A civil society group, Socio-Economic Rights and Accountability Project (SERAP) is threatening legal action if the President Umaru Musa Yar'Adua government “continues to fail and/or neglect to collect overdue revenue from Shell Petroleum Development Company (SPDC); Elf Petroleum Nigeria Ltd; Agip Nigeria PLC; Chevron Oil Nigeria PLC; Total Nigeria PLC; and Exxonmobil Corporation.”
The group said the alleged failure by the government to “fully collect overdue revenue from the oil companies involved and ensure its transparent and efficient use for infrastructural development and the good of the country is a violation of Section 16 of the Deep Offshore and Inland Basin Production Contracts Act of 1999; the 1999 Nigerian Constitution and Nigeria’s international human rights obligations and commitments.”
In a letter dated 18 October 2009 and signed by Solicitor to SERAP, Mr Femi Falana, and sent to Attorney General of the Federation and Minister of Justice Mr Michael Kaase AONDOKAA (SAN), the group threatened to “take steps to seek the leave of court for an order of mandamus compelling the government to discharge its responsibility under Section 16 of the Act if the government fails to act within 7 days of the receipt and/or publication of the letter.”
Section 16 (1) of the Act states: The provisions of this decree shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, real terms, the share of the government of the federation in the additional revenue shall be adjusted under the Production Sharing Contracts to such extent that the Production Sharing Contracts shall be economically beneficial to the government of the federation.
“Under international law, Nigeria is obligated to use its maximum available resources to achieve economic, social and cultural rights of its citizens. Implicit in this obligation is the responsibility of the government to exercise due diligence in the collection of all due revenue. The more resources a state has the greater its ability to provide services that guarantee economic, social and cultural rights. The failure of the government to collect accruable revenue therefore constitutes a violation of Section 16 of the Act and of the international legal rights of the deprived, and itself constitutes an international wrong”, the group argued.
According to the group, “the Administration of former President Olusegun Obasanjo between May 1999 and January 2007 failed to collect over $18 billion owing to negligence to propose relevant amendments to the Deep Offshore and Inland Basin Production Contracts Act of 1999 to the National Assembly. Most of the operators have been producing at close to peak production since they brought the fields on stream in 2005. A detailed breakdown of what each of the fields produced shows that Shell’s Bonga did 58.5 million barrels in 2006, 93.4 million barrels in 2007, 64.4 million barrels in 2008 and 16.7 million barrels in 2009. Other figures are: Mobil’s Erha - 53.4 million barrels (2006), 74.9 million barrels (2007), 72.4 million barrels (2008), and 23,325,664 barrels (2009); Chevron Agbami – 19.4 million barrels in 2009; while Agip’s Abo produced 3.6 million barrels (2004), 10.4 million barrels (2005), 9.2 barrels (2006), 6 million barrels (2007), 6.6 million barrels (2008) and 3 million barrels in 2009.”
“When these volumes produced by the IOCs are computed against the average price of crude oil (in real terms), which OPEC’s website put at $42.04, $59.09, $70.98, $75.21 and $98.50 per barrel in 2004, 2005, 2006, 2007 and 2008, respectively, this translates to $34.7 billion that has accrued from four of the five fields between 2004 and 2008. Given that the price of crude exceeded $20 per barrel from 2004 to date, had the government’s share been adjusted under the PSCs to such extent that it is economically beneficial to it, the amount that could have accrued to the Federation Account would be over $18 billion”, the group further added.
The group argued that “however, the persistent failure and lack of due diligence by the government to fully implement the provision of the Act, by proposing amendments to the Act, is a failure of responsibility, which has also contributed to a massive reduction in resources available to the government, which in turn has limited the ability of the government to access, harness and use the country’s maximum available resources for the full realization of human rights of millions of Nigerians who continue to face absolute poverty. It is also contributing to underdevelopment and exacerbating inequality in the country.”
“It is difficult to image how genuine and significant reductions in poverty would be achieved or how Nigeria would meet its commitments with respect to the UN Millennium Development Goals (MDGs) if accruable revenue to the Federation Account is not diligently collected by relevant government agencies and authorities”, the group further argued.
Signed
Executive Director
18/10/09
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