The federal government of Nigeria has sued Shell Petroleum Development Company of Nigeria Limited and its allied Shell Western Supply & Trading Limited for nearly $407 million as it accuses the multinational of illegally siphoning the nation’s crude oil. The government says that $404.74 million is the total sum of the missing revenues from the shortfall/undeclared/under-declared crude oil shipments of the government, including interest on the money. This lawsuit brought forward by the Nigerian government is its latest endeavour in its battle to recover all monies siphoned from the state.
Prior to the lawsuit filed against Shell, the cash-strapped Nigerian Federal Government previously demanded $490.5 million and $145.8 million from two international oil companies (IOC’s), Agip and Total respectively, for undeclared crude oil shipped out of the country between 2011 and 2014. The oil firms are among up to 15 oil majors targeted by the Nigerian government for the recovery of $17 billion in deprived revenue. The government’s most lucrative fine remains that of telecommunication giant MTN earlier in the year of $1.3 billion. The correlation between the government’s urgent need for funding and urgency with which it is indicting multinationals cannot be ignored, and evidence suggests that the prosecutions are more than a witch-hunt.
Nigeria’s economic woes are popularly attributed to diversion of funds by corrupt officials, so much so that the illicit activities of multinational corporations (MNC’s) have operated to a large extent under the national radar. The amount allegedly taken out of the country by these companies comes at the cost of infrastructural development and robs the financial system of much-needed liquidity. The case filed against Shell, in particular, appears to have plausible grounds for prosecution.
A number of consortium experts employed by the government to carry out intelligence based tracking of Oil and Gas uncovered major discrepancies between the Shell export records from Nigeria and the import records from respective ports of entry in the USA. A comparison of the import and export data showed that the crude oil shipments declared to have been exported from Nigeria were less than what was declared to have been imported into the US, using the same shipment by the same vessel on the same bill of lading. In some cases, shipments were completely undeclared to the requisite authorities.
As Nigeria, which is currently facing a recession, is looking for alternative avenues to funds its national budget, it is no surprise that it has chosen to pursue retroactive action against the alleged transgression of MNC’s. This, however, does not take away from the validity of the fines and levies. On the other hand, international oil corporations would find this a particularly torrid time to have to pay fines, given the huge losses already suffered in the hands of the Niger Delta Avengers this year.
For more insight, kindly listen to podcast below:
