Outstanding Royalties And Funds Diverted From Federation Account Not Less Than $103.7bn – Falana
A Senior Advocate of Nigeria (SAN), Mr Femi Falana, has asked the National Assembly to collaborate with anti-graft agencies for the recovery of oil sale funds lost from the federation’s account.
According to a letter sent to Senate President Ahmad Lawan, Mr Falana claimed that about “$103.7 billion” generated from oil sale have been withheld or diverted from the nation’s coffers.
Mr Falana in his letter argued that if the nation can recover the money lost to oil sale, there would be no need to seek foreign loans.
Falana’s letter comes on heels of an announcement by the Finance Minister, Mrs Zainab Ahmed, stating that Nigeria has secured a $3 billion loan from the World Bank in April.
This fund according to Mrs Ahmed, would be used for reforming the nation’s power sector.
However, Mr Falana is of the opinion that the nation would not need to get into debt if the National Assembly can work with the anti-graft agencies to locate and recover the funds he alleges are missing from the country’s purse.
But Falana said Nigeria lost a larger part of the proceeds from oil as a result of the non-implementation of the deep offshore and inland basin production contracts act.
In his letter dated October 18, the Senior Advocate said he drew the attention of the Federal Government to the loss of billions of dollars arising from the non implementation of the Deep Offshore and Inland Basin Production Contracts Act.
Falana further stated that based on the provisions of the law the Federal Government and the International Oil Companies entered into Production Sharing Contracts which provided for an upward review of the loyalties whenever crude oil was sold beyond $20 per barrel in the international market.
He stressed that even though the price of crude was beyond $100 per barrel in the recent past both parties ignored the provisions of the law to the detriment of the national economy.
The human rights activist alleged that in the course of his work on leakages in the national economy, he and his team have also discovered that sometime in 2006, the management of the Central Bank of Nigeria (CBN) illegally withdrew $7 billion from the nation’s foreign reserves and fixed same in 14 commercial banks.
He said Godwin Emefiele, the CBN Governor, had also ignored their demand for the recovery of the $7 billion and the accrued interests from the 14 commercial banks.
Mr Falana further stated that apart from the expected revenue of $1.5 billion from the implementation of the amended deep offshore and inland basin production contracts act, the outstanding royalties, fixed deposit and other funds withheld or diverted from the federation account are not less than $103.7 billion.
Below is the Senior Advocate’s letter to the Senate President in which he urges the National Assembly to look into recovering the funds which he argues will keep the country from having to borrow.
October 18, 2019
Dr. Ahmed Lawan,
The Senate President,
National Assembly Complex,
Third Arms Zone,
Request to ensure the recovery of $105 billion by the Federal Government
In November 2015, we drew the attention of the Federal Government to the loss of billions of dollars arising from the non implementation of the Deep Offshore and Inland Basin Production Contracts Act. Based on the provisions of the law the Federal Government and the International Oil Companies entered into Production Sharing Contracts which provided for an upward review of the loyalties whenever crude oil was sold beyond $20 per barrel in the international market. Even though the price of crude was beyond $100 per barrel in the recent past both parties ignored the provisions of the law to the detriment of the national economy.
We were equally compelled to call on the national assembly to amend the Deep Offshore and Inland Basin Production Contracts Act in favour of the Nigerian people. Although the call was ignored but we kept up the pressure on the executive and legislative branches of the federal government to do the needful.
However, we are delighted to know that the national assembly has belatedly resolved to amend the Deep Offshore and Inland Basin Production Contracts Act. In fact, the Senate has passed the Amendment Bill. Upon the passage of the the said bill last week you had this to say:
“The Bill must be passed and concurred to by the House of Representatives and of course, assented to by President Muhammadu Buhari who is on the same page with us.
As a patriotic Senate, there is no way, we would have yielded to pressures and deny our dear country $1.5 billion that will be accruing into her account on yearly basis based on contractual sharing agreements put in place by the new provisions which become law when finally assented to by the President.”
Mr. Senate President, we fully agree with you that the Deep Offshore and Inland Basin Production Sharing Contracts (Amendment) Bill ought to be speedily passed by the House of Representatives and assented to by the President since the law will fetch the country the sum of $1.5 billion per annum. While we commend the Senate for the initiative in passing the Bill we urge the national assembly to ensure the recovery of the funds listed below:
1. In his reaction to our allegation of economic sabotage by the public officers who deliberately refused to implement the Deep Offshore and Inland Basin Production Sharing Contracts Act the immediate past Minister of State in the Ministry of Petroleum Resources, Dr. Ibe Kachukwu admitted that the non implementation of the law by some unnamed public officers had led to a loss of oil revenue of over $60 billion. But due to the reluctance of the federal government to enforce the law the governments of Akwa Ibom, Bayelsa and Rivers States instituted an action at the Supreme Court in 2016 to compel the Federal government to recover the accrued royalties.
In the judgment delivered in the case on October 18, 2018 the Supreme Court directed the Federal government to recover the royalties that had not been collected from the International Oil Companies for the past 18 years. Based on the judgment of the apex court the Federal government has demanded for the immediate payment of the sum of the sum of $62 billion by the defaulting oil companies. But the affected oil companies have filed fresh suits in the federal high court challenging the claim of the federal government. It is hoped that the federal high court will speed up the hearing of the new cases in view of the categorical pronouncement of the Supreme Court on the right of the federal government to recover the outstanding royalties.
2. The National Extractive Industry and Transparency Initiative (NEITI) has disclosed that sum of $22 billion and N481 billion has been withheld from the Federation Account by the NNPC and some oil companies. Without any justification whatsoever the federal government has ignored the findings of the NEITI. Convinced that the Federal Government has violated the provisions of the NEITI Act we have instituted an action at the federal high court seeking for the implementation of the findings of the NEITI.
3. A group of Nigerian lawyers engaged by the NIMASA found that the crude oil stolen from Nigeria by well known oil and shipping companies between 2011 and 2014 and discharged at the Philadelphia Port in the United States was 60.2 barrels. The said stolen oil has been valued at $12.7 billion. Curiously, all efforts to persuade the federal government to recover the fund have fallen on deaf ears. Out of sheer frustration the lawyers who indicted the oil and shipping companies have instituted civil suits in the federal high court for the recovery of the said sum of $12.7 billion.
4. In the course of our work on leakages in the national economy, we discovered that sometime in 2006 the management of the Central Bank of Nigeria illegally withdrew the sum of $7 billion from the nation’s foreign reserves and fixed same in 14 commercial banks. For reasons best known to him, the Governor of the Central Bank, Mr. Godwin Emefile has ignored our persistent demand for the recovery of the principal sum of $7 billion and the accrued interests from the 14 commercial banks.
In the light of the foregoing, it is clear that apart from the expected revenue of $1.5 billion from the implementation of the amended Deep Offshore and Inland Basin Production Contracts Act the outstanding royalties, fixed deposit and other funds withheld or diverted from the Federation Account are not less than $103.7 billion.
If the National Assembly, under your able leadership, is prepared to resist pressures from vested interests and muster the political will to recover the said fund Nigeria will have no business begging for foreign loans from China, African Development Bank and the World Bank. Therefore, the National Assembly may wish to collaborate with the anti graft agencies in the recovery of the said sum of $103.7 billion without any delay.
Please accept the assurances of our highest esteem.
FEMI FALANA, SAN FCI Arb.
CC: Femi Gbajabiamila Esq.
House of Representatives,
National Assembly Complex,
Third Arms Zone,
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