S/Court Fixes Nov 14 To Hear Crude Oil Revenue Sharing Formula Suit

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Abuja –   The Supreme Court on Thursday fixed Nov. 14 to hear a suit on alleged outdated oil revenue sharing formula instituted against the Federal Government.

Justice Bode Rodes-Vivour led six justices of the apex court to announce the date after a preliminary session on the suit.

The Bayelsa and Rivers States had enlisted the court to interpret various constitutional provisions and the Deep Offshore and Inland Basin Production Sharing Contracts Act.

The plaintiff had urged the apex court to conduct the interpretations in relation with fiscal responsibility of the defendant to them.

The News Agency of Nigeria (NAN), reports that the Attorney-General of the Federation is the sole defendant.

The plaintiffs had urged the court to invoke its jurisdiction by interpreting Sections 80 (1), 162 (1), (2) and (10 of the constitution).

They also called for the interpretation of Section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contract Act of 2004.

The plaintiffs said the suit related to fiscal responsibility of the defendant regarding alleged unaccounted oil revenues due to them.

According to them, the suit also deals with mandatory stipulations in Sections 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act.

The plaintiffs averred that the defendant was vested with ownership and control of all crude hydrocarbon petroleum oil and gas in the country.

They said this ownership power vested on the defendant included the collection of revenue into the federation account and consolidated revenue fund.

They further said those oil revenues were held in trust for and its component federating states.

“In furtherance of the statutory responsibilities imposed on the defendant, it established various production sharing contracts over various concessions in the inland basin and deep offshore areas, some of which fall into the plaintiffs geographical areas.

“These production sharing contracts became necessary as the country was almost bankrupt in the mid 1980s to late 1990s.

The country could not afford its counterpart funding for further exploration and production in the oil industry, then shifting to the rich and prolific offshore reserves.

“The necessity for juicy concessions to oil giants with fiscal incentives, attractive waivers and pegged negligible taxes were offered in exchange for their sourcing or applying own in exchange for shared profit oil funds’’, they averred.

They further said the deep offshore and inland basin production sharing contracts Act had expressly stated that `profit oil’ was the remainder of the available crude oil after deduction of royalty oil, tax oil and cost oil.

“The `profit oil’ shall be shared between the defendant and the oil companies in the manner specified in the production sharing contracts.

“The deep offshore and inland basin production sharing contracts Act further put a ceiling on the said profit oil sharing formula to the extent that the price per barrel of crude oil does not exceed 20 dollars per barrel.

The plaintiffs had asked the court to decide among others, whether by virtue of Sections 162(1), (2) and 10(a-b) of the constitution in view of the alleged irregularities, they were not underpaid and short-changed in real terms.

The plaintiff are seeking a consequential order compelling the defendant to adjust the share of the Government of the Federation as approved by the defendant the respective times the price of crude oil exceeded 20 dollars per barrel.

They said the shortfall should be calculated with effect August 2003.

The plaintiffs, therefore, said all outstanding statutory allocations due and payable to them arising the said adjustments should be settled.

Mr Lucius Nwosu (SAN) counsel to the plaintiffs said the suit was not a hostile litigation against warring parties.

“It is like a litigation intended to interpret the provisions of sections 16(1) of the Deep Offshore and Inland Basic Production Contracts Act.

“And this requires that at any time that the price of crude oil exceeds 20 dollars per barrel in real terms that the share of the profit oil revenue should be reviewed’’, he said.

According to him, such a review will make it economically advantageous to the federal government.

Mr Tijani Gazeli, counsel to the defendant, said the AGF was yet to file his process as the required information needed agencies of government in the oil sector was still trickling in.