenith Bank emerged the toast of investors, exchanging 86.55 million shares valued at N1.52 billion.
It was followed by Access Bank accounting for 73.03 million shares worth N682.92 million, while Guaranty Trust Bank sold 37.13 million shares valued at N1.06 billion.
The Nigerian Breweries accounted for 36.02 million shares worth N1.69 billion, while Fidelity Bank traded 17.71 million shares worth N33.15 million.
Akwa Ibom: DPR seals 13 illegal petrol stations
The Department of Petroleum Resources (DPR), Eket Field Office, in Akwa Ibom has sealed 13 filling stations for acts of illegality and non-renewal of licenses in the state.
The DPR Operations Controller in the state, Tamunoiminabo Kingsley-Sundaye, disclosed this on Wednesday in Uyo during a routine surveillance on petrol stations.
Kingsley-Sundaye said the filling stations were sealed in Uyo, Essien Udim, Ikot Ekpene, Abak, Etim, Ika Local Government Areas of the state.
He explained that out of the 13 stations sealed, seven were sealed for non-approval to build or operate the stations while six did not renew their licenses.
“Seven of them do not have approval to build filling stations.
“The team of DPR on routine surveillance went out to some areas in Akwa Ibom to ensure compliance in terms of standard, safety engineering standard and operating standard,” he said.
The operations controller said the department had given prior warning to defaulting stations but they were recalcitrant and refused to comply with guidelines and standard of operations.
“There are some people who are adamant and they feel the system is weak or the government is weak to make them to obey the law. We will continue to do what is right,” Mr Kingsley-Sundaye said.
He said the department collaborated with the Nigeria Security and Civil Defence Corps (NSCDC) to arrest defaulters of oil and gas in the state in October.
He noted that after the arrest, a good number of the defaulters came back to do the right thing while two petroleum marketers, who were arrested, refused to do the right thing.
Kingsley-Sundaye added that those petroleum marketers who built filling stations without approved licenses would be sanctioned and prosecuted in the court of law.
“The department will approach court of law to prosecute the defaulters in the state.
“If your license expires, the law states, you don’t have the authority to continue doing such business.
“When you continue to operate illegally, it is a criminal matter but not a civil matter and the law enforcement agency will assist us to do what is right.
“It is cheaper for you to obey the law than to break it,” the operation controller said.
He advised some of the petroleum marketers to approach DPR if they wanted to build filling stations or site oil and gas facilities in the state.
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