Why FG can’t recover $62bn from IOCs – Sylva
Minister of State for Petroleum Resources, Timiprey Sylva, yesterday declared that it is impossible for the Federal Government to recover a total $62 billion from International Oil Companies (IOCs) being revenue lost to oil exploration since 2003.
The minister stated this while briefing State House Correspondents after the Federal Executive Council (FEC) meeting presided over by President Muhammadu Buhari at the Presidential Villa, Abuja.
Nigeria is seeking recovery of $62 billion from the oil companies including Total, Eni, Shell, Chevron, and ExxonMobil using a 2018 Supreme Court ruling, which enables it to increase its share of income from production-sharing contracts (PSCs).
The Federal Government, through the office of the Attorney-General of the Federation (AGF), had demanded various sums of money from the oil companies on the basis of an October 17, 2018 judgement of the Supreme Court.
The apex court had, in the said judgement, ordered the Federal Government to immediately take steps to recover all revenues lost to oil-exploring and exploiting companies due to wrong profit-sharing formula since August 2003.
About five suits are currently before the Abuja and Lagos divisions of the Federal High Court stalling the Federal Government’s move to recover about $62 billion from international oil companies.
Sylva said although the government has started discussions on the matter, it remains a lost opportunity.
“Well, we have started discussions. Let us consider that as a lost opportunity, the money was not in a cupboard, they have taken it. Nobody can bring out that kind of money. I mean, we can’t get $62 billion.
“We can maybe get something from them, but not $62 billion. It’s an opportunity we have lost. We have already started discussions with them, but that is what is clear that it is a lost opportunity really,” the minister noted.
The minister explained that the existing Deep Offshore Act in the country, which is very old, is part of the problem and needs to be repealed if the government can get it right in terms of Production Sharing Contracts with the oil majors.
He said: “Most of these laws are old already and they need to be amended. The amendment of these bills really portends a lot for us. There are a lot of missed opportunities already. The previous law provided that when oil prices went beyond $20, we are supposed to negotiate and get some additional revenues.
“We didn’t take advantage of that and of course, when we approached the oil companies, the oil companies said, look, this is a lost opportunity, it’s not lost money because this money is not just there, it is not being kept in some cupboard.
“So, of course, it is a lost opportunity, we have to do something quickly to ensure that we don’t lose this opportunity in the future. That is why we have to ensure that this bill is passed. With this bill now, there will be some adjustments in the fiscal regime and we believe that the government will get a lot from the oil companies, especially their deep shore exploration activities.
“You know that the PSCs means that they invest the money, they recover their cost before the government begins to get some revenues from it. Unfortunately, the recovery, each time they keep investing and they keep recovering. So, if you don’t take time, you never really get to the point where you benefit at all, because, the oil companies are perpetually recovering cost. So, with the Deep Offshore Act Amendment, all those things are taken care of,” Sylva added.
Asked if such laws will take a retroactive measure, the minister explained that: “The amendment of the bill cannot be retroactive. Laws cannot be retroactive, we have to look forward.”
When the law came into effect 26 years ago, crude was selling for $9.50 per barrel. The oil companies currently take 80% of the profit from these deep-offshore fields, while the government receives 20%.
SOURCE: newtelegraphng.com
