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FG Sues Oil Firm Over $3bn Unpaid Taxes
The Federal Government, through the Office of the Attorney-General of the Federation, has commenced legal proceedings against Addax Petroleum Development Nigeria Ltd, a Chinese-owned oil firm, over the company’s alleged under-remittance of $3billion in taxes and royalties.
Documents before Justice Mojisola Olatoregun showed that the funds are outstanding claims against the company under the Petroleum Profit Tax Act and Petroleum (Drilling and Production) Amendment Regulation 2003 over Oil Mining Leases (OMLs) 123, 124, 126, and 137.
Joined as respondents are Addax Petroleum Development Nigeria Ltd, Addax Petroleum Exploration Nigeria Ltd, the Nigerian National Petroleum Corporation (NNPC), the Ministry of Petroleum Resources, Department of Petroleum Resources, and the National Petroleum Investment and Management Services (NAPIMS).
D.A. Awosika and Partners, counsel representing the Federal Government, stated that the $3billion unremitted funds came as a result of the oil multinational’s illegal and irregular reliance on side letters dated November 21, 2001, December 20, 2001, and August 24, 2004, that were never gazetted.
The government moved to recover the funds from Addax after report on how the Chinese firm allegedly paid millions of dollars in bribes to Nigerian officials to secure juicy contracts in the oil industry.
In 1998, Addax Petroleum, a subsidiary of China’s Sinopec Group, one of the world’s largest oil and gas producers, entered into a Production Sharing Contract (PSC) with the NNPC (as concessionaire) in respect of OPL 98/118 and OPL 90/225.
Four years later, the company discovered oil in commercial quantities and the OPLs were converted into Oil Mining Leases (OMLs) 123/124 and 126/137.
The PSC entered by the two parties required Addax Petroleum to pay royalties on any oil produced from the relevant oil blocks at the rate of 20 per cent as stipulated by law. It also provided that the Petroleum Profit Tax Act (PPTA) applicable to the contract areas shall be 65.75 per cent for the first five years, starting from the first day of the month of the first sale of the oil, and 85 per cent thereafter.
D.A Awosika & Partners are insisting that Addax Petroleum fraudulently obtained a side letters in 2001 and 2004 that were “never gazetted” and which they used in calculating their taxes and royalties.
The calculations in the side letters fixed the PPT payable by the company at 60 per cent, and rather than the 20 per cent flat rate of royalty, provided for a graduated rate depending on the volume of oil produced from the oil blocks.
The said letters were signed by then Special Assistant on Petroleum and Energy to former President Olusegun Obasanjo, Mr. Funsho Kupolokun, in 2001 and the then Director General/Special Adviser on Budget to the President in 2004, Mr. Olabode Agusto.
“Several objections and protests were raised by Federal Inland Revenue Service (FIRS), NNPC, and DPR to the reliance on these side letters by the defendants to bypass, supplant, and subvert the process,” the government’s lawyers stated.
“In 2003, in order to give effect to the graduated royalty regime stated in the side letters, the Minister of Petroleum Resources (Obasanjo) issued the Petroleum (Drilling and Production) Amendment Regulations, which provided for graduated royalty rates for onshore and shallow offshore PSC which did not account for royalty by tranches.
effect from the first day of January, 2000, which was the same date of commencement of the graduated royalty rates contained in the side letters.”
Several meetings between Nigerian government officials – represented by the FIRS, DPR, and NNPC – and representatives of Addax Petroleum reassess and resolve the latter’s “colossal underpayment” to the government between 2007 and 2012 yielded no results.
But Addax Petroleum maintained its right to the use of the side letters for computing the taxes on its operations and dragged the government over accusations of a breach of their 1998 PSC on the oil blocks.
In suit FHC/ABJ/CS/1099/2014 filed before former Chief Judge of Federal High Court Ibrahim Auta, the company sought a judicial approval towards their continued use of the side letters to compute its financial obligations to the Nigerian government.
However, on May 26, 2015, three days before the administration of the then president, Goodluck Jonathan, handed over to his successor, Muhammadu Buhari, the government negotiated a controversial out-of-court settlement with Addax Petroleum, agreeing to pay the company $3.4billion (about N1trillion).
Court papers filed by the Nigerian government’s lawyers stated that Addax Petroleum “surreptitiously teamed up” with some officials of DPR, FIRS, and NNPC to execute certain terms of settlement that were eventually made the Consent Judgment of court, notwithstanding the pendency of several applications yet to be heard by the same court.
“In executing the said terms of settlement, the authorities were not sought, no approval at Federal Executive Council level was given, the governing boards of the FIRS, NNPC and DPR did not authorise those officers that executed the bogus terms of settlement to so act,” the lawyers argued.
However, when President Muhammadu Buhari’s assumed office, the NNPC in a letter to Addax Petroleum endorsed by the president and dated September 7, 2015, reversed the agreement entered into by the previous administration.
In the ongoing suit before Justice Olatoregun, the federal government is seeking an order directing the NNPC, Ministry of Petroleum/DPR, and NAPIMS from further allocation of crude oil explored from OMLs 123, 124, 126, and 137 to Addax Petroleum pending when the company furnishes the court verifiable Bank Guarantee from Nigerian banks to cover the monetary claims of the plaintiff.
Other prayers sought by the Nigerian government include an order restraining the NNPC, Petroleum Ministry, and NAPIMS from dealing with Addax Petroleum, as well as stopping them from transferring or assigning their interest in the OMLs to another person.
Also, an order compelling the Nigerian agencies to file an affidavit of fact detailing the company’s assets, properties, and funds.
On Friday, Justice Olatoregun granted an order for the government’s lawyers to serve court papers to the NNPC, the third respondent in the suit, whose office is situated in Abuja, outside the court’s jurisdiction.
She thereafter adjourned the suit till May 3, 2018.
Nigerians were among more than 140 residents injured after Iran launched multiple ballistic missiles and unmanned aerial vehicles at the United Arab Emirates, at the weekend.
This raised fresh fears for thousands of Nigerians living and working in the Gulf nation.
The UAE Ministry of Defence disclosed last Saturday that its air defence systems intercepted several missiles and drones fired from Iran, describing the attack as a major escalation in the ongoing regional tensions.
In a statement posted on its official X handle, the ministry said its air defence units engaged nine ballistic missiles and 33 drones during the latest assault on March 14.
It added that the attacks left six people dead and 141 others injured, including foreign nationals.
“The UAE air defence systems on March 14 engaged nine ballistic missiles and 33 UAVs launched from Iran,” the ministry stated.
“Since the onset of this blatant Iranian aggression, UAE air defences have engaged 294 ballistic missiles, 15 cruise missiles, and 1,600 UAVs launched from Iran,” UAE added.
According to the ministry, those killed in the attacks included citizens of the UAE as well as foreign nationals from Pakistan, Nepal and Bangladesh.
“Although the authorities did not specify the exact locations where the casualties occurred, the ministry said the injured victims were from several countries, including Nigeria.
Others affected include residents from Egypt, Sudan, Ethiopia, the Philippines, Pakistan, Iran, India, Bangladesh and Sri Lanka.
The list also included Azerbaijan, Yemen, Uganda, Eritrea, Lebanon, Afghanistan, Bahrain, Comoros, Türkiye, Iraq, Nepal, Oman, Jordan, Palestine, Ghana, Indonesia and Sweden.
The Tide reports that this development has sparked concern among Nigerian communities in the UAE, where thousands of citizens live and work in sectors such as construction, hospitality, logistics and trade.
Data from Nigeria’s diaspora commission shows that the UAE remains one of the largest destinations for Nigerian migrants in the Middle East, particularly in the emirates of Dubai, Abu Dhabi and Sharjah.
The Nigerian government had in recent years raised concerns over the safety and welfare of its citizens in the country following diplomatic tensions and visa restrictions affecting Nigerians.
Saturday’s attacks have now heightened anxieties within the diaspora community, especially as the Gulf region faces growing military confrontations.
In its statement, the UAE Ministry of Defence said the country remained fully prepared to confront any threats to its security.
“The Ministry of Defence remains fully prepared and ready to deal with any threats and will firmly confront any attempts to undermine state security in a manner that ensures the protection of its sovereignty, security and stability, and safeguards its national interests and capabilities,” the ministry said.
In a separate update, the ministry noted that its defence systems were still actively intercepting missiles and drones.
“UAE air defences are dealing with Iranian ballistic and cruise missiles and drones,” it said.
Regional media reports indicate that the attacks form part of a wider escalation of hostilities between Iran and Western-backed forces in the Middle East.
According to Al Jazeera, Iran has continued sustained missile and drone strikes across the Gulf despite protests from neighbouring states.
The strikes were said to be in retaliation for military operations launched by the United States and Israel against Iranian positions in the region.
Tehran targeted several Gulf countries, including Saudi Arabia, Qatar and the UAE, late on Friday and into Saturday.
The attacks also caused infrastructural damage in parts of the UAE.
Meanwhile, Iran’s elite military wing, the Islamic Revolutionary Guard Corps, warned that US interests in the UAE would remain legitimate targets.
Iranian state media reported that the group issued the warning after US forces attacked Iranian-controlled islands.
The IRGC specifically mentioned ports, docks and military installations linked to the United States as potential targets.
It also urged residents in the UAE to evacuate areas around ports and military facilities to avoid civilian casualties.
Security analysts say the growing exchange of threats and strike across the Gulf could destabilise the region’s economic and aviation activities if the conflict escalates further.
Nigeria’s Ministry of Foreign Affairs has yet to issue an official statement on the incident as of the time of filing this report.
Rivers State Governor, Sir Siminalayi Fubara, has charged the five new commissioners sworn-in last Wednesday to put in their best for the development of the State.
Fubara gave the charge during the swearing-in of the commissioners at the Executive Council Chambers of the Government House, Port Harcourt, last Wednesday.
This followed the successful screening of the five commissioners by the Rivers State House of Assembly, last Tuesday.
The five commissioners are Tonye Bellgam, Prof. Temple Nwofor, Dr. Peters Nwagor, Mr. Lekue Kenneth, and Sir Amairigha Edward Hart.
The Tide reports that the governor had sent nine commissioner-nominees to the Assembly for screening, but the Assembly confirmed only five nominees and rejected the nomination of four over various allegations.
Those rejected by the Assembly are Prof. Dantonye Alasia, Mrs. Charity Demua, Mr. Tamuno Williams, and Otonye Amachree.
The governor congratulated the new commissioners on their appointment, noting that their thorough screening by the Rivers State House of Assembly was a proof of their capabilities.
He urged them to deploy their wealth of experience in various fields and put the State on a fast lane of development.
“Ordinarily, I am supposed to charge you on your responsibilities and how to operate. But that has been taken care of by the screening at the Assembly.
“I believe that going through one of the most rigorous screenings, it is enough to say that for those of you who succeeded, you are fit and ready to deliver to our dear State.
“So there is no further charge. The screening was the charge, so I wish you the best as I don’t expect anything less than the best from you,” Fubara said.
The Nigerian Navy has intensified its crackdown on crude oil theft and illegal bunkering, destroying a reactivated illegal refinery site in Rivers State and intercepting suspected stolen petroleum products in Calabar, Cross River State.
The Director of Naval Information, Capt Abiodun Folorunsho, disclosed this in a statement released in Abuja, yesterday.
Folorunsho said personnel of the Nigerian Navy Ship SOROH, operating under Operation DELTA SENTINEL, destroyed a reactivated illegal refinery site at Okolomade Community in Abua-Odual Local Government Area of Rivers State.
He said the action followed credible intelligence that a previously dismantled illegal refining site had resumed operations.
According to him, an Anti–Crude Oil Theft team deployed to the location discovered that the dismantled refining oven had been reconstructed.
“Further exploitation of the area led to the discovery of additional refining equipment and storage facilities containing about 3,000 litres of product suspected to be illegally refined Automotive Gas Oil (AGO),” he said.
Folorunsho added that the illegal refining infrastructure, including ovens, storage tanks, hoses, connected pipes and newly acquired metal components used for illegal refining, was destroyed in line with operational procedures.
He said personnel of the Nigerian Navy Ship Victory, in another operation, intercepted about 3,950 litres of suspected stolen petroleum products at the Nigerian Ports Authority area in Calabar, Cross River State.
He said the interception was based on credible intelligence on suspected siphoning of petroleum products from vessels berthed at the port.
The naval patrol team, according to him, swiftly deployed to the area and traced the illegally siphoned products to a trailer park within the port facility.
“On sighting the naval patrol team, the suspected perpetrators fled the scene, after which the area was cordoned off and the illegally siphoned products secured,” he said.
Folorunsho said further inspection led to the recovery of about 3,950 litres of Automotive Gas Oil stored in drums and jerrycans, which had been evacuated to the naval base for further necessary action in line with extant regulations.
He noted that the successes aligned with the directive of the Chief of the Naval Staff, Vice Adm. Idi Abbas, to intensify operations against crude oil theft and other maritime crimes across Nigeria’s maritime domain.
Folorunsho reiterated the Navy’s commitment to sustaining the operational tempo of Operation DELTA SENTINEL through intensified surveillance, patrols and intelligence-driven operations aimed at combating crude oil theft, illegal bunkering and other forms of economic sabotage.