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Published On: Wed, Nov 22nd, 2017

Reps grill Shell over allege $157.5m unpaid royalties

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By Umar Muhammad Puma

The House of Representatives adhoc committee investigating revenue leakages from 2016 to 2017 has querried the management of Shell Petroleum Development Company (SPDC) over alledged wilful violation of Nigerian regulatory authorities in the oil and gas industry.
According to documents submitted to the Rep Jarigbe Agom Jarigbe-led panel by the Department of Petroleum Resources (DPR) said Shell has refused to pay outstanding revenue of $157,53,298 (US Dollars), owed since year 2000 on gas sales accruing to the federation account.
Members of the committe in reaction to an apparent refusal by Shell’s General Manager in charge of Government Relations, Bashir Bello to some of their questions told the oil giant that it cannot be a government within the government of the Federal Republic of Nigeria.
Bello had earlier informed the panel, saying “we were asked to bring details on unitised fields which we are exploring in a joint venture with the NNPC and the prove of reconciled payments to the DPR which we have brought”.
On gas sales which the DPR is accusing Shell of witholding royalty, the GM said: “We haven’t seen the data from DPR to confirm whether the outstanding is actually there or not”.
“On the applicability of paying royalty on gas sale, the company would want to know the details of where the discrepancies are coming from, relying on information from the DPR”, the official said.
A member of the panel at this point, noted that there was a meeting which held on May 19, 2017 where Shell acknowledged the need to reconcile data regarding its oustanding payments but has failed to see it through.
Also examining the documents, the panel chairman, Jarigbe said the submission was done late and as such cannot be studied by members for any informed inputs, adding that other issues raised by the DPR must be treated in whatever reconciliation there is to be done.
He noted that there is a pending royalty sum of $20,468,660 (US Dollars) of which nothing has been recovered, and another $54,683.62 on gas sale royalty, as well as $74,667 owed on gas flare penalty.
However, the Shell official responded that the company cannot understand where the discrepancies are coming from, saying that SNEPCO which is a subsidiary of Shell does not have any obligation for royalty, but SPDC and they have become subjects of further reconciliation.
Reacting, the Head of Planning at the DPR, Folasade Odunuga said “I don’t know where SPDC is coming from, and I know he has talked about reconciliation, but DPR has its data and as regulators, we know what we deal with and we are on top of our job. And as far as we are concerned, we are not going to share our regulatory role with Shell, we can only collaborate with them and these data are meant to get to the government of Nigeria”.
Asked why the DPR didn’t penalise IOCs for defaulting, Mrs Odunuga said it has been penalising them, to the extent of stopping them from lifting crude, and that section 40 of the Act empowers them to impound the assets of defaulting companies.
A member of the panel at this point said “Chairman, we canot allow Shell to behave with impunity and there can’t be government within a government”.
Amid protest by some members, the committee chairman ruled that Shell takes one week to iron out all differences with the DPR and get back to them.
Also responding to claims by Exxon Mobil that it does not sell nor flare gas and as such cannot be said to owe royalty on gas sales, as well as issues raised by Nigeria Agip Oil Company (NAOC) that it no longer owes the government on royalty, the DPR representative, Folasade Odunuga maintained that both companies have lied to the panel and Nigerians.
While Exxon Mobil hinged its argument on the provision of the Petroleum Profit Tax Act, Section 11 (14), saying that “gas transferred from gas to liquid shall not attract tax or royalty”, Agip on the other hand stated through its Tax and Fiscal Manager, Mr. Wole Agbede that there was a letter creating a certain gap which is responsible for the said outstanding being talked about, adding that reconciliation on that will be held and ironed out.

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