The Attorney General of the Federation and minister of Justice, Mohammed Bello Adoke, has said that the Nigerian National Petroleum Corporation (NNPC), can legitimately transfer its participating interest in the oil mining leases (OML) to its wholly owned subsidiary, the Nigerian Petroleum Development Company (NPDC).
The AGF provided the legal position during the investigative hearing of the Senate Committee on Finance on the alleged unremitted $49.8 billion oil revenue in respect of the status of $6 billion NPDC revenue which the suspended CBN governor, Mallam Sanusi Lamido Sanusi, had alleged was part of oil revenue that should have been remitted to the Federation Account by NNPC.
Mr. Adoke noted that by virtue of paragraph 14 to 16 of the First Schedule of the Petroleum Act, CAP.P.10 Laws of the Federation of Nigeria, LFN, 2004 (NNPC Act) and Regulation 4 of the Petroleum (Drilling and Productions) Regulations 1969 as amended, a holder of an OML or Oil Prospecting License (OPL) can assign its interest provided the consent of the Minister of Petroleum Resources is obtained.
“Furthermore, section 6(1)(C) of the NNPC Act empowers the NNPC to establish and maintain subsidiaries for the discharge of its functions.
The NPDC was thus incorporated as a limited liability upstream company of NNPC to carry out its upstream operations as envisaged by the law,” Adoke submitted.
He added that it is pertinent to note that the transfer of the participating interests in the OMLs in question, relates to a joint venture arrangement between NNPC, on the one hand and Shell Petroleum Development Company of Nigeria ltd, Nigerian Agip Oil Company Ltd (AGIP) and Total E & P (Nigeria) Limited on the other hand.
On whether all revenues derived by the NNPC from upstream operations including those under which OMLs in the JV operations are payable to the Federation Account, Adoke posited that NNPC is generally under an obligation to remit its revenue from the upstream petroleum operations into the federation account.
The AGF stated that the NNPC is required to pay into the Federation Account the ‘net revenue’ as opposed to the ‘gross revenue’.