NNPC accuses oil company of evading taxes

The decision of the NNPC not to approve the mergers and acquisition carried out by four of its joint venture partners yet, has received the full backing of the House of Representatives. The House, going by the recommendation of its committee on Joint Venture Operations wants the NNPC to issue immediately, directives to the affected oil companies namely, Chevron, Elf, Mobil and Texaco, to commence the process of consummating their mergers in accordance with Nigerian laws and regulations or face sanctions.
The committee submitted to the House that the oil firms, by not consummating their mergers in Nigeria, had merely evaded paying taxes due to the Federal Government. "These companies have to pay assignment fees, and by that there are conditions attached to the assignment, as well as Capital Gain Tax which they were supposed to pay," said a source in the committee.

The spate of mergers among these companies carried out in the last three years, had been a major concern not only to Nigerian authorities, but also to Nigerian employees working in the local affiliates of these multinational oil companies. US-based Chevron had last year merged with Texaco to form ChevronTexaco.
The merger had been preceded by two others, that between French oil firms TotalFina and Elf Aquitaine to form TotalFinaElf and also between Exxon and Mobil to form ExxonMobil. The NNPC had last month stated that it was not recognising the mergers, as they did not exist in government books.
The NNPC had said it wanted to carry out fresh audit of all the assets held by the companies before it could approve the mergers and acquisition. Before the mergers, the Federal Government, through the NNPC, controlled 60 % equity each in the joint venture partnerships with Chevron, Elf, Texaco and Mobil.

The oil companies are the operators of the joint ventures, where for instance the NNPC/Mobil joint venture produced more than 600,000 bpd of crude oil including condensate. The NNPC/Chevron venture produced more than 450,000 bpd, NNPC/Elf venture flowed 155,000 bpd and the NNPC/Texaco output is put at 60,000 bpd.
Chairman of the House Committee, Chudi Offordile, said it was the decision of the committee that the NNPC as well the Department of Petroleum Resources (DPR), should commence action that would force the companies to consummate the mergers in Nigeria. "This will enable us to know exactly who our joint venture partners are. We cannot invest so much and allow faceless people to simply disappear with our patrimony when they so wish," Offordile said.

Nigerian employees of the merged companies, said the jobs and positions held by Nigerians before the mergers have come under threat, and were being taken over by expatriates under the guise of merger. The NNPC and the DPR had before now, expressed concerns over the mergers, saying that the companies had created confusion in the mergers.
As they explained, expenditure by one of the firms was being pushed as expenditure by the two merging companies. For instance, all theassets particularly in exploration sector, of Texaco Overseas in Nigeria, including the 1 bn barrel Agbami deep offshore field, has come under Chevron management which is the senior partner in the merger.

Similarly, the Managing Director of Chevron, Mr. Jay Pryor also heads Texaco as no new managing director was appointed for the latter since the exit of its former chief, Gregori Simone. The same applies to TotalFinaElf.
The Managing Director of Elf Petroleum Nigeria, Mr. George Buresi also oversees Total Upstream, although in the case of Elf, it was relatively easier as Total is only prominent downstream and currently drilling in deep offshore block OPL245 in conjunction with South Atlantic Petroleum.