The Federal Government of Nigeria has sued four oil companies before the Abuja Federal High court, accusing them of not being transparent in their production activities report.
The Federal Government has also accused the companies of under-remittance of taxes, oil and gas royalties, as well as redirecting such funds to private treasuries.
This is a battle in line to recover large sums of money allegedly lost to the under-remittance and diversions of royalties and taxes from oil and gas, by some major oil companies in Nigeria.
The oil companies are: The Nigerian National Petroleum Corporation (NNPC), Shell Petroleum Development Company (SPDC), Nigerian Petroleum Development Company (NPDC) and Nigerian Agip Oil Exploration Company.
The Legal Actions: In a supporting affidavit presented before the ruling Justice John Tsoho of the Abuja Federal High Court on May 28, 2019, the Plaintiff (the Federal Government) accused the NNPC of failing to forward to it the taxes and royalties paid by its agents. The FG also stated that the petroleum corporation diverted funds estimated at $148 million, paid by Agip as taxes between 2007 and 2016. Part of the affidavit reads thus;
“All indicated tax oil allocations form legitimate computations, were released to and all collected by the NNPC on judiciary and for the sole purpose of paying the required financial and financial obligations to the Federal Government designated Crude Oil Royalty Tax Account No: 802906875 domiciliated at the Central Bank of Nigeria (CBN) and described as such, the sum of $148 million.”
The plaintiff further noted that NNPC was engaged in unethical practices as the company’s employees allegedly veiled and redirected to individual accounts the accruing royalty tax on crude oil from operators. This was to the tune in the tune of $44 million between 2007 to 2016.
Agip was accused of being non-transparent in reporting its production volumes in relation to OML 60 and 61, including 66 oil wells at Udaga farmland in Oguta Local Government Area of Imo State. the Federal Government further stated that the company had misappropriated huge sums of monies in US dollars, and quantifiable volume of gas measured in British thermal unit (mmbtu) per day to the tune of 2000 barrels and $750 million respectively.
Similar claims were also raised against Shell in relations to its operations in OML 20 from indicated 40 oil wells. The company was allegedly accused of consistent failure to abide by Royalty and Taxation laws, alteration and incorrect entries of daily production volume, as well as the underpayment, non remittance, and diversion of Petroleum Profit Tax and VAT between 2007 and December, 2017 at N5,000,000 annually, N100,000 yearly inspection and also N500,000 Monitoring Fee which is totaling N375 billion ;N1.1 billion and N8.25 billion correspondingly.
NPDC, in the fourth suit presented to the Federal High court in Abuja, by the plaintiff, revealed that the sum of N7.4 billion was not remitted to the Government coffers between 2011 and 2017 as recommended by law.
The Bottom Line: The Plaintiff prays the court to, among other things, order the named companies to remit to the FG’s coffers, the amount due to it as taxes and royalties. Nevertheless, the case has been, adjourned till September 17, when the accused (NNPC, Shell, NPDC, Agip) and other interested parties are required to have filed responses.