Representatives probe withdrawal of $23 million deposited in foreign crude account in 2021

The House of Representatives on Tuesday threatened to invoke its constitutional powers to hold the CEOs of international oil companies (IOCs) to account for their handling of joint venture agreements from 1990 to 2022 and allegations of tax evasion and capital cost allowances claimed.

Speaking at the investigative hearing, the Chairman of the Ad Hoc Committee to Investigate the JV Deal/Operations of the Nigeria National Petroleum Company (NNPC) Limited, Hon. Abubakar Fulata, alleged that Shell Petroleum Development Company Limited (SNEPCO) claimed depreciation from the Federal Government without having the Capital Assets Acceptance Certificate (CAFA).

During the investigative hearing, lawmakers are also investigating the ownership and operation of an offshore crude sales account into which $23,122,553.14 was paid between March and December 2021 and withdrawn.

Hon. Fulata argued that "a company's policy can never replace an Act of the National Assembly which provides for capital allocation and for Shell which operated in Nigeria for many years even before independence, failing to comply is a major violation."

While emphasizing that the House will ensure that all taxes are paid into the Federation's account, he alleged that "most businesses rely on subsidiary issues to evade primary issues. Just like the "National Assembly enacting a law that contradicts the Constitution. Once you enact a law that contradicts the Constitution. That law is dead on arrival. Neither the company nor a country itself can enter into an agreement that violates its An agreement with a company can never replace a law passed by the National Assembly.

"What you need to do once you've made the deal, you get the certificate that would guarantee you compliance. Once you have it, you're covered. But if you continue to enjoy write-offs without CAFA certificates, you have completely violated Nigerian tax laws which is gross misconduct as far as we are concerned.Especially for Shell which has been operating in Nigeria for many years I think even before Nigeria gained independence. So I think it's a very serious offence."

While responding to questions on the concerns raised by lawmakers, SNEPCO Managing Director Mr. Osagie Okunbor, who confirmed that Shell and SNEPCO have benefited from write-offs since their inception, urged the committee to suspend judgment pending submission of the relevant documents.

ALSO READ FROM NIGERIAN TRIBUNE

He said, "What I have tried to clarify is as you have explained. There is a basis in statute and law that allows you to make these claims. What I am saying is that 'as a law-abiding organization, we have applied the fundamentals of this law. Whether there is an actual certificate, because 500,000 for our type of business for assets, is a fairly low threshold.

“If you allow us to present what we have in this regard. I appeal for you to suspend judgment pending when we present ourselves,” Mr. Okunbor urged.

During his decision, the Hon. Fulata asked the CEO of SNEPCO to: "Provide us with details of all assets on which you have claimed capital cost allowance at the next adjourned date."

Furthermore, during the investigative hearing, lawmakers threatened to invoke the relevant constitutional powers to compel the managing director of New Cross Petroleum Limited to appear in person at the next hearing or he will declare him wanted and will be produced by handcuffed police.

While responding, the Managing Director of New Cross Exploration & Production, Mr. Sodje Victor, who disclosed that New Cross E&P came into existence in 2015, while the asset was acquired in 2014, added that “NewCross Exploration and Production was engaged in the joint venture with NNPC, we have 45% and NNPC 55% and Newcross Petroleum is in PSC with NNPC.”

He explained that the company had raised money from nine banks.

"But unfortunately we weren't able to make a profit. We've calculated the capital cost allowance and we have uncompensated losses, so we haven't been able to take advantage of the capital cost allowance at any time at this time. day."

While answering a question about the current Petroleum Profits Tax (PPT) payment, he said, "FIRS can actually confirm here that we have accrued uncompensated losses, we could not not pay PPT on losses. PPT is payable on profits. So right now we are working to invert the curve making sure that any losses we have had in the past. It is only when we make profit we have to pay PPT."

Mr. Sodje, who disclosed that the company had experienced a decline in revenue since 2015, argued that the company recorded no revenue in 2021 and had been loss-making for the past few years.

After a series of questions from lawmakers, however, he...