Three states in the oil-rich Niger Delta region – Rivers, Bayelsa and Akwa Ibom – have sued the Federal Government at the Supreme Court for alleged huge loss of oil revenues to oil companies between 1999 and 2015.
The suit, SC.964/2016, was filed with the Attorney General of the various states named as the plaintiffs and the Attorney General of the Federation, being the chief law officer of the Federal Government, named as the sole defendant.
According to the plaintiffs, the Federal Government had been short-changed of its supposed share of an estimated earnings of $1,149,750,000,000 under the Production Sharing Contracts between the Federal Government and its Production Sharing Partners (oil exploration and exploitation companies) for the period between1999 and 2015.
By the plaintiffs’ calculation, using the exchange rate of N470 per dollar as of the time the suit was filed on November 15, 2016, the total amount earned by the Federal Government and the oil companies, under the PSC, stood at N540,382,500,000,000 within the period of over 15 years.
The plaintiffs stated that the development had adversely affected the revenue accruable to them from the Federation Account.
Among the prayers sought by the plaintiffs in the suit is an order directing the AGF to adjust the sharing formula to reflect the provisions of the current statute, calculate in arrears with effect from August 2003, recover and pay to them “immediately all outstanding statutory allocations due to them arising from the re-adjustment.”
According to them, the loss suffered by the Federal Government is due to the failure of the Minister of Petroleum Resources for over 15 years to kick-start the re-adjustment of the sharing formula of 60 per cent share of oil profits to the Federal Government and 40 per cent to the oil companies.
The plaintiffs faulted Section 8(1)(f) of the Production Sharing Contracts between the Federal Government and the oil companies, which makes provision for the 60 to 40 per cent sharing agreement.
They explained that the Federal Government had suffered huge losses under the PSC because of non-compliance with Section 16(1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act, which was said to have come to effect since January 1, 1993.
They stated that under the law, there ought to be an upward re-adjustment of Federal Government’s share of oil profit “in a manner as to become economically beneficial to the Federal Government” whenever the price of crude oil exceeded $20 per barrel.
The plaintiffs therefore argued that the PSC, which provides for the current sharing formula between the Federal Government and the oil companies, could no longer be valid because the oil prices had since overshot the $20 per barrel.
They stated in their written address, “Plaintiffs have come to court because oil prices have even before the first oil was produced from the field, in 1998, the price of crude oil, had exceeded the US$20 per barrel bench mark and the Minister of Petroleum, both as Chairman of the board of the Nigerian National Petroleum Corporation and approving authority of the PSC, exclusively nominated by the defendant (FG) has failed to kick-start and achieve a re-adjustment of the sharing formula of the profit oil such that would have benefited more the Federal Government and the consequential enhanced revenue accruing to the plaintiffs’ (Rivers, Bayelsa and Akwa Ibom states) coffers under Section 162 of the Constitution of the Federal Republic of Nigeria 1999(as amended).”
They, therefore, sought three prayers, among which is an order directing the AGF to adjust the share of the Federal Government from the respective times the price of crude oil exceeded $20 per barrel in real terms and to calculate in arrears with effect from August 2003 and recover and pay to them immediately “all outstanding statutory of $20 per barrel”.
The legal team of the plaintiffs was led by the Attorney General and Commissioner for Justice of Rivers State, Mr. Emmanuel Aguma (SAN), when the case came up before the Supreme Court on Thursday.
But a Senior Advocate of Nigeria, Lucius Nwosu (SAN), who signed the plaintiffs’ originating summons, made oral submissions on behalf of the team before the apex court during the proceedings.
The Attorney General of Bayelsa State, Mr. Kemasuode Wodu, and his Akwa Ibom State counterpart, Mr. Uwemedimo Nwoko, among other private SANs, were also part of the legal team jointly appearing for the plaintiffs on Thursday.
The suit was originally filed by Rivers and Bayelsa states, but by a motion, moved by the plaintiffs and which was not opposed by the AGF’s (defence) lawyer, Mr. Tijani Gazali, the seven-man panel of the Supreme Court joined Akwa Ibom State as the third plaintiff on Thursday.
The Federal Government has yet to respond to the suit, but Gazali told journalists after proceedings on Thursday that the AGF would consult with the relevant agencies and ministries of the Federal Government “to take a stand in the case”.
The seven-man panel led, by Justice Olabode Rhodes-Vivour, fixed November 24 for hearing.