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  • Senate gives CBN, NNPC, Customs, others deadline to submit budgets

    Senate gives CBN, NNPC, Customs, others deadline to submit budgets

    THE Senate yesterday gave the Central Bank of Nigeria (CBN), Nigerian National Petroleum Corporation (NNPC), Nigerian Customs Service, Federal Inland Revenue Service (FIRS) and 34 other statutory federal agencies a seven-day ultimatum to submit their 2017 budgets to the National Assembly for vetting and passage into law.

    The upper chamber said the directive was in line with the Fiscal Responsibility Act 2007.

    The directive followed the observation of Senate Leader Ahmed Lawan that a greater number of the statutory agencies and corporation have failed to comply with the requirement of the Fiscal Responsibility Act to submit their 2017 budget proposals for scrutiny by the National Assembly.

    Lawan noted that ordinarily, the budget proposals of the agencies should have been presented with the 2017 Appropriation Bill presented by President Muhammadu Buhari.

    He noted that it has become necessary for the agencies to submit their budgets for consideration and passage before the National Assembly goes on recess.

    He insisted that the submission of the budget proposals must be done within the week to enable the parliament do its constitutional duty.

    Senate President Bukola Saraki agreed with Lawan that the consideration and approval of the budgets must be concluded before the end of the session.

    Saraki said it was imperative to pass the budgets before the Senate goes on recess to pave the way for its full implementation.

    Senator Solomon Adeola, in his contribution, said the submission of the budgets should be the responsibility of ministers since most of the agencies and corporations did not have boards to approve the budget proposals.

    Deputy Senate President Ike Ekweremadu said laws are made to be obeyed.

    He said since the Fiscal Responsibility Act made it mandatory for listed statutory agencies to lay the budgets for the approval of the National Assembly, affected agencies were duty bound to comply with the law.

    In line with the motion by Lawan, the Senate resolved that the affected agencies must submit their 2017 budget proposal to the National Assembly within the week for consideration and passage into law.

    Other affected agencies are  Nigerian Ports Authority (NPA), Securities and Exchange Commission (SEC) National Agency for Food and Drug Administration and Control (NAFDAC),  Bureau of Public Enterprises (BPE), National Maritime Authority (NMA), Federal Airport Authority of Nigeria (FAAN), Nigerian Communications Commission (NCC), Nigerians Deposit Insurance Corporation (NDIC), Nigerians Immigration Service (NIS), Federal Housing Authority (FHA), Federal Mortgage Bank (FMB) and Corporate Affairs Commission (CAC), among others.

  • Senate gives CBN, NNPC, Customs, others seven- day ultimatum to submit budgets

    Senate gives CBN, NNPC, Customs, others seven- day ultimatum to submit budgets

    The Senate on Wednesday gave the Central Bank of Nigeria (CBN), Nigerian National Petroleum Corporation (NNPC), Nigerian Customs Service, Federal Inland Revenue Service (FIRS) and 34 other statutory federal agencies a seven- day ultimatum to submit their 2017 budgets to the National Assembly for vetting and passage into law.

    The upper chamber said the directive for the agencies and corporations to submit their budgets to the National Assembly was in line with the Fiscal Responsibility Act 2007.

    The directive followed the observation by the Senate leader, Senator Ahmed Lawan, that a greater number of the statutory agencies and corporation have failed to comply with the requirement of the Fiscal Responsibility Act to submit their 2017 budget proposals for scrutiny by the National Assembly.

    Lawan noted that ordinarily, the budget proposals of the agencies should have been presented with the 2017 Appropriation Bill presented by President Muhammadu Buhari.

    He noted that it has become necessary for the agencies to submit their budgets for consideration and passage before the National Assembly goes on recess.

    He insisted that the submission of the budget proposals must be done within the week to enable the parliament do its constitutional duty.

    Senate President, Bukola Saraki, agreed with Lawan that the consideration and approval of the budgets must be concluded before the end of the session.

    Saraki said it was imperative to pass the budgets before the Senate goes on recess to pave the way for its full implementation.

     

  • NNPC gets $2b discount on upstream contracts

    NNPC gets $2b discount on upstream contracts

    • Production cost down to $22/barrel

    The Nigerian National Petroleum Corporation  (NNPC), has secured $2billion discounts in the last one year from renegotiated upstream contracts being executed by its various service providers.

    NNPC Group Managing Director, Dr. Maikanti Baru, who made this known,in a podcast message to the Corporation’s workers to mark  his One-Year Anniversary,  said the feat was achieved in its quest to continually drive down the high cost of production in the industry.

    He said cost reduction and efficient managment of scarce resources remain vital to the organisation, saying  the Corporation has lowered operating costs of production from $27 to $22/barrels.

    “For the upstream, cost reduction and efficiency are key features that we will pay attention to”, Dr. Baru stated in the 25-minute podcast.

    Dr. Baru said the focal points for efficiency in each of the Corporation’s Autonomous Business Units (ABUs), and Corporate Services Units (CSUs) should be identified to ensure the realisation of the key performance indicators enshrined in the 2017 budget, adding that the firm must attain a six-month contracting cycle.

    Speaking further on the achievement of NNPC in the past year with him at the helms of affairs of the Corporation, Dr. Baru said there had been a significant increase in crude oil reserves and production, stressing that during the period, the national average daily production was 1.83million barrels of oil and condensate while currently, the year-to-date 2017 average production hovers around 1.88million barrels.

    He said with the improvement in security and resumption of production operation on the Forcados Oil Terminal (FOT) and Qua Iboe Terminal (QIT) pipelines, the average national production was expected to increase and surpass 2017 target of 2.2million barrels of oil and condensate per day.

    Baru said in October last year, the Owowo Field, located close to the producing ExxonMobil-operated Usan Field was found, adding that the field’s location could allow for early production through a tie-back to the Usan Floating Production Storage and Offloading (FPSO).

    The field, he noted, had added a current estimated reserves of 1billion barrels to the national crude oil reserves.

    Baru noted that the oil firm had grown the production of the Nigerian Petroleum Development Company (NPDC), NNPC’s flagship upstream firm, from 15,000 barrels of oil per day (bopd) to the current peak-operated volume of 210,000bopd in June 2017.

    He said the ownership of Oil Mining Licence (OML) 13 had been restored to NPDC following a presidential intervention, with first oil from the well expected before the end of the year.

    The GMD said the confidence of the NNPC JV partners to pursue new projects had been rekindled following the repayment agreements for JV cash call arrears that were negotiated and executed for outstanding up to end 2015 by all the IOC Partners of the Corporation’s Joint Venture Companies (JVCs).

  • NNPC gets $2b discounts on upstream contracts

    NNPC gets $2b discounts on upstream contracts

    …reduces cost of prodcution to $22/barrel
    The Nigerian National Petroleum Corporation  (NNPC), has secured $2billion discounts in the last one year from renegotiated Upstream contracts being executed by its various service providers.

    The Corporation said the feat was achieved in the quest to continually drive down the high cost of production in the industry.

    This was made known on Tuesday by NNPC Group Managing Director, Dr. Maikanti Baru, in a podcast message to the Corporation’s Staff to mark One-Year Anniversary of his appointment as the Corporation’s helmsman.

    Dr. Baru, who took over the mantle of leadership of NNPC from Honourable Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, July 4, last year, said already NNPC had lowered operating costs of production from $27/barrels to $22/barrels.

    “For the Upstream, cost reduction and efficiency are key features that we will pay attention to”, Dr. Baru stated in the 25-minute podcast.

    Dr. Baru directed that focal points for efficiency in each of the Corporation’s Autonomous Business Units, ABUs, and Corporate Services Units, CSUs, should be identified to ensure the realisation of the key performance indicators enshrined in the 2017 budget, adding that the Corporation must attain a six-month contracting cycle.  

    Speaking further on the achievement of NNPC in the past year with him at the helms of affairs of the Corporation, Dr. Baru said there had been a significant increase in crude oil reserves and production, stressing that during the period, the national average daily production was 1.83million barrels of oil and condensate while currently, the Year-To-Date 2017 average production hovers around 1.88million barrels.

    He said with the improvement in security and resumption of production operation on the Forcados Oil Terminal (FOT) and Qua Iboe Terminal (QIT) pipelines, the average national production was expected to increase and surpass 2017 target of 2.2million barrels of oil and condensate per day.

    The GMD stated that in October last year, the Owowo Field, located close to the producing ExxonMobil-operated Usan Field was found, adding that the Field’s location could allow for early production through a tie-back to the Usan Floating Production Storage and Offloading (FPSO).

    The Field, he noted, had added a currently estimated reserve of 1billion barrels to the national crude oil reserves.

    Baru noted that the Corporation had grown the production of the Nigerian Petroleum Development Company, NPDC, NNPC’s flagship Upstream Company, from 15,000 barrels of oil per day (bopd) to the current peak-operated volume of 210,000bopd in June 2017.

    He stated that the ownership of Oil Mining Licence, OML13 had been restored to NPDC following a presidential intervention, with first oil from the well expected before the end of the year.

    The GMD said the confidence of the NNPC JV partners to pursue new projects had been rekindled following the repayment agreements for JV cash call arrears that were negotiated and executed for outstanding up to end 2015 by all the IOC Partners of the Corporation’s Joint Venture Companies (JVCs).

    In the gas sector, the GMD said gas supply to power plants and industries in the Country had been significantly increased.

    Dr. Baru listed the accomplishments of the Corporation in the sector to include: Completion of the repairs of the vandalized 20” Escravos Lagos Pipeline System A (ELPS –A) in August 2016 which ramped up Chevron Escravos Gas plant supply from nil to 259MMscfd and the Completion of repairs of the vandalized Chevron offshore gas pipeline in February 2017 which equally peaked the company’s gas supply to 430MMscfd.

    Other accomplishments under this category are: the completion of repair works on the vandalized 48” Forcados Oil Terminal (FOT) export gas pipeline in June 2017, which had reactivated shut down gas plants, including Oredo Gas Plant, Sapele Gas Plant, Ovade Gas Plant, Oben and NGC Gas Compressors; and the commissioning of NPDC’s Utorogu NAG2 and Oredo EPF 2 gas plants.

    The GMD explained that the concomitant effect of the efforts was a significant growth in domestic gas supply in the last few months, adding that during the period, domestic gas supply had increased from an average of 700MMscf in July 2016 to an average of 1,220MMscfd currently, with about 7 of the volume supplied to thermal power plants.

    “A lot of Generation Companies (GENCOs) are rejecting gas due to the inability of Transmission Company of Nigeria (TCN), to wheel-out the power generated”, Dr. Baru said.

    Dr. Baru informed that since his assumption of office a year ago, resources had been deployed to the Benue Trough, with exploration efforts commenced there in earnest.

    He explained that seismic data acquisition was ongoing in the frontier region using the services of Integrated Data Services limited, IDSL, and her partners to pursue Government’s aspiration to grow the reserves base of the Country.

    The GMD stated that drilling activities were expected to commence in Benue Trough in Q4 this year.
    He said: “We are working with the security agencies for an early return to the Chad Basin. Drilling activities will be a priority on resumption while continuing with seismic data acquisition with improved parameters.”

    In the Downstream Sector, Dr. Baru explained that in the last one year, NNPC had stabilised the market with sufficient products’ availability across the Country through modest local refining efforts as well as the Direct Supply Direct Purchase, DSDP, scheme,  which he observed had saved the nation about N40billion in 2017.

    “We have also commenced the resuscitation of our products transportation pipelines network, thus enabling us to move products to depots at a faster rate and cheaper distribution costs to consumers. The Aba, Mosimi, Atlas-Cove and Kano Depots have all been re-commissioned and are currently receiving products, thereby enhancing products’ availability across the Country”, the GMD said. 

    Baru said in the last one year, NNPC had improved capacity utilisation of the refineries with the projection that they would attain supplying 50 per cent of the non-gasoline white products to the nation, including Diesel and Kerosene that are commonly consumed in the Country.

    The GMD said after more than seven years of dormancy, the Asphalt Blowing Unit of the Kaduna Refining and Petrochemical Company, KRPC, was resuscitated to meet road construction needs in the Country.
    He declared that efforts were ongoing to secure 3rd party financing to revamp the refineries to their full operational capacities.

    Drawing his address to a close, Dr. Baru disclosed that the overwhelming support he received from the Corporation’s staff and the Industry’s in-house Unions, Nigerian Union of Petroleum and Natural Gas Workers, NUPENG, and Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, contributed to the successes recorded by NNPC Management under his leadership in the past year.

    “I look forward to your continued cooperation and support as we navigate the Corporation out of its current challenges towards profitability with integrity and transparency,” the GMD stated.

  • Man jailed two years over illegal possession of firearms

    Man jailed two years over illegal possession of firearms

    A Jos Upper Area Court on Wednesday sentenced a 32-year-old man, Mohammed Bello, to a two-year prison term over illegal possession of firearms.

    The News Agency of Nigeria (NAN) reports that Bello was sentenced after he pleaded guilty to the charge of being in possession of a locally fabricated gun and 30 rounds of ammunition.

    The magistrate, however, gave Bello a fine option of N5,000.

    The prosecutor, Yakubu Tambaya, had told the court that Bello was arrested by a police officer, Insp. Dalyop Davou, on April 7, 2017 during a road search.

    “The accused was arrested during a stop and search operation along NNPC filling station, Zaria Road, Jos.

    “The policeman stopped a vehicle for a routine search and found a locally made revolver and 30 rounds of cartridges owned by the accused. He was arrested when the officer confirmed that he had no legal tittle to the items,” he said.

    He said that the offence was contrary to section 3 of the Robbery and Firearms Act.

    The accused promptly pleaded guilty and begged for leniency, while promising to change his ways.

  • It’s a shame we are still importing petroleum products – Kachikwu

    It’s a shame we are still importing petroleum products – Kachikwu

    Minister of State for Petroleum Resources, Ibe Kachukwu has said that Nigeria remain the only oil producing country that is still struggling with the importation of refined petroleum products, describing the situation as a complete embarrassment.

    The Minister said Nigeria was the only member country of the Organisation of Petroleum Exporting Countries (OPEC) still grappling with the importation of refined petroleum products. 

    Kachukwu who spoke at the 5th Triennial National Delegates Conference of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja also said it was a shame that despite its huge resources, Nigeria has continued to grapple with epileptic power supply.

    He said Nigeria should be able to produce enough petroleum products to meet domestic needs, pointing out that changing times in the industry suggest that Nigeria must look for ways of ensuring efficient management of the refineries and make them productive or lose them and the job opportunities it offers.

    He said the nation’s future lies in the area of gas, saying at best, the nation’s oil reserve will last for another 25 to 39 years, while the nation’s gas reserve will last for over 60 years.

    He said: “For me, the while idea of continuing importation of petroleum products in this country is a shame. We are the only once, when we go for OPEC meetings that are still struggling how to import petroleum products when we should be able to produce even if it is only the petroleum products that we need in this country. 

    “We need to find anything that will help us to do that and I encourage you to collaboratively work with us as we get into this. Once that happen, it is going to open a whole vista of opportunities in marketing, midstream performances, opportunities in infrastructure along pipeline. 

    “I urge you to take the solidarity that you have and you sing so passionately about away from just fighting issues of staff welfare and move into issues of staff investments. I need to see you participate in the value chain. Some of you are some of the best brains there are in the industry and you know where the issues are and where to create new investments.”

    On epileptic power in the country, he said: “It is a shame that a country with such massive resources will continue to be epileptic in power supply. I go to Ghana sometimes and I am ashamed that we supply some of the gas. At least in Accra, and most of the major cities, power is 24 hours. In Ivory Coast, despite the problems they have in terms of power costing, there is 24 hours supply. 

    “There is no absolute reason why this country cannot move from this decadent practice of explaining inefficiency to a new horizon where visibility are grandiose. I am committed to working with the power ministry and every Nigeria to move the transformative journey from one point to another, from the point excuses to the point of absolute final delivery.”

    The Minister said further that “the reality is that the oil industry is changing almost transformatively. Prices have tumbled and have continued to struggle despite all the works we have done in OPEC to the and boast it. The reality is that investments are declining at an alarming rate and suddenly, there are new entrants into the industry. 

    “Also, CEOs are struggling as to where to put very scarce resources and suddenly, it is now how well you can market your country, reposition your policies in such a way that there are benefits. All is a sudden, investment return in some of these exploration activities are beginning to get challenges. Only those who are able to look at their technology and new ways of doing business are going to survive the oil industry of tomorrow. 

    “If you take the annual return of most of the major oil companies, you will see the sort of disequilibrium that’s happening there and those who are beginning to jump in and out of leadership, you realize that expectations are changing. As it concerns Nigeria, we must work inclusively hard to deal with some of the difficulties that we will continue to see in our production platforms. 

    “Whether it is the militants which is a key component or the slow speed of approvals or whether the fact that  our policies are not even as fast as they should to catch up with changing Times.

    “Those of us who have the opportunity to seat in ministerial zones where we have to influence policies have got to work extremely hard to help drive the sea of change that is imperative is the sector is to survive. Infrastructural deficit is a key component. We lack infrastructure in the sector, whether it is down stream or up stream or oil and gas. 

    “The absence of infrastructure has made it impossible to have a holistic private sector participation. We have got to find policies that will encourage private sector participants to play a key role. Coupled with that is the fact that countries are moving away from oil. Our oil estimate as per reserve is at best about 25 to 30 years, while gas estimate is over 60 years. 

    “Clear enough, Nigeria is more of a gas country than an oil country. But what are we doing to ensure that our dramatic movement into the gas production. I am just coming from the FEC where we presented a memo on gas which has been approved today. 

    “Major movement is in terms of what we need to do in the gas environment because it is so key that unless we can put the two energy together, we are not likely to see an improvement in our economy or see opportunities that most of you are beginning to miss in terms of job creation and employment in the oil sector.

    “Gas is the new horizon of opportunity. There is so much happening that needs to happen, that should have happened yesterday. Gas is the future for this country and the place to be and we need to start looking at that. Increasingly, we are seeing very strong local players.”

    The Minister dispel insinuations that the government has concluded plans to either concession or sell off the refineries, saying “let me say that there has been attempt and there is no approval to concession refineries or sell refineries. I keep hearing discussions all over the place especially from people who should know better. 

    “What we have approval for is to bring in a financing mechanism that will enable us to finance and develop and upgrade the refineries as they are. The reality is that once private sector players begin to build their own refineries, whatever we it that we are afraid of will disappear and unless we begin to move very rapidly and quickly to position these refineries in such a way that they can compete, we will lose the refineries completely together with the job scale that exist there right now.

    “My drive is to see that those investments goes through a transparent process and the announcement that you hear about selection has not happened. They all be pacesetters in the whole process, but it will go through a transparent process. 

    “Nothing that we are trying to do has taken away thE management from the NNPC. However, we need to bring in fund and best practices and elevate these institutions to the level where they should work for this country because we are losing money.”

    In his address, National President of PENGASSAN, Francis Olabode Johnson said the union was in full support of government initiatives to bring in investors to revamp the refineries especially in the area of funding and expertise.

    Johnson said however that the union want to have access to the memorandum of understanding to be signed between the  federal government and the investors for the three refineries in Kaduna, Warri and Port Harcourt.

    In addition, he said the two unions in the oil and gas sector, PENGASSAN and NUPENG should be carried along at all stages of the process to ensure that Labour related issues and job security is guaranteed, saying, “while we await the direction of the investors in the three refineries, we call on the government to ensure immediate rehabilitation of obsolete equipment in the plants”

    Johnson also frown what he described as fragrant disobedience to tripartite agreement reached by International Oil Companies operating in the country on job security, saying “we take this as an affront on the constituted authorities in the country. We call on the management of the Oil and Gas companies in Nigeria to respect the laws of the land as well as constituted authorities in Nigeria.”

  • Court sets aside $2.5b judgment by Shell, Esso against NNPC

    Court sets aside $2.5b judgment by Shell, Esso against NNPC

    The Court of Appeal in Abuja has set aside a portion of an arbitral award got by Shell Nigeria Exploration and Production Limited (Shell) and Esso Exploration and production Limited (Esso) against the Nigerian National Petroleum Corporation (NNPC).

    By the portion of the award, made by an arbitration tribunal in Lagos on October 24, 2011, NNPC was ordered among others, to pay Shell and Esso over $2.5billion for abusing a Production Sharing Contract (PSC) between them in relation to the operation of an oil filed identified as Erha Deepwater Project.

    Shell and Esso particularly, accused NNPC of assuming their responsibilities, under the PSC, including determining what should be paid to the Nigerian government as petroleum profit tax (PPT), and that in so doing, NNPC over lifted petroleum products valued at $1,207,500,000 to pay its unilaterally assessed tax on their behalf (Shell and Esso).

    On learning about the Shell and Esso case against NNPC, which will require it to refund the tax paid to it by NNPC on behalf of Shell and Esso, the Federal Inland Revenue Service (FIRS) went before the Federal High Court in Abuja, in suit No: FHC/AB/CS/764/11, to challenge the aspect of the arbitral proceedings relating to tax issues.

    The arbitration tribunal, at the end of its proceedings on October 24, 211, ordered NNPC to pay Esso and Shell $1,799,000,000, “with simple interest at the rate of 30-day LIBOR plus 4per cent from December 17, 2007 (the date of breach) until April 30, 2011,” estimated at $243,000,000.

    It asked NNPC to pay another “simple interest at the rate of 30-day LIBOR plus 4per cent on the $1,799,000,000 from April 30, 2011 up until the date of payment;” and a further “sum determined by the volume and value of over lifting by the respondent that has taken place since April 30, 2011 and until the date of this final award, plus simple interest at the rate of 30-day LIBOR plus 4per cent from April 30, 2011 up until the date of payment.”

    However, in his judgment on March 9, 2012 on the suit by FIRS, Justice Adamu Bello (now retired) of the Federal High Court, Abuja set aside the October 24, 2011 arbitral award/judgment on the ground that the arbitration tribunal lacked the jurisdiction to have entertained dispute relating to tax, a decision Shell and Esso appealed to the Court of Appeal, Abuja.

    The Court of Appeal, in a unanimous judgment of a three-man panel on March 10 this year, a copy of which The Nation accessed last Friday, set aside the monetary award against NNPC, held that oil companies lacked the power to determine what profit tax to pay and that such responsibilities reside solely with the FIRS under the country’s laws.

  • Court sets aside $2.5b judgment awarded to Shell, Esso against NNPC

    Court sets aside $2.5b judgment awarded to Shell, Esso against NNPC

    •Judges say oil firms can’t determine what to pay as tax
    •FIRS’ sole right to assess petroleum profit tax upheld

    THE Court of Appeal in Abuja has set aside a portion of an arbitral award got by Shell Nigeria Exploration and Production Limited (Shell) and Esso Exploration and Production Limited (Esso) against the Nigerian National Petroleum Corporation (NNPC).

    By the portion of the award, made by an arbitration tribunal in Lagos on October 24, 2011, NNPC was ordered,  among others, to pay Shell and Esso over $2.5 billion for abusing a Production Sharing Contract (PSC) between them in relation to the operation of an oil field identified as Erha Deepwater Project.

    Shell and Esso particularly accused NNPC of assuming their responsibilities, under the PSC, including determining what should be paid to the Nigerian government as petroleum profit tax (PPT), and that in so doing, NNPC over-lifted petroleum products valued at $1,207,500,000 to pay its unilaterally assessed tax on their behalf (Shell and Esso).

    On learning about the Shell and Esso case against NNPC, which will require it to refund the tax paid to it by NNPC on behalf of Shell and Esso, the Federal Inland Revenue Service (FIRS) went before the Federal High Court in Abuja to challenge the aspect of the arbitral proceedings relating to tax issues.

    The arbitration tribunal, at the end of its proceedings on October 24, 2011, ordered NNPC to pay Esso and Shell $1,799,000,000, “with simple interest at the rate of 30-day LIBOR plus four per cent from December 17, 2007 (the date of breach) until April 30, 2011,” estimated at $243,000,000.

    It asked NNPC to pay another “simple interest at the rate of 30-day LIBOR plus four per cent on the $1,799,000,000 from April 30, 2011 up until the date of payment;” and a further “sum determined by the volume and value of over-lifting by the respondent that has taken place since April 30, 2011 and until the date of this final award, plus simple interest at the rate of 30-day LIBOR plus four per cent from April 30, 2011 up until the date of payment”.

    However, in his judgment on March 9, 2012 on the suit by FIRS, Justice Adamu Bello (now retired) of the Federal High Court, Abuja set aside the October 24, 2011 arbitral award/judgment on the ground that the arbitration tribunal lacked the jurisdiction to have entertained dispute relating to tax, a decision Shell and Esso appealed to the Court of Appeal, Abuja.

    The Court of Appeal, in a unanimous judgment of a three-man panel on March 10 this year, a copy of which The Nation accessed last Friday, set aside the monetary award against NNPC, held that oil companies lacked the power to determine what profit tax to pay and that such responsibilities reside solely with the FIRS under the country’s laws.

    Justice Emmanuel Akomaye Agim, in the lead judgment, faulted the exercise of jurisdiction over a tax related dispute by an arbitration tribunal.

    He noted: “The payment of petroleum profit tax (PPT) by parties to a production sharing contract is not governed by the Arbitration and Conciliation Act.

    “The assessment and determination of the PPT payable and the collection of such tax are governed by the Federal Inland Revenue Service (FIRS) Act and Petroleum Profit Tax (PPT) Act.”

    Justice Agim said FIRS was right to have challenged the arbitral proceedings while it was still on, because it relation to tax dispute, which an arbitration tribunal lacked jurisdiction to entertain.

    He said the order by the arbitral tribunal that NNPC cease making tax payments inconsistent with PPT returns prepared by the appellants, one of the reliefs claimed for by the appellants in the tribunal, takes away the discretionary power given the FIRS by Section 35(2) & (3) of the PPT Act, to accept returns filed with it and assess a tax payer’s tax liability on the basis of them or refuse to accept the returns, assess the tax payable on its own best judgment.

    Justice Agim said: “This relief has the effect of taking away completely the 1st respondent’s statutory power to assess and determine the tax payable vested in it (FIRS) by Section 35, 36 and 37 of the PPT Act and Section 43(1) of the same Act, which makes the assessment by the 1st respondent final and conclusive.

    “The order defeats the operation of sections 52 and 53 of the PPT Act, which makes the filing of inaccurate PPT returns an offence.

    “Therefore, the duty of the parties to the PSC to pay the PPT for the contract area and the exercise of the statutory powers of the 1st respondent to assess, determine and collect petroleum profit tax from oil producing companies in Nigeria and the non-refundability of paid PPT, except the part considered as overpayment, not arbitrable,” Justice Agim said.

    He faulted the decision by Shell and Esso to refer to an arbitration tribunal, their grievance over the way NNPC handled the issues of tax assessment and payment.

    Justice Agim noted where oil companies have issues with tax assessment by FIRS, they can, by virtue of the provisions of sections 42 and 43 of the PPT Act, appeal to Tax Appeal Commissioners, and further to the Federal High Court for the finality and conclusiveness of the assessment.

    He said: “On the whole, this appeal succeeds in part and fails in part. The judgment of the Federal High Court at Abuja in suit No: FHC/AB/CS/764 delivered on March 9, 2012 by A. Bello J. (Justice A. Bello), nullifying the entire arbitration agreement between the appellants and 2nd respondent, the arbitration proceedings and the award is hereby set aside, except as it affects the request or claims for reliefs F, H and I in the arbitration proceedings and the award of the same reliefs by the arbitral tribunal.

    “For the avoidance of doubt, the judgement nullifying the request for reliefs F, H & I in the arbitration proceedings and the award of these reliefs by the arbitral tribunal is upheld and affirmed.

    “The part of the judgment dismissing the preliminary objection to the jurisdiction of the Federal High Court to entertain and determine the suit is affirmed and upheld in respect of the request for reliefs F, H & I in the arbitration proceedings,” Justice Agim said.

    Justices Tinuade Akomolafe-Wilson and Tani Yusuf Hassan, who were on the panel, agreed with Justice Agim’s reasoning in the lead judgment.

  • Oil marketers urge FG to pay outstanding fuel subsidy claims

    Oil marketers urge FG to pay outstanding fuel subsidy claims

    The Major Oil Marketers Association of Nigeria (MOMAN) has appealed to the Federal Government to pay the outstanding fuel subsidy claims to its members to pay back their bank loans.

    The Executive Secretary of the association, Mr. Obafemi Olawore, made the plea in an interview with the News Agency of Nigeria (NAN) on Wednesday in Lagos.

    NAN reports that some oil marketers had on June 18 appealed to the Federal Government to pay their outstanding debts of two  billion dollars (N720 billion) owed on importation of petrol products and the accrued interests on bank loans.

    Olawore said that the immediate payment of the accumulated subsidy claims would salvage the banks from total collapse over the huge debts owed them by marketers.

    According to him, the delay in repayment of the loan debts owed the banks by marketers had led to retrenchment in the banking and the oil and gas sectors.

    “We (marketers) are afraid that if the money is not paid on time, this may attract the Asset Management Corporation of Nigeria (AMCON) to take over our businesses.

    “The debts had imparted grossly on marketers, while only very few marketers are presently importing insignificant quantity of petroleum products into the country,” he said.

    Olawore said that the plea was to avert the scarcity of petroleum products in the country.

    The executive secretary said that inability of the marketers to import fuel had impacted negatively on loading activities at the Apapa and Dockyard private depots.

    Olawore said that the NNPC had become the sole importer of petroleum products, while marketers were queuing to get the products on credit.

    He said that the Federal Government paid over N300 million daily as fuel subsidy.

    Olawore said that anytime there was problem in the banking sector, it was always traced to the oil sector, because of the unpaid loans collected by marketers borrowed.

    “Once we (marketers) are unable to pay, the banks will have problems,” he said.

    Olawore said that some banks might be having problem with their correspondence banks abroad due to the unpaid loans.

    “This can have negative effects on the financial sector’s stability, which is not good for the economy.

    “A situation where the banks are being owed N800 billion constitute major threat to the continuous existence of the sector,” he said.

  • NNPC station reduces diesel price to N160 per litre

    NNPC station reduces diesel price to N160 per litre

    A market survey that The Nation embarked upon on Tuesday confirmed that The Nigerian National Petroleum Corporation (NNPC) mega station on the Olusegun Obasanjo Way, Abuja sold the Automative Gas Oil (AGO) also known as diesel for N160 per litre.

    The Independent Petroleum Marketers Association of Nigeria (IPMAN) confirmed that its members have reduced the price of diesel to N170 per litre.

    Speaking with Nation on phone, its National Vice President, Alhaji Abubakar Maingadi, said that the price reduced from last week N180 and N190.

    He, however, attributed the decline to the deregulation of the price by the Nigerian National Petroleum Corporation (NNPC).

    He said that the “price is coming down because of deregulation,” urging the federal government to deregulate the entire petroleum sector.

    The National Vice President noted that the price of Premium Motor Spirit (PMS) will also crash if the NNPC deregulate its price.

    The Corporation’s General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu had on Sunday said that the price dropped by 42% owing to the NNPC strategic intervention efforts.

    He recalled that the product’s retail prices as at the end of May 2017 ranged from N175 to N200 across the country (a significant price drop of about 42%), while ex-depot prices also dropped to between N135 and N155.

    While our correspondent was at Total stations yesterday they sold for N195 per litre in virtually all their sales outlets. A sales representative at Opposite Febson Mall, Wuse, said that the product previously sold for N220 per litre.

    Azman Petrol station sold the product N180 per litre.