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.
Nigeria’s border reopening will not impact profitability in 2021 – Flour Mills GMD
Flour Mills Nigeria Plc has stated that the recent reopening of the nation’s land borders will not affect the profitability of the company.
Mr. Omoboyede Olusanya, the Group Managing Director of Flour Mills Nigeria Plc has disclosed that the recent reopening of the nation’s land borders will not adversely impact the performance and profitability of the company in 2021 and beyond.
He added that FMN will continue to leverage brand loyalty, product standardization and innovation, as well as improved cost efficiency to increase profitability in 2021.
This statement was made by the Olusanya during the company’s 9M’20/21 Investor Webinar which held virtually on January 26, 2020.
According to the statement made by Mr. Olusanya at the virtual meeting, the reopening of the nation’s land border will not affect the company’s sales and revenue, as Flour Mills Nigeria is focused on increasing operational efficiency with accelerated plans for cost optimizations across the group to ensure competitive product offerings and profitability in the new operating environment, occasioned by the border reopening.
He revealed that the company will continue to invest in local content development, production capacity and aggregation to strengthen product innovation and product standardization in a bid to foster brand loyalty.
In line with this, Flour Mills Nigeria has invested heavily to upscale its Regional Distribution Centers (RDCs), in order to gain direct access to consumer market segments across the country, and expand consumer reach with the road to market initiatives and product offerings across the group, especially in the B2C segment.
Olusanya revealed that the group has successfully opened new regional distribution centers (RDCs) in Kano, Magboro and Abuja targeting the new fast-growing B2C product categories (fats, sugar and garri).
He added that the FMN Group among other strategic investments made, has invested in trucks to support the RDCs, animal feeds and starch value chains; as well as sales force automation platforms to ensure high-quality processes and services.
He concluded that the activities of the company will be complemented by the efforts of the nation’s border security, as these agents would ensure that the borders do not become porous, and would help to curtail markets from being proliferated by imported items.
What you should know
- Recall that Nairametrics reported that Flour Mills Nigeria Plc declared a profit of N5.65 billion in the third quarter ended, 31st December 2020.
- The report revealed that the profit which Flour Mills made in the third quarter of its accounting year 2020/2021 rose by a whopping 150.36% when compared to the profit it made in the corresponding period of 2019.
- It is important to note that the impressive performance of the company was driven by the agro-allied segment. The Agro-Allied segment benefited immensely from the August 2019 border closure, as the profit from this segment improved by 15,268%.
South African President appeals to wealthy countries not to hoard COVID-19 vaccines
South African President, Cyril Ramaphosa has called on the world’s wealthiest countries to stop “hoarding” vaccines.
The South African President, Cyril Ramaphosa has urged the world’s wealthiest countries to stop “hoarding” vaccines and called for an end to “vaccine nationalism.”
He made this call at the World Economic Forum’s virtual Davos Agenda event, where he clearly cautioned that some countries had ordered more supplies of vaccines than they needed, and that this was counterproductive to the global recovery effort.
According to him,
- “Ending the pandemic worldwide will require greater collaboration on the rollout of vaccines, ensuring that no country is left behind in this effort”
- “The rich countries of the world went out and acquired large doses of vaccines from the developers and manufacturers of these vaccines, and some countries have even gone beyond and acquired up to four times what their populations need”
- “That was aimed at hoarding these vaccines and now this is being done to the exclusion of other countries in the world that most need this”
What they are saying
According to Africa CDC Director, John Nkengasong, the African continent is quite facing a “very aggressive second wave” of the pandemic, with mortality increasing on average 18% across the 55 African member states last week.
“We as a continent must recognize that vaccines will not be here when we want them, but as such we need to really focus on the public health measures that we know work”
He however praised the progress of the African Vaccine Acquisition Task (AVAT) Team, which he said was created when AU nations realized “how the world’s richest countries are behaving.”
What you should know
- South Africa is the country, worst hit by Covid-19 on the continent.
- As at date, the country had recorded more than 1.4 million cases with 41,117 deaths.
- The African Vaccine Acquisition Task (AVAT) Team has secured a provisional 270 million doses for AU member states directly, in addition to the 600 million expected from the World Health Organization’s COVAX initiative.
IMF optimistic about global economy but warns new Covid variants could affect recovery
IMF is quite optimistic about the fortune of the global economy but expressed fear that the new Covid variant could derail economic recovery.
The International Monetary Fund (IMF) has expressed optimism about the global economy but warns that the new COVID 19 variant could affect the global economic growth, according to its latest World Economic Outlook.
According to the report, “the institution now expects the global economy to grow 5.5% this year — a 0.3 percentage point increase from October’s forecasts. It sees global GDP (gross domestic product) expanding by 4.2% in 2022”.
According to its Chief Economist, Gita Gopinath:
- “Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens.
- “There remains tremendous uncertainty and prospects vary greatly across countries.
- “China returned to its pre-pandemic projected level in the fourth quarter of 2020, ahead of all large economies. The United States is projected to surpass its pre-Covid levels this year, well ahead of the euro area.
- “Policy actions should ensure effective support until the recovery is firmly underway, with an emphasis on advancing key imperatives of raising potential output, ensuring participatory growth that benefits all, and accelerating the transition to lower carbon dependence.”
What you should know
- There has been a surge in the number of reported cases of the new variant Covid-19 infections and deaths over the past few months.
- The new variant has been described as being more infectious and potentially deadlier than the original strain.
- The IMF had cut its GDP forecasts for the euro zone this year by 1%.
- It is being projected that the 19-member region, which has been severely hit by the pandemic, would grow by 4.2% this year.
- Germany, France, Italy and Spain — the four largest economies in the euro zone — also saw their growth expectations cut for 2021.
- Economic activity in the region slowed in the final quarter of 2020 and this is expected to continue into the first part of 2021. The IMF does not expect the euro area economy to return to end-of-2019 levels before the end of 2022.
- IMF revised its GDP forecast upward by 2% points on the back of a strong momentum in the second part of 2020 and additional fiscal support, with GDP expected to grow to 5.1% this year.