International oil companies (IOCs) owe the country a staggering $62 billion in line with the provisions of the Production Sharing Contract law of 1993. The responsibility to collect it rests squarely with President Muhammadu Buhari, who is also the substantive minister of petroleum resources. The Supreme Court had in October 2018 entered a judgement in favour of the country. But the supine or indolent disposition of the authorities towards enforcing the judgement is intolerable and should change. Besides this amount, there is also a huge amount, which the administration established early during Buhari’s first term in office, to have been the value of undeclared quantity of crude lifted by some of the oil majors between 2010 and 2015.
Instead of Nigeria exerting its powers as a sovereign state to collect these debts, amid its mounting revenue challenges, the President has been roving around the world in search of loans to fund infrastructure. Recently, the World Bank gave Nigeria a $3 billion credit facility to ramp up the supply of electricity for productive activities. The President of the Nigeria Labour Congress, Ayuba Wabba, condemned the paradox and likened it to the country washing her hands with saliva by the river bank.
Under the 1993 PSC law, profit-sharing between Nigeria and its joint venture partners should be reviewed when the price of crude hits $20 per barrel or alternatively, 15 years after its commencement. Accordingly, the two options were due in 2000 and 2008 respectively. Angered by the seeming conspiracy surrounding its non-implementation, Akwa Ibom, Rivers and Bayelsa states — the richest oil-producing states which stand to benefit by its enforcement with the 13 per cent derivation — instituted a case at the Supreme Court, which entered judgement in their favour.
One year after, the government appears to be reluctant to actualise the apex court ruling. For instance, the Attorney-General and Minister of Justice, Abubakar Malami, confirmed on October 9 that the IOCs “short-changed” the country to the tune of $62 billion. He said, “Computing the amount that should be credited to the Nigerian government if that law was effectively applied, that translates to around $62 billion…” But a week later, the Minister of State for Petroleum Resources, Timipre Sylva, who ought to be on the same page with the Justice Minister, openly and sharply differed: “Nobody can bring out that kind of money; I mean we can’t get $62 billion.” According to him, that should be considered “as a lost opportunity.” Maybe, he concluded, the country might get something, but not the amount the Supreme Court had affirmed. This is strange.
An incongruous outburst such as this is an incentive to foreign elements to dare the country. If the highest court’s decision can be treated with levity by these defiant firms, aided by a cabinet that works at cross purposes and a weak Presidency, the country may have prepared more grounds for their further violations of its laws.
Given the hefty amount involved, the uncollected PSC funds should raise more alarm than the $9.6 billion P&ID contract sham did, which provoked a spirited response from the Presidency with an investigation and legal action to boot. Unequivocally, the acting Chairman of the Revenue Mobilisation Allocation and Fiscal Commission, Shettima Abba-Gana, said in February that the non-review of the law for 11 years, which then bled $60 billion from the treasury, meant “…it has been going to personal pockets.”
This allegation should not be taken lightly in a country that purports to be waging a war against corruption. It should be investigated and appropriate sanctions meted out to those that may be found culpable. It is inconceivable that the successive ministers of petroleum, the Group Managing Directors of the Nigerian National Petroleum Corporation, Department of Petroleum Resources and their legal divisions; and the National Assembly were all unaware of the PSC law. Decidedly, this is a clear case of perfidy and corruption on the rampage at the highest echelons of government.
Instructively, the $62 billion is far more than the $40.7 billion in foreign reserves. Buhari’s government would have had no business piling up an external debt stock by $15.3 billion since he (Buhari) assumed office if it had looked inwards, collected these debts and blocked all the leakages in the oil sector he had made Nigerians to believe would be done once he mounted the saddle in 2015.
An odious case like this explains why the country is now seen as a weak or failing state; and a reference point in bad governance, especially in running an oil economy. Paul Collier, a development economist and professor at the University of Oxford, said the mistakes by Nigeria in corruption, violence and power struggle for the control of oil resources have staunched her full potential from being achieved. Consequently, African countries that have newly joined the petro-dollar economy have turned Nigeria into a guinea pig on how not to manage an oil economy.
One of them is Ghana. Two of her researchers, Francis Tuokuu and Elias Kuusaana, in an article entitled: Escaping the oil curse in Ghana: Lessons from Nigeria, published in the International Journal of Business and Social Science, said, “These damning mistakes” observed by Collier, should be avoided “so that the resources from the oil sector can be used effectively for the betterment of Ghanaians.”
Nigeria’s business with the IOCs should not be at the expense of her sovereignty. And no country worth its name trifles with this. The United States demonstrated it when it slammed British Petroleum with an $18.7 billion fine in 2015 over the 2010 oil spill in the Gulf of Mexico, after a prolonged legal tango. Here too, the Supreme Court has given its verdict. Buhari’s government should enforce it.
