Senate constitutes Adhoc Committee to investigate alleged N1.2trn oil revenue loss

The Senate, on Tuesday, constituted a seven-man Adhoc committee to investigate a N1.2 trillion oil revenue loss to the Federal Government in its upstream oil sector.

SINOPEC ADDAX Petroleum is being fingered as the multinational oil firm responsible for the loss.

Senator representing Niger North, Aliyu Sabi Abdullahi is to chair the Adhoc Committee which has six other lawmakers as members.

The investigative team include; Gershom Bassey; Biodun Olujimi; Ahmad Baba Kaita; Jubril Isah; Michael Nnachi; Clifford Ordia; and Haliru Jika.

The resolution to investigate the revenue loss was a sequel to a motion sponsored by Senator representing Cross Rivers South, Gersom Bassey.

Bassey in his motion noted that in 2000/2001, the Federal Government had provided a Fiscal Incentive Package to Addax Petroleum Company that saw the reduction of the company’s Petroleum Profit Tax from 85 per cent in the 1998 Production Sharing Contract (PSC) to 60 per cent in the 2001 Fiscal Incentive Package; and the companies share of oil lifting increase from about 45 per cent to 56 per cent.

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According to the lawmaker, Addax Petroleum followed through by investing to grow production from about 10,000bopb in 2000 to over 100,000bopd by 2008.

He further revealed that after the purchase of Addax Petroleum by Sinopec in 2009, “the assets have witnessed significant production decline due to poor investment decisions making production levels to fall presently to approximately 30,000bopb with no developed gas.”

Bassey observed that: “Sinopec Addax despite holding a 100 per cent Production Sharing Contract (PSC) with oil mining leases OML-123, OML-124, OML-126 has refused to stick to its end of the bargain to continue investing in the operated assets leading to a revenue loss of about $3.55 billion per year by the Nigerian Government.”

The lawmaker further observed that: “in the fourth quarter of 2018, the lack of competent operations by Sinopec-Addax made five Nigerians General Managers and their deputies exit the company voluntarily.

The Senate expressed concern that given the lack of any demonstration by Sinopec-Addax to stay in Nigeria because of the company’s unwillingness to purchase an office building and its refusal to invest for production growth, it is shocking that NNPC continues to Honour the elapsed gentleman’s agreement that made Sinopec Addax operate these assets and lift 70 per cent of the crude oil they are producing resulting in a huge annual revenue loss to the Nigerian Government;

“Worried that in 2016 the process of Value For Money (VFM) audit of $1.37 billion of cost oil that had been lifted by Addax Petroleum from 2097 to 2014 was initiated with the understanding that it would take three months to conclude;

“Further worried that since the initiation of the VFM audit in 2016, Sinopec Addax Petroleum has continued to enjoy oil over the lift and have frustrated the process of conclusion of the audit to allow for the equitable and accurate determination of lifting;

“Disturbed that the COVID-19 Pandemic has negatively impacted on our economy and has thrown Nigeria into debt meanwhile the Federal Government has over N1.2 trillion of its oil revenue lying with Sinopec-Addax Petroleum Company; and

“Further disturbed that Sinopec Addax Petroleum will be leaving an abandonment/decommissioning liability cost of about $750 million at the expiration of their stay in Nigeria come 2022.”

NIGERIAN TRIBUNE