We are Counsel to Addax, an international company with multi billion U.S. dollars investment in Nigeria.
Our attention has been drawn to the false and malicious story published in some news media (LEADERSHIP, PREMIUM TIMES) alleging a multi million dollar oil scam designed to swindle Nigeria. The story sadly misrepresents and distorts facts and mischievously attempted to paint as a holy crusade, an extortionist plot against Addax Petroleum Nigeria by HURAIN, an “NGO”.
The story is even more disturbing as no attempt was made to seriously engage with Addax for its own side of the story by either Leadership Newspaper or the Premium Times).
The publication clearly lacks balance. It is unfair and deliberately undermine efforts of the Government to attempt to resolve a straight forward commercial dispute and ultimately attract/retain genuine foreign investors.
First We must put on record that the Product Sharing Contract (PSC), the ‘Agreement’, the foundation, which is now subject of litigation, had a history of due process. The Leadership/Premium story failed to report this.
Addax is the successor company to Ashland. Ashland in 1995, complained tothe Ministry of Petroleum Resources of the grave operational and business challenges they faced under the then existing Fiscal Terms and the PSCwhich hampered operations and investment in respect of OMLs
In response to Ashland’s appeals, the Government constituted an Inter-Ministerial Committee to amongst other things, review and if deemed appropriate, recommend Fiscal Incentives for onshore and shallow offshore PSCs of the OMLs. It was in the course of this that Addax acquired all the interests of Ashland in the said Leases.
The Government Panel submitted its recommendations to the Federal Government. Thereafter the President of Nigeria, who was also then the Hon Minister of Petroleum, directed the Special Assistant to the President on Petroleum, Engr Funsho Kupolokun, to issue the Letter dated 21st November 2001, “the SIDE LETTER”. The letter was addressed to FIRS and NNPC.
By the “Side Letter”, the Federal Government conveyed approval of a new Fiscal Regime for onshore and shallow offshore PSCs including a tranches Royalty Scheme and 60% Petroleum Production Tax Rate.
The “Side Letter” was also forwarded to Addax by NNPC vide a letter dated 11th December, 2001, for implementation of the computation of the Plaintiffs’ applicable taxes and Royalty obligations.
These Fiscal Terms were reinforced three years later by letter dated 24th August, 2004 signed by the Special Adviser to the President and Director-General, Budget Office, Mr Olabode Agusto.
As a result and in order to actualize the aspirations of growing Nigeria’s hydrocarbon reserve base and production capacity, Addax has over the years thereafter made significant investment of over $5 Billion USD in the OMLs.
This Huge investment has inured to the mutual benefit of Nigeria, with Billions of US Dollars paid in taxes. Oil Production also exponentially increased from 10,000BPD to over 100,000 BPD.
From about 2012, the Ministry of Petroleum Resources and FIRS in breach of due process, later unilaterally tried to review the Production Sharing Agreement, altering the agreement and attempting to impose extra taxes and levies on Addax. If this is allowed it will have serious negative and apocalyptic effect on the finances and capital base of the company. It will alsoundermine the commitment of government to attract foreign investment.
All efforts to get these Agencies to resolve this matter failed. Addax had to go to Court to enforce the PSC as well as the ‘side letters’ for of contract, enforcement of the Doctrine of Legitimate Expectation as well as for misrepresentation.
Contrary to the Leadership/Premium Times Report, Addax has no prayers in the case in court for any monetary settlement. The principal prayer in the case is for a declaration that the Defendants are bound by the terms of the ‘’Side Letters’’ dated 20th December, 2001, signed by Engineer Funso Kupolokun, Special Assistant to the President on Petroleum and the ‘’Side Letter’’ dated 24th August 2004 signed by Mr Olabode Agusto, Director General/Special Adviser to the President on Budget.
The second prayer is for a declaration that the terms of the said “side letters” respectively constitute the Subsisting Fiscal Regime existing between the Plaintiffs and the Defendants and which determines the Tax and Royalty Obligations of the Plaintiffs.
We also want to put on record that all relevant parties were represented in court contrary to the story that the Office of the Attorney General of the Federal has no representation in the court. All parties are dully represented.For the avoidance of doubt, (we received correspondence from) the Director of Civil Litigation, who represented the Federal Attorney General, Ministry of Petroleum Resources was represented by Tunde Fagbounlu, SAN; Nigeria National Petroleum Corporation was represented by Chief J.Gaizama,SAN,while the Federal Inland Revenue Service was represented by Barr. MaryOkpe.
It is important not to mislead the public on matters of international contract of this nature. This case is about a breach of on-going contract which the Federal Government had entered into since before 2001. The contracts and concessions were duly and properly approved by President Obasanjo, as President and as Minister of Petroleum (between 1999-2007).
Libeling, Blackmailing or engaging in vulgar abuse of the Federal Attorney General will not solve the problem. And it is indeed a shame that common and shady characters are are being allowed to dabble into matters of this nature.
Addax is ready for a peaceful settlement but is not desperate to settle out of court. We are ready to prosecute the case to its logical conclusion. But it will be very expensive for who ever loses and found to be in breach at the end.
It was this realization that prompted the exploration of the possibility of an out court settlement, an option which, as at now, has not even been consummated
For us, as counsel (to Addax), we have a duty to protect and seek enforcement of our client’s contractual rights at the same time help Nigeriangovernment to ensure protection of foreign investment.
The concoction or allegation of a “scam” or “under hand deal” as painted in the report exist only in the imagination of HURAIN, the “NGO” and their sponsors who think they can use the media to extort money from our client. That will not happen, not while we are Counsel to Addax.