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FG to recover N18.9 trillion backlog income from oil companies
Nigeria Government is planning to enforce a 2018 Supreme Court ruling that will it recover the sum of N18.9 trillion ($62 billion) from International Oil Companies (IOC) as its share of income from production sharing contracts.
According to a document prepared by the attorney general’s office, IOCs failed to honour a 1993 contract-law requiring the government to receive a greater share of revenue when oil price exceeds $20 per barrel.
Under the law, IOCs including Royal Dutch Shell Plc, ExxonMobil Corp., Chevron Corp., Total SA and Eni SpA agreed to fund exploration and production of deep-offshore oil fields and government gets its share of income from the profit after these oil companies cover their cost.
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As at the time the law came into effect, crude oil sold for $9.50 per barrel. The oil companies currently take 80% of the profit from these deep-offshore fields, while the government receives 20%.
The contract-law required that its provisions be reviewed after 15 years and subsequently every five years. The attorney-general’s office insists that the provision for a higher share of revenue doesn’t require legislative action to take effect.
The government had secured a supreme court ruling but the IOCs have gone to the Federal High Court to challenge the ruling of the apex court, arguing that the Supreme Court ruling doesn’t allow the government to collect arrears.
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