The House of Representatives on Tuesday threatened to invoke its constitutional powers to compel Chief Executive Officers of International Oil Companies (IOCs) to account for their stewardship on the Joint Ventures agreements since 1990 to 2022 and alleged tax evasion and capital allowances applied for.
Speaking during the investigative hearing, Chairman, Ad-hoc Committee investigating Nigeria National Petroleum Company (NNPC) Limited’s JV agreement/operations, Hon. Abubakar Fulata, alleged that Shell Petroleum Development Company Limited (SNEPCO) has been claiming capital allowances from Federal Government without having the Certificate of Acceptance on Fixed Assets (CAFA).
During the investigative hearing, the lawmakers also investigate the ownership and operator of a foreign crude sales account into which the sum of $23,122,553.14 was paid between March and December 2021 and withdrawal
The House of Representatives on Tuesday threatened to invoke its constitutional powers to compel Chief Executive Officers of International Oil Companies (IOCs) to account for their stewardship on the Joint Ventures agreements since 1990 to 2022 and alleged tax evasion and capital allowances applied for.
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Speaking during the investigative hearing, Chairman, Ad-hoc Committee investigating Nigeria National Petroleum Company (NNPC) Limited’s JV agreement/operations, Hon. Abubakar Fulata, alleged that Shell Petroleum Development Company Limited (SNEPCO) has been claiming capital allowances from Federal Government without having the Certificate of Acceptance on Fixed Assets (CAFA).
During the investigative hearing, the lawmakers also investigate the ownership and operator of a foreign crude sales account into which the sum of $23,122,553.14 was paid between March and December 2021 and withdrawn.
Hon. Fulata maintained that “a company’s policy can never supersede an Act of the National Assembly which provides for capital allowance and for Shell which has operated in Nigeria for many years even before independence, not to comply is a major infraction.”
While stressing that the House will ensure that all the taxes are paid into the Federation Account, he alleged that “Most companies rely on subsidiary issues to evade primary issues. Just like the National Assembly enacting a law which contradicts the Constitution. Once you enact a law which contradicts the Constitution. That law is dead on arrival. Neither the company nor a country itself can enter into an agreement that violates its laws. An agreement with a company can never supersede an Act of the National Assembly.
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“What you need to do once you enter the agreement, you obtain the certificate that would guarantee you compliance. Once you have it you are covered. But if you go ahead enjoy capital allowances without the CAFA certificates, you have completely violated Nigerian tax laws which is a gross misconduct as far as we are concerned. Especially for Shell which has operated in Nigeria for many years, I think even before Nigeria got independence. So, I think it is a very serious infraction.”
While responding to questions on the concerns raised by the lawmakers, SNEPCO Chief Executive Officer, Mr Osagie Okunbor who confirmed that Shell and SNEPCO have been enjoying capital allowances since inception, urged the Committee to withhold judgement pending the presentation of relevant documents.
He said: “What I have tried to clarify is as you have explained. There is a basis of statute and law that enables you to make those claims. What I am saying is that as a law-abiding organization, we have applied the basis of that law. Whether there is an actual certificate, because 500,000 for our kind of business for assets, is a pretty low threshold.
“If you would allow us to present what we have in this respect. I am appealing that you withhold judgment pending when we present,” Mr Okunbor urged.
While ruling, Hon. Fulata directed the SNEPCO CEO to: “Avail us of details of all the assets on the basis of which you have been claiming capital allowance on the next adjourned date.”
Also, during the investigative hearing, the lawmakers threatened to invoke relevant constitutional powers to compel the Managing Director of New Cross Petroleum Limited to appear in person at the next hearing, otherwise will declare him wanted and be produced by the police in handcuffs.
While responding, the Managing Director of New Cross Exploration & Production, Mr. Sodje Victor who disclosed that New Cross E&P came into being in 2015, while the asset was acquired in 2014, added that “NewCross Exploration and Production was engaged in the joint venture with NNPC, we have 45% and NNPC 55% and Newcross Petroleum are in PSC with NNPC.”
He explained that the company sourced for money from nine banks.
“But unfortunately, we have not been able to make profit. We have capital allowance computed and we have unrelieved losses, so we’ve not been able to enjoy the capital allowance at any point in time to date.”
While responding to a question on the up-to-date payment of Petroleum Profit Tax (PPT), he said: “FIRS can actually confirm here that we have accumulated unrelieved losses, we could not pay PPT on losses. PPT is payable on profit. So, right now we are struggling to turn the curve by making sure that all the losses we’ve encountered in the past. It’s only when we make profit that we are to pay PPT.”
Mr Sodje who disclosed that the company has since 2015 experienced a slide in its revenue, argued that the company recorded zero revenue in 2021 and has been running at loss over the past few years.
After a series of questions posed by the lawmakers, he however affirmed that “we are making small-small profits.”
To this end, Hon. Abubakar Fulata said: “Who is the other person, I will give you the opportunity to come along with him. But we did a letter to that effect, we told you verbally here, then we did a letter.”
While reacting to his submission, Hon. Mark Gbillah maintained that all the Managing Directors of the three companies are under obligation to appear in person to give account of their stewardship during the investigative hearing.
The payments are: on the 6th of January 2021, payment of $3,332,620 paid into the account. On the 17th March 2021 payment of $1,131,163.14 were made. 30th of June 2021, $4,595,280 was paid into the account. On the 18th of October 2021, the sum of $2,513,950 was paid into the account.
“On 20th of October, 2021 again, the sum of $8,886,220 was paid into the account. On the 1st of October, 2021, $656,000 was paid into the account. On the 22nd of November, 2021 $679,330 was paid into the account. On the 21st of December, 2021, $1,319,700 paid into the account. A total of $23,122,553.14 was paid into the account,” Hon Fulata noted.
In a swift response, Mr. Sodje who earlier confirmed that the account was operated by NNPC, noted that the inflow into the crude oil, was Federal Government’s equity, adding that when the company produces crude, ours is 45%, Federal Government is 55%. In line with the self-funding arrangement that the NNPC puts in place, NNPC wanted each operator to be funded from the revenue that accrued from that particular operator.
To this end, Hon. Abubakar Fulata said: “Who is the other person, I will give you the opportunity to come along with him. But we did a letter to that effect, we told you verbally here, then we did a letter.”
While reacting to his submission, Hon. Mark Gbillah maintained that all the Managing Directors of the three companies are under obligation to appear in person to give account of their stewardship during the investigative hearing.
The payments are: on the 6th of January 2021, payment of $3,332,620 paid into the account. On the 17th March 2021 payment of $1,131,163.14 were made. 30th of June 2021, $4,595,280 was paid into the account. On the 18th of October 2021, the sum of $2,513,950 was paid into the account.
“On 20th of October, 2021 again, the sum of $8,886,220 was paid into the account. On the 1st of October, 2021, $656,000 was paid into the account. On the 22nd of November, 2021 $679,330 was paid into the account. On the 21st of December, 2021, $1,319,700 paid into the account. A total of $23,122,553.14 was paid into the account,” Hon Fulata noted.
In a swift response, Mr. Sodje who earlier confirmed that the account was operated by NNPC, noted that the inflow into the crude oil, was Federal Government’s equity, adding that when the company produces crude, ours is 45%, Federal Government is 55%. In line with the self-funding arrangement that the NNPC puts in place, NNPC wanted each operator to be funded from the revenue that accrued from that particular operator.
