Again, court orders FG to pay Rivers, Akwa Ibom $3.3b oil revenue

 
Wed Jun 23rd, 2021 - Abuja (FCT)
 

A day after a Federal High Court sitting in Abuja ordered the Federal Government to pay $951 million to the Bayelsa State government as arrears of the 13 per cent derivative sum due to the state, another court yesterday ordered the Federal Government to pay over $3.3 billion to Rivers and Akwa Ibom states, as share of revenue from crude oil sales.

The amount formed the shares of the two states from the $62 billion the Federal Government recovered from some oil companies. Delivering the verdict, Justice Taiwo Taiwo ordered that $1.114 billion be paid to Rivers State, while $2.258 billion should be paid to Akwa Ibom State, being the amounts the states claimed against the Federal Government from the $62 billion recovered from oil companies.

The court also awarded a post-judgment interest of 10 per cent in favour of the plaintiffs until the final liquidation of the judgment. Plaintiffs in the suit are the Attorneys General of Rivers and Akwa Ibom states, while the Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami, was the sole defendant.

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Justice Taiwo held that the Federal Government admitted that the states’ monetary claims against it was caused by its refusal to defend the case when the court served the processes. He explained that the notice of intention to defend the case without joining issues with the plaintiffs was an error on the part of the Federal Government and was not enough in any litigation.

Declining to debunk, counter-claim or controvert the states’ claims on the oil revenue issue, he ruled that the Federal Government had admitted that the assertions of both states were true.

Justice Taiwo further held that the suit was founded on a Supreme Court judgment on how proceeds from sales of crude oil should be shared, adding that the defendant did not controvert the states’ claim on the recovery of additional $62 billion, in spite of several correspondences, hence, the law deemed unchallenged claims as true.

The court also rejected Federal Government’s argument that it could not pay the money it received from crude oil sales, adding that the defendant ought to have filed a bona fide defence to explain its position on the $62 billion oil earnings as required by law.

“By failing to file a defence to challenge the claims of $62 billion oil earnings of the two plaintiffs, I have no option than to hold that the Federal Government has no defence and I have no discretion to give judgment in favour of the plaintiffs.

“I hereby order that $1.114 billion be paid to Rivers State as its share from the $62 billion and $2.258 billion be paid to Akwa Ibom as its share from the oil proceeds,” he concluded.

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It would be recalled that in 2016, Rivers, Bayelsa and Akwa Ibom states through their Attorneys-General had sued the Federal Government, represented at the Supreme Court in Suit No: SC.964/2016, seeking a declaration that there is a statutory obligation imposed on the defendant (the Federal Government) pursuant to Section 16(1) of the Deep Offshore Inland Basin Production Sharing Act, Cap.D3 Laws of the Federation of Nigeria 2004, to adjust the share of the federation in the additional revenue accruing under the Production Sharing Contracts if the price of crude oil at any time exceeds $20 per barrel.

The states had asked the court to declare that the failure of the defendant to accordingly adjust the share of the Government of the Federation in the additional revenue in the Production Sharing Contracts following the increase of price of crude oil in excess of $20 per barrel in real terms, constitute a breach of the said Section 16(1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act and has therefore affected the total revenue accruing to the federation.

The three oil producing states further prayed the court to issue a consequential order compelling the defendant to adjust the share of the Government of the Federation in the additional revenue under all the Production Sharing Contracts in Nigeria’s Oil Industry within the Inland Water Basin Deep Offshore areas as approved by the defendant from the respective times the price of crude oil exceeded $20 per barrel in real terms and to calculate in arrears with effect from August 2003 and recover and pay immediately all outstanding statutory allocations due and payable to the plaintiffs arising from the said adjustments.

It will be recalled that at the Supreme Court, the Attorney General of the Federation opted for an out of court settlement and consequently, terms of settlement were duly drawn up by the parties and entered as the judgment of the court. The judgment specifically stated that the reliefs in the amended originating summons relating to the larger interest of the Federal Government of Nigeria and the entire citizenry of the Federal Republic of Nigeria shall be diligently implemented.

It was also agreed that the Attorney General of the Federation, working jointly with the plaintiffs should undertake to immediately set up a body and the necessary mechanism for recovery of all lost revenue accruing to the Federation Account in the past and up till the date of full recovery and accruing in future or an acceptable instalmental payments thereof within 90 days next from the date of execution of these presents or its being made judgment of the Court.

Following the judgment of the Supreme Court and in compliance therewith the Attorney General of the Federation, the defendant, constituted a body to determine the respective liabilities including the amount due to oil mineral producing states as derivation proceeds.

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The report of that body stated among others that Rivers and Akwa Ibom States were entitled to $1,114,551,610.00 and $2,258,411,586.00 respectively as derivation proceeds.

However, Attorney General of the Federation without recourse to the Governments of Rivers and Akwa Ibom States unilaterally claimed to have settled with International Oil Companies (IOCs). And it was this unilateral action on the part of the Attorney General of the Federation that led to the plaintiffs to file the suit at the Federal High Court in Abuja.

MEANWHILE, the Ijaw Youths Council (IYC) Worldwide, has urged the Federal Government to pay the $951 million awarded to Bayelsa State by the Federal High Court sitting in Abuja being arrears due it on 13 per cent derivation. IYC President, Peter Timothy Igbifa, in a statement, yesterday, in Port Harcourt, Rivers State, lauded the judgment.

He explained that the court, presided over by Justice Inyang Ekwo had, on Monday, ordered the Federal Government to pay $951 million arrears of 13 per cent derivation to the state.

Igbifa, however, urged the Federal Government not to appeal the judgment, saying the case filed by Bayelsa State was evidence of the entrenched injustice in the distribution of revenue between the centre and the Niger Delta states.
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source: Guardian