The Petroleum Industry Act, 2021 and the unveiling of the Nigerian National Petroleum Company Limited

  1. INTRODUCTION

The Petroleum Industry Act 2021 (“PIA”) was signed into law by the President of the Federal Republic of Nigeria, His Excellency, Muhammadu Buhari, GCFR on 16 August 2021. The Act is to provide legal governance, regulatory and fiscal framework for the Nigerian petroleum industry and the development of host communities. Prominent amongst the many innovations of the PIA is the creation of the Nigeria National Petroleum Company Limited (“NNPCL”) which was officially unveiled on Tuesday, 19 July 2022.

Prior to now, the Nigerian petroleum industry had become so synonymous with the Nigerian National Petroleum Corporation (“NNPC”). The NNPC has been the government’s main entity primarily vested with the responsibility of managing the joint venture relationships between the Nigerian Government and multinational companies licensed to carry out exploration, exploitation, production and distribution of petroleum in Nigeria. It was by its creation and structure, a state-owned entity/corporation devoid of any ownership of shares.

However, the NNPCL based on the provisions of the PIA was designed to be a limited liability company and to succeed the NNPC with its specific objectives enumerated in Section 64(a)-(m) of the PIA. The NNPCL was to be incorporated within 6 (six) months from the commencement of the PIA and was eventually incorporated on 21 September 2021 in accordance with the Companies and Allied Matters Act 2020.

  1. HIGHLIGHTS OF THE PIA AS IT RELATES TO THE NNPCL

The PIA makes extensive provisions for the formation, structure, objectives and governance of the new entity “NNPCL” in Sections 53 to 65 of the Act. The referenced sections are contained in Part V, Chapter One of the PIA. The major highlights of the provisions are:

  • Ownership and Non-Transferability of Shares
    • Ownership of shares of the NNPCL is to be vested in the Government at incorporation and held by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in equal portions on behalf of the Federation. One peculiar point to note as regards the shares of the NNPCL is that the shares are not transferable except with the approval of the Government and endorsement of the National Economic Council on behalf of the Federation.
    • In the event that the said shares are transferred, it shall be on equal proportion basis of the shares held by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated.
  • Funding
    • The NNPCL is set up to operate as a commercial entity without reliance on government funding and it is mandated to expressly state the restrictions in its Memorandum and Articles of Association. It is also required to pay its share of all fees and taxes or other form of payments to the Government under any lease or license.
  • Limitation of Action upon Transfer of Assets, Interests and Liabilities of NNPC
    • Upon the conclusion of the transfer of the assets, interests and liabilities of NNPC to the NNPCL or to the Government or extinguishing of same within the stipulated period of 18 months from the commencement of the PIA, the NNPC shall cease to exist and all pending actions commenced by or against NNPC with regards to the assets, interests and liabilities of NNPC before the transfer shall be enforced or continued by NNPCL. However, the PIA places a limitation on the commencement of any action against the NNPCL with regard to the transferred assets, interest and liabilities where the time for instituting such proceedings would have expired had such transfer to NNPCL not occurred.
    • The transfer is not in any way deemed to have created a new cause of action for the Creditors of NNPC or any party to a contract with NNPC which was entered into before the date of Transfer.
  • Appointment of NNPCL to Act as Agent of NNPC
    • The Minister of Petroleum upon due consultation with the Minister of Finance shall appoint the NNPCL as an agent of NNPC for the sole purpose of managing the process of winding down the assets, interests and liabilities of NNPC and the cost is to be borne by the Government.
  • Automatic Transfer of Employees
    • The provision of the PIA mandates that all employees of the NNPC are deemed to be employees of NNPCL and the said employees are to enjoy any related entitlements as specified under any applicable law and to also take benefit of terms and conditions not less favourable than what they enjoyed prior to the transfer. The NNPCL is required as a matter of law to fulfil all statutory obligations in terms of Pension owed to the employees by NNPC. This in effect means that the employees do not lose their jobs merely by reason of the transition. 
  • Governance
    • The PIA provides for the composition of the Board of the NNPCL whose members shall be appointed or removed by the President of the Federal Republic of Nigeria. The Board is required to carry out its responsibilities as enumerated under Section 63 (1) of the PIA in line with applicable principles of corporate governance and best practices.
  • Establishment of Incorporated Joint Venture Companies
    • The PIA makes provision for the restructuring of any Joint Operating Agreement (“JOA”) as an Incorporated Joint Venture Company. This option is solely on a voluntary basis as may be agreed by parties to the JOA in respect of any upstream petroleum operation.
  1. CONCLUSION

It is clear from the highlights in the foregoing paragraphs that the NNPCL is structured to run as an independent company based on commercial objectives in line with best practices and standard principles of corporate governance. These are indicators that the NNPCL is primed to compete at the world international level with other major operators in the Oil and Gas sector.

It is the hope of Nigerians that with the unveiling of the new NNPCL, Nigeria will be able to attain global relevance in the Petroleum Industry.

Energy, Constitutional Law & Electoral Matters and Transport (ECT) Section

  • Chinedu Anyaso – chinedu.anyaso@paulusoro.com
  • Esther Samuel – esther.samuel@paulusoro.com
  • Chijioke Obute – chijioke.obute@paulusoro.com

Mrs. Mfon Ekong Usoro Served as a Consultant of the IMO at the Regional Workshop for the Heads of Maritime Administrations

 

L-R: Capt Sunday Umoren – SG, Abuja MoU; Capt Dallas Laryea – IMO Regional Rep; Mfon Ekong Usoro-IMO Consultant; Capt Babacar Diop – IMO Consultants; William Azuh – Head Africa Section, IMO Integrated Technical Cooperation Programme.

Our Managing Partner, Mrs Mfon Ekong Usoro served as a consultant of the International Maritime Organisation at the Regional workshop for the heads of Maritime Administrations(MARADs) organised by the Memorandum of Understanding on Port State Control for West and Central African Region(Abuja MoU) in collaboration with the International Maritime Organisation (IMO) held on 9-11 May, 2022 at Eko Hotel, Lagos.

The Abuja MoU is one of the Nine(9) Regional MoUs established pursuant to the IMO Resolution A.682(17) of 1991 and implemented on the 22nd October, 1999 in Abuja covering 22 Countries with 18 of these countries having full member Status.

The workshop was established to reiterate and amplify the core objectives which informed the founding and establishment of the Abuja MoU which includes the elimination of substandard shipping, prevention of marine pollution and improvement of the living and working conditions of seafarers aboard ships.

On Day 1, our Managing Partner who has extensive National, regional, continental and international experience in the sector led conversations on the Responsibilities of MARADs as flag state to include implementation of the IMO and domestication of relevant international instruments, establishment of institutions for Enforcement as well as Evaluation and regular assessment of recognized organizations. She also discussed the responsibilities of Coastal States to include the need to guarantee right if Safe passage of ship, the obligation to prevent pollution and the provision for reception activities. Mrs Usoro further trained participants on Regional Port State Control (PSC) regimes highlighting the Status, need for harmonization and Co-operation with other PSC regimes.

On day 2, Mrs Usoro led the breakout sessions with Heads of MARADs to understand the challenges they face, their Expectations from Abuja MoU and the Expectation of Abuja MoU from MARADs.

On the third and final day, Mrs Usoro led the analysis of the annual report and presented the draft record of Action Plans for adoption by all participants.

As a remark, she reiterated the need for gender balance in the Maritime sector, applauded the countries with female representatives and encouraged others to open up the spaces for women to take advantage.

The workshop had in attendance 19 African Countries and also had in attendance Mr William Azuh, head of African Section, Technical Cooperation Division of the International Maritime Organisation, Dr. Magdalene Ajani, the Permanent Secretary of the Federal Ministry of Transportation as representative of the Honourable Minister for Transportation, the representative of the Director General of Nigerian Maritime Administration and Safety Agency(NIMASA),  the Secretary General of the Abuja MoU, Captain Sunday Umoren and Captain Babacar Diop as the lead consultant of the IMO.

The frontline role of Mrs Usoro in the Maritime sector remains a great encouragement for women to take advantage in the space and would serve as an inspiration to others as the International Day for Women in Maritime is celebrated on 18th May, 2022.

Our Principal Partner, Paul Usoro, SAN Inaugurated as Chairman of the Board of Dakkada Luxury Estate, Akwa Ibom State

We are pleased to announce that our Principal Partner, Paul Usoro, SAN was inaugurated as the Chairman of the Board of Dakkada Luxury Estate by the Governor of Akwa Ibom State, Mr. Udom Emmanuel on Tuesday, 05 April 2022.

The 5-man board which is led by our Principal Partner is tasked with the responsibility of managing the luxury estate which will operate as a limited liability company without government’s expense. The need for the luxury estate is to expand the housing and educational facilities in order to accommodate the influx of people into the state.

The expertise of our Principal Partner in delivering this task is without a doubt and we are confident that the vision behind the establishment of the luxury estate would be achieved. 

PUC Congratulates Our Partner, Mrs. Adetola Bucknor-Taiwo on the Success of the NBAWF International Women’s Day Conference

Paul Usoro & Co (“PUC”) was well represented at the 2022 edition of the Annual Conference of the Nigerian Bar Association Women Forum (NBAWF) held in commemoration of the International Women’s Day 2022.

PUC played a frontline role in the actualisation of the success of this year’s conference which was themed “The Invisible Hand of Gender Bias: Championing Collective Change” as we were privileged to have our partner, Mrs. Adetola Bucknor-Taiwo serve as the Chairperson of the Conference Planning Committee, assisted by our Associate Trainee, Unwanaobong Ekanem who also served as a member of the Logistics and Technical Sub-Committee. The Conference featured a total of six plenary sessions on topics ranging from the “Hidden Biases in Courtroom Dynamics: Gender and the Judiciary” to “Shattering Stereotypes: Heels in the Boardroom – A Case for Navigating or Negotiating the Corporate Ladder”.

It is worthy to note that the NBAWF was inaugurated in September 2019 by our Principal Partner, Paul Usoro, SAN during his tenure as the President of the Nigerian Bar Association.

PUC is dedicated to creating a culture where everyone regardless of gender, is given equal opportunity to thrive and we will do our part in support of the fight against stereotypes and biases especially in the workplace.

PUC Facilitates Training on the Legal Framework for Combating Piracy and Other Maritime Crimes in Nigeria

Paul Usoro & Co. (“PUC”) was engaged by the Federal Ministry of Transport (“FMOT”), Nigeria to facilitate a 2-day training on the legal framework for combating piracy and other maritime crimes in Nigeria.

The training came up on the 26 – 27th of January 2022 in Abuja and covered the historical perspective to piracy, the substantive law on piracy in Nigeria (Suppression of Piracy and Other Maritime Offences Act 2019) and the practice and procedure of prosecuting maritime offences in Nigeria.

The PUC team at the training was led by our Managing Partner, Mrs. Mfon Usoro and the presentations were delivered by our Partner, Mrs. Adetola Bucknor-Taiwo, Senior Associate, Mr. Ime Edem Nse and Navy Captain Warradi Enisuoh as a guest speaker.

The event was insightful and well received by the participants.

After a 25 Year Legal Tussle PUC Makes Another Bold Statement at the Federal High Court for the Nigerian National Petroleum Corporation (NNPC)

Paul Usoro and Co (“PUC”) successfully represented and secured a remarkable victory for the Nigerian National Petroleum Corporation (“NNPC”) at the Federal High Court (“FHC”), Lagos Judicial Division in a Judgment delivered on 18 January 2022, after twenty-five (25) years of turbulent legal battles in SUIT NO. FHC/L/CS/1186/96: ROBINSON EDOBOR & ORS v. NNPC.

The legal tussle started sometime in 1996 when the Plaintiffs vide a Writ of Summons, Statement of Claim and other accompanying processes (“Originating Processes”) commenced a Suit against NNPC seeking inter alia declaratory reliefs, perpetual injunction, refund of excess monies paid as housing allowances, as well as damages and an Order compelling NNPC to transfer the Certificate of Occupancy in respect of the houses occupied by the Plaintiffs to them. The Plaintiffs’ claims were predicated on the fact that on or about 16 March 1977 in the Daily Times Newspaper Publication, the then Federal Military Government under the Leadership of General Olusegun Obasanjo introduced a Housing Policy Scheme to facilitate home ownership for Nigerian workers. The said Housing scheme which was open to all participating organization had three (3) categories of houses, to wit: Two (2) Bedroom at the rate of N12, 000.00, three (3) Bedroom at the rate of N16,500.00 and four (4) Bedroom at the rate of N21,000.00 respectively and the said amounts were paid by the Plaintiffs.

According to the Plaintiffs, the Federal Government sequel to the housing policy, vide a Letter of Allocation, allotted parcels of land at Satellite Town in Lagos to NNPC to develop, build houses, and deduct on monthly basis certain sums from their gross housing allowances with the sole aim of transferring ownership of the said houses to the Plaintiffs. Rather than comply with the government directives, NNPC issued a vacation Notice to the Plaintiffs and equally coerced them to sign an undertaking to vacate the house before they could be paid their entitlements.

PUC on behalf of NNPC mounted a very robust defence against the Plaintiffs and also Counterclaimed against them, seeking inter alia declaratory and injunctive reliefs. It was PUC’s arguments that NNPC was not bound by the then policy of the FGN, the Letter of Allocation did not provide that the developed staff quarters would have to be on owner/occupier basis. In point of fact, the quarters were governed by NNPC’s housing policy, which empowered NNPC to generally deduct 81/3% (eight and one-third percent) as cost of rent, from the annual income of its employees resident in the NNPC Staff quarters. The rent deduction is discontinued upon the vacation of the houses by any of the allottees’ or any other condition(s) provided by NNPC. However, the policy was discontinued several years before the determination of the Plaintiffs’ employment.

In support of the immutable principle that policy of the Federal Government was not a law binding on NNPC, PUC relied on the Court of Appeal decision in Wilkie v. FGN & ORS (2017) LPELR-42137, whereat, the Court upheld the afore-referenced principle. In addition, PUC established before the FHC that the Plaintiffs were not privy and/or party to the contract of allocation between NNPC and the then Federal Government as such, the Plaintiffs’ lacks the competence to have instituted the Suit. Moreover, the Plaintiffs did not establish that by the Letter of Allocation, the developed quarters were to be built on owner/occupier basis. What is more? The Plaintiffs did not even produce the Letter of Allocation before the Court, the plank upon which their case rested on.

The Court after the examination of the issues in contention agreed with PUC’s submissions and granted all the reliefs sought in the Counterclaim. In its Judgment, the Court raised two issues for determination to wit:

  1. Whether the Plaintiffs have placed sufficient materials and evidence before the Court to be entitled to reliefs sought?
  2. Whether the Defendant/Counterclaimant is entitled to the reliefs claimed in the Counterclaim against the Plaintiffs?

The Court held that the Plaintiffs failed to discharge the burden of proof on them to be entitled to the properties in issue. The Court went further to hold that the Counterclaimant’s claim succeeds having been able to prove its claims before the Court. The Court in its analysis held that the Letter of Allocation being the contract between the FGN and NNPC which contained the disputed conditions of allocation was capable of settling the Suit one way or the other. However, failure on the part of the Plaintiffs to produce same in proof of their case notwithstanding the issuance of a notice to produce on NNPC was tantamount to not discharging the burden of proof based on preponderance of evidence. Also, the Court held that the Letter of Allocation being a contract document between the FG and NNPC, the Plaintiffs were not privy to same and so could not sue for its enforcement.

As it relates to the Federal Government’s directives and policy in respect of the Housing Scheme, the Court held that Government policies cannot create contract and have no force of Law. In the final analysis, the Court agreed with the entirety of PUC’s submissions and held that the Plaintiffs’ Suit was frivolous and lacking in merit and dismissed same. On the other hand, the Court upheld NNPC’s Counterclaim in its entirety.

What is significant about this PUC victory, apart from the illuminating questions of law and facts that were in issue, is the fact that PUC reaffirmed again, its remarkable ability to competently defend the interest of its Clients.

Trailblazing PUC: The Case of Mobil Producing Nigeria Unlimited & Exxon Mobil Corporation v. Registered Trustees of Mineral Resources Awareness Initiative of Akwa Ibom State & Anor.

Click here to read the CTC of the judgement.

Just within days of preventing a calamitous upset in the Nigerian Mining sector by securing a court victory in what is arguably Nigeria’s biggest mining legal tussle, Paul Usoro & Co (“PUC”) made another profound statement on Friday 14 January 2022 by recording a second tumultuous courtroom win, the echoes of which this time around, reverberated well beyond the shores of Nigeria right up to the offices of international oil giant, Exxon Mobil Corporation, in the United States of America.

In a Suit commenced by a Writ of Summons, Statement of Claim and other accompanying Processes dated 12 May 2017 (“Originating Processes”) and based on a  fiat issued to them by the Attorney General of Akwa Ibom State, the Registered Trustees of Mineral Resources Awareness Initiative of Akwa Ibom State and one other instituted Suit No: FHC/UY/CS/67/2017; Registered Trustees Of Mineral Resources Awareness Initiative Of Akwa Ibom State & Anor V. Mobil Producing Nigeria Unlimited & Anor at the Federal High Court, Uyo Judicial Division against Mobil Producing Nigeria Unlimited (the 1st Defendant or MPNU) and Exxon Mobil Corporation, a foreign corporation resident in the United States of America (the 2nd Defendant or EMC). The 1st Plaintiff, a non-governmental organization claiming to act for the people of Akwa Ibom State was seeking an assortment of declaratory, executory and monetary reliefs, principal amongst which was for an order of Court compelling MPNU to relocate its head office from Lagos State to Akwa Ibom State. The Plaintiffs anchored this interesting relief on a document called the Standard of Business Conduct document published on EMC’s website which the Plaintiffs claim constitutes a contract between them on the one hand and MPNU and EMC on the other. The Plaintiffs assert that by the said standard of Business Conduct issued by the parent company EMC and binding on the subsidiary, MPNU, the said MPNU was obligated to locate its headquarters in Akwa Ibom State as against Lagos State because MPNU’s operations are in Akwa Ibom State.

The Plaintiffs also made a claim for the payment/remittance of accrued tax from 1987 till the date of Judgment for sums running into billions of dollars.

Continue reading “Trailblazing PUC: The Case of Mobil Producing Nigeria Unlimited & Exxon Mobil Corporation v. Registered Trustees of Mineral Resources Awareness Initiative of Akwa Ibom State & Anor.”

PUC Records Another Remarkable Victory at The Federal High Court for Dangote Group

Paul Usoro and Co (“PUC”) reaffirmed its place as the foremost commercial litigation firm after successfully representing and securing a remarkable victory for Dangote Industries Limited & Dangote Cement Plc (“Dangote Group”) at the Federal High Court, Benin Judicial Division in a twin decision delivered on 10 January 2022 in the Suit No.: FHC/B/CS/7/2016:BUA INTERNATIONAL LIMITED & ANOR v. HONOURABLE MINISTER OF MINES & STEEL DEVELOPMENT & ORS (“BUA Group Suit”) and  Suit No. FHC/B/CS/74/2016 between DANGOTE INDUSTRIES LIMITED & ANOR V BUA INTERNATIONAL LIMITED & ORS (“Dangote Group Suit”).  Beyond the recondite issues of law canvassed by our Firm, this precedent-setting decision prevented what would have become a near-catastrophic tsunami in the Nigerian mining industry. Had PUC’s arguments been rejected, the outcome would have been the nullification of all mining leases issued by the Mining Cadastre Office (“MCO”) since 2008 when the agency was created, and this would have thrown the entire mining sector into a turmoil.

The legal tussle started in 2016 following the Suit filed by the BUA Group to challenge the Dangote Group’s right over the Mining Lease No. 2541ML located at the border town between Okpella in Edo State and Okene in Kogi State. The BUA Group also sought to enforce their rights over the Mining Lease Nos. 18912 and 18913 which they claim were granted to them. The Dangote Group counter sued the BUA Group to challenge the latter’s  acts of trespass, wrongful and illegal exploitation of the claim  over the mining area covered by  2541ML which was historically granted on February 01, 2008 by the Mining Cadastre Office (“MCO”)and the Honourable Minister of Mines and Steel Development pursuant to the provisions of the Nigerian Minerals and Mining Act, 2007 (‘Mining Act) to Ado Ibrahim & Company Limited (“AICO”) and subsequently transferred to the Dangote Group in 2014. Continue reading “PUC Records Another Remarkable Victory at The Federal High Court for Dangote Group”