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Oil firms to pay government $62b in contract default arrears

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Following the 2018 Supreme Court judgment on the Deep Offshore and Inland Basin Production Sharing Contract of 1993, oil companies operating in Nigeria are to pay the Federal Government $62 billion in default arrears.

The then military regime had entered into a contract with the oil firms where they agreed that the product, which was selling at about $9 per barrel, would attract renegotiation regarding sharing formula once the price exceeds $20 per barrel.

But sadly, the contract was neither reviewed nor the sharing formula readjusted hence the three plaintiff states of Akwa Ibom, Rivers and Bayelsa filed a suit against the Federal Government with the Attorney General of the Federation as a defendant.

Giving an update on the matter in a chat with newsmen yesterday in Calabar, the Attorney General of Akwa Ibom State, Uwemedimo Nwoko, stated: “On the 17th of October 2018, the Supreme Court gave judgment in favour of Akwa Ibom, Rivers, and Bayelsa states. It was actually a consent judgment because even the Attorney General of the Federation, who was a defendant in that case, entered into a settlement.”

Nwoko said the committee to work out modalities for payment “set up on the instruction of the Supreme Court to enforce that judgment has presented a demand of $62 billion calculated on well established principles on the matter to the oil companies for payment and instead of paying that money, they decided to play games with the judicial process.”

His words: “You might be aware that the Senate three weeks ago passed an amendment to the Production Sharing Contract Act, and in that amendment, it did not in anyway make a provision that tends to take away the rights vested in the states that won the case. If that had happened, we would have challenged it. But I want to say that I have read through the law as passed by the Senate which is yet to be assented to by the President but that amendment does not in any way impugn or tend to take away the vested right as created by the judgment of the Supreme Court on the three states that went to court.

“But besides that, the only thing I see is that the Senate in the amendment increased the period of review from five to 10 years which we are still looking at and may have to bring up with the Attorney General of the Federation and other stakeholders.”


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