It burst onto the scene with a bang, shaking the elite oil industry.
By the time it left the scene – with a whimper – after four years, it took with it billions of dollars that should have gone into the Federal treasury.
But the promoters of Atlantic Energy Drilling Concepts Nigeria Limited (AEDCNL), which entered into a Strategic Alliance Agreement (SAA) with the Nigerian Petroleum Development Company (NPDC), seem to be quiet. Among them are prominent businessmen Jide Omokore and Kola Aluko.
The SAA, which paved the way for AEDCNL to operate some oil blocks during the administration of former President Goodluck Jonathan, has left the country short-changed by about $2 billion.
Besides, there are hundreds of millions of dollars in bank loans.
After four years in the alliance, everything suggests that NPDC and Atlantic Energy owe Nigerians a lot of explanations regarding how some oil blocks – OMLs 26, 30, 34, 42, 60, 61, 62 and 63 – were handled between 2011 and 2014. Not all the proceeds of the crude oil lifted in the four years seem to have been accounted for.
The SAA covered four oil blocks: OML 26 – FHN; OML 30 Shoreline; OML 34 – Niger Delta Oil, and OML 42 Neconde — all sold by Shell /Agip and Total.
It was obvious that the NPDC signed the SAA without due process as stipulated in the government’s procurement laws and policy.
With the sale of the four oil blocks in which the Federal Government owns 55 per cent, the National Petroleum Investment Management Services (NAPIMS), which oversees national investments in Joint Venture Companies (JVCs), Production Sharing Companies (PSCs) and Services Contract Companies (SCs), transferred the ownership to NPDC as the upstream producing arm of the NNPC.
Although the NPDC should have paid NAPIMS a signature bonus, no payment was made, leading to a loss of asset by the federation and loss of revenue that should have accrued to the nation’s coffers. This was confirmed by the PwC report on the audit of remittances from NNPC to the federation account after the allegation by Sanusi Lamido Sanusi, former governor of the Central Bank of Nigeria (CBN), who is now the emir of Kano, that no less than $20million oil money was missing. The audit showed that remittances into the federation account were not up to date.
The SAA was to enable Atlantic Energy provide funds and technical services and lift oil. Being a funding mechanism, the SAA is meant to enable the owner (NPDC) to accept its strategic partner (Atlantic Energy) to partake in the production sharing of the oil field at a fee (signature bonus). The strategic partner is expected to return, fund the operations and provide technical support so that it can be reimbursed directly from the production in subsequent periods.
Although a good idea that is said to be critical to the survival of the country’s oil and gas industry, the SAA was obviously not managed in the national interest; it has left many financial gaps.
Atlantic Energy was supposed to pay a signature bonus of $245 million to NPDC, but it paid $135 million – no thanks to legal terminology and simple arithmetics that only parties in the deal could explain. The balance was remitted to the account of unknown people .
Atlantic Energy approached two banks for loans. The loans, said the company, were meant for the payment of signature bonus and cash calls to NPDC. In 2011, the company took a loan of $490million. First Bank contributed $370million and Skye Bank $120million. At the beginning of the deal, Atlantic Energy paid the signature bonus of $135 and cash calls of $68 to NPDC from the loan, totalling $203 million out of the $490million provided by the two banks. The rest was sent overseas by the shareholders of Atlantic Energy. And all this was done through transfers, payments to companies and cash withdrawals without contracts.
In 2011, NPDC lifted crude oil (947,096 barrels) on behalf of Atlantic Energy and remitted $102m into the coffers of its strategic partner; instead of Atlantic Energy to lift oil and remit proceeds. Atlantic Energy, a mere portfolio company at the time it was handed the by contract, was untested to even secure an export permit for such a venture, as at the time, thus showing the level of involvement of the top echelons of the Petroleum Ministry and NPDC .
A detailed scrutiny of the cash calls schedules and other papers also showed what an industry source described as the “plundering galore” continued in 2012 and 2013. For example, in 2012, Atlantic Energy paid cash calls worth $168m, but lifted crude oil of about 3million barrels, valued conservatively at over $350 million. Despite the differentials in remittances, NPDC continued to look the other way as Atlantic Energy lifted about 2million barrels of crude oil, valued at about $240million, but paid cash calls of $68million.
In 2014, Atlantic Energy paid zero cash calls and lifted about 500,000 barrels of crude oil, valued at $54 million. The funds were transferred overseas as payments for vendors.
Omokore and Aluko incorporated the Atlantic Brass Development Company Limited on February 5, 2013. It was granted another set of SAA. The new SAA covered four blocks: OML – 60; OML – 61; OML – 62; OML – 63.
If the deals on OML 26, OML 30, OML 34, and OML 42 were reprehensible, what was done on OML 60, OML 61, OML 62, and OML 63 was questionable. Unlike in the previous deals in 2011 and 2012, when it paid a fraction of obligatory funds, the company simply pocketed all the proceeds, paying no signature bonus or any cash calls at all, despite lifting about 8 million barrels of crude oil valued at $800 million at the time.
All this went on unhindered, with the connivance of government ministries and parastatals, as cash was transferred to the accounts and investment companies in UK, Dubai and Switzerland. Mirror accounts of Atlantic Energy Brass were opened in the UK and Switzerland. All the proceeds of crude oil that were lifted were pumped into the accounts.
However, with the Goodluck Jonathan administration gone, the chicken seems to have come home to roost. The NPDC, which seemed to have condoned all the infractions of its strategic partner, has suddenly woken up from its slumber.
In a letter from NPDC, dated May 6, 2015, Atlantic Energy was asked to pay its outstanding indebtedness on OMLs 26, 30, 34, and 42, totalling $573,668,090 (five hundred and seventy three million, six hundred and sixty eight thousand, ninety dollars).
“This is to inform you that we have not yet received any payment on outstanding cash call obligations after our reconciliation sign-off, dated August 28, 2014. Kindly remit the sum of $573,668,090 (five hundred and seventy three million, six hundred and sixty eight thousand, ninety dollars) only, being amount due to OMLs 26, 30, 34, and 42,” said the letter.
An analysis of the reconciliation sheet revealed that the $573,668,090 was just a fraction of the cash calls, as some huge returns that were yet to be subjected to technical and financial analysis by the two parties were not included.
But the bad state of finances on OMLs 26, 30, 34, and 42 became insignificant when compared with that on OMLs 60, 61, 62 and 63 where Atlantic Energy owes NPDC $1,250,644,474.54 (One billion, two hundred and fifty million, six hundred and forty four thousand, four hundred and seventy four dollars).
In another letter from NPDC, dated May 6, 2015, Atlantic Energy was reminded of its outstanding indebtedness.
“This is to inform you that we have not yet received any payment outstanding cash call obligations after our reconciliation sign-off, dated August 28, 2014. Kindly remit the sum of $1,250,644,474.54 (one billion, two hundred and fifty million, six hundred and forty four thousand, four hundred and seventy four dollars) only, being amount due on OMLs 60, 61, 62 and 63,” the letter said.
Atlantic Energy , The Nation learnt, has not filed its accounts with the Federal Inland Revenue Service (FIRS) as stipulated by law. Using an influential lawyer, who sources said is the company’s legal backbone, Atlantic Energy has continued to hold on to the legal advice that it is not liable to tax.
In a letter from FIRS, dated February 17, 2015, Atlantic Energy was warned of the consequences of its refusal to submit its accounts and returns within the next 10 days. It was signed by Okeowo Taiwo and Ocheja E.F., FIRS’ manager (Tax) and deputy manager (Tax).
The FIRS letter reads: “It is worrisome to note that we are yet to receive the draft accounts/returns as promised. Let me remind you that the accounts/returns are long overdue for submission. You are advised to submit the accounts/returns within 10 days from the date of receiving this letter, failing which FIRS shall enforce compliance with the relevant tax laws.”
The Nation’s attempt to speak with Atlantic Energy did not yield any result – as at last night. It was impossible to speak with any official of the company as it has since closed shop. Members of staff said as at the time the office was closed, their salaries had not been paid for over one year.
source: the nation
|
