Malami Tells IOCs to Pay $62.1bn PSC Arrears

Iyobosa Uwugiaren in Abuja

The Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami SAN, has asked international oil companies (IOCs) to settle their unpaid arrears of approximately $62.1 billion to Nigeria.

The minister, in a statement issued yesterday in Abuja by his media aide, Dr. Umar Gwandu, said with the signing of the Deep Offshore and Inland Basin Production Sharing Contracts Act CAP D3 Law of the Federation of Nigeria 2004 (as amended) in 2019 for oil exploration in deep offshore and inland basin, the federal government was to get more shares of the oil revenue, which the international companies did not pay.

He put the estimated arrears as at 2018 at $62.1 billion.
Speaking on the media reports on the recovery fee, the minister said the matter was not about percentage of the commission to be given to the recovery agency, but of patriotic desire for the country to recover the revenue it deserved.

Noting that the five per cent commission was a reduction from what it used to be during the past administration, the minister said the five per cent proposed as success contingent fees was an unprecedented reduction from what it used to be.

“The five per cent as a recovery fee is a product of innovation introduced by the federal government upon the assumption of office of the President Muhammadu Buhari as against the 30 per cent and above which was the traditional fee by the previous administration.

“The comparative basis is not the Lagos budget as the considerable parameter, but the amount due for the recovery which in the circumstance is approximately $62, 190, 679,793.00 as at December 2018.
“When you convert $62, 190,679, 793 billon into naira, it will give you an amount more than 20 trillion naira,” he stated.
According to him, by virtue of Section 162 of the Constitution of the Federal Republic of Nigeria 1999 as amended, the amount in question is more than enough for three year budget of Nigeria considering the 2020 budget of N10.3 trillion.

Malami said the focus should not be about the composition and who the recovery agents are, but that the funds belonging to the Nigerians must be recovered for the government to carry out more development projects for the benefits of the people.
He added: “Above all, volume of the fees payable to the recovery agents, which in all cases is contingent upon recovery, has never been a subject of executive contention in this matter.

“It does not accord with reason and logic for the Federal Government of Nigeria to overlook, forgo and condone loss of $64 billion on account of mere five per cent fee payable upon recovery.”
Three oil producing states of Bayelsa, Rivers and Cross River had filed an action in the Supreme Court on April 27, 2019 praying, among other things the recovery and payment immediately of all outstanding statutory allocations due to them.

On January 19, 2018, Trobell International (Nig) Ltd forwarded a proposal to the Office of the Attorney General of the Federation requesting to be engaged as an agent to recover the PSC arrears.
Following the approval, Trobell on April 12, 2018 engaged the services of lawyers, engineers, financial experts and petroleum experts nominated by the three state governments to work out the recovery plan.