$62.1bn PSC arrears: Malami adamant on payment of N774bn ‘recovery’ commission

$62.1bn PSC arrears: Malami adamant on payment of N774bn ‘recovery’ commission

Wednesday, November 27, 2019 7:43 am

The Attorney General of the Federation and Minister of Justice, Abubakar Malami

Mr. Abubakar Malami, the Attorney-General of the Federation and Minister of Justice is vigorously defending his plan to pay five per cent recovery cost to a consulting company he has engaged to help recover about $62.1 billion alleged unpaid arrears from international oil companies (IOCs) for the country.

As explained by the Minister in a statement issued by his media aide, Dr. Umar Gwandu, on Tuesday, the demand for the arrears from the oil companies followed the signing of the Deep Offshore and Inland Basin Production Sharing Contracts Act CAP D3 Law of the Federation of Nigeria 2004 (as amended) into law

He added that with the new law, the federal government was to get more shares of the oil revenue international companies did not pay, with at least,  $62.1 billion already due for payment as arrears at at 2018.

But reports in the past few days had indicated that President Muhammadu Buhari had directed the cancellation of contract signed by Malami with a consultancy firm, Trobell International (Nig) Ltd for the recovery of the arrears of the oil payment.

The President, according to reports, believed that the five per cent of the total sum to be paid to Trobell as indicated in the contract signed by AGF with the company in 2018 was on the high side, especially when the government can write to the oil companies to demand for the payment.

An online newspaper, The Cable had indicated that with the agreement, Trobell would receive $2.15 billion — or N774 billion — as commission.

According to the report, in a letter to Malami dated October 16, 2019, Abba Kyari, the chief of staff to the president, said Buhari directed that the minister to 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.”

In a statement released on Tuesday, the Minister did not dispute the presidential order.

But he put up a vigorous defence for retaining the contract, arguing that the five per cent commission proposed as success contingent fees was an unprecedented reduction from what it used to be.

“The five per cent as a recovery fee is a product of innovation introduced by the federal government upon the assumption of office of the President Muhammadu Buhari as against the 30 per cent and above which was the traditional fee by the previous administration.

“The comparative basis is not the Lagos budget as the considerable parameter, but the amount due for the recovery which in the circumstance is approximately $62, 190, 679,793.00 as at December 2018.

“When you convert $62, 190,679, 793billon into naira, it will give you an amount more than 20 trillion naira,” he stated.

Malami noted that by virtue of Section 162 of the Constitution of the Federal Republic of Nigeria 1999 as amended, the amount in question is more than enough for three year budget of Nigeria considering the 2020 budget of N10.3 trillion.

Accrding to the Minister, the focus should not be about the composition and who the recovery agents are, but that the funds belonging to the Nigerians must be recovered for the government to carry out more development projects for the benefits of the people.

“Above all, volume of the fees payable to the recovery agents, which in all cases is contingent upon recovery, has never been a subject of executive contention in this matter.

“It does not accord with reason and logic for the Federal Government of Nigeria to overlook, forgo and condone loss of $64 billion on account of mere five per cent fee payable upon recovery.”

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