Mixed Reactions As Presidency Sets Aside Supreme Court Judgement, Terminates Oil Recovery Contracts

The presidency has terminated oil recovery contracts, which the Ministry of Justice signed with Trobell International Limited on the recovery of $43.747b from Petroleum Sharing Contractors (PSCs) pursuant to Supreme Court’s consent judgement of April 5, 2018.

Accordingly, it has suspended the 2018 Supreme Court judgement on Deep Offshore and Inland Basin Production Sharing contracts of 1993 with oil companies operating in Nigeria from which the 36 states, Federal Capital Territory (FCT) and the Federal Government were to derive $62 billion as arrears from default based on the committee’s report that worked out modalities for payment on Supreme Court orders to enforce the judgement.

In 1993, the military government entered into a contract with oil companies as there was a glut of oil and gas in the deep offshore and inland basins of Nigeria’s territory and the cost of exploration of the oil was huge.

However, the parties agreed that oil sold at $9 per barrel at the time of the contract, but that if the price exceeded $20 per barrel at any point, both parties would renegotiate the sharing formula as contained in the law.

But the contract and sharing formula were not reviewed, which was detrimental to the Federal Government hence Akwa Ibom, Rivers and Bayelsa states decided on the instructions of their governors and their Attorneys General to file a suit against the Federal Government with the Attorney General of the Federation as defendants.

On October 17, 2018, the Supreme Court ruled in favour of the plaintiffs in a consent judgement because even the Attorney General of the Federation, who was also a defendant in the case, agreed to some terms of the settlement, so it was a consent judgement delivered by the Supreme Court.

Thereafter, a committee to work out modalities for payment set up on the instructions of the Supreme Court to enforce the judgement, presented a $62b demand calculated on established principles on the matter to the oil companies for payment.

But Abba Kyari, who is Chief of Staff (COS) to President Muhammdu Buhari, in a leaked letter to some journalists dated October 16, 2019 with reference number SHCOS/01/A/885c said,

“Kindly be advised that Mr. President has approved that the Attorney General of the Federation and Minister of Justice (HAGF) should immediately comply with Mr. President’s directives of March 4, 2019, and terminate the Recovery Contract which the Ministry of Justice had signed with Trobell International Limited.

“Regarding the purported recovery of $43.747b from the PSCs pursuant to the consent judgement of the Supreme Court of April 5, 2018.”

The letter, which has caused ripples in Akwa Ibom, Rivers and Bayelsa states further directed the Office of the COS “to convene an all-Parties meeting comprising the HAGF, Minister of State for Petroleum Resources, Attorneys General of the litigating states and Group Managing Director of the Nigeria National Petroleum Corporation (NNPC) to review the current state of activities and harmonise a government’s position to resolve the issues with a view to setting aside the Supreme Court consent judgement.

Reacting to the directives, Attorney General of Akwa Ibom State and Commissioner for Justice, Uwemedimo Nwoko said, “that letter has been brought to my attention, and I find it a chagrin that a Nigerian government official, who should be working in the larger interest of the Nigerian people, will seek to set aside a Supreme Court’s judgement that is actually in favour of Nigerians.

However, when contacted yesterday on the matter, Attorney General of Rivers State, Dr. Zach Adangor, said he could not immediately comment on the issue, as he was busy with other matters, but promised to call back later for a response.

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