By Akin Kuponiyi
A limited liability company, Eterna Plc, has dragged an oil marketing company, Sahara Energy Resource Limited before a Federal high court in Lagos south west Nigeria over the failure of the company to facilitate payment of Petroleum subsidy in the sum of N 4.2billion
Joined as co – defendants in the ensuring legal hostility are Petroleum Products Pricing Regulatory Agency, PPPRA; Federal Ministry of Finance of the Federal Republic of Nigeria, and the Attorney General of the Federation.
In an affidavit sworn to by the principal officer of Eternal Plc, Bunmi Agagu and filed before the court by a Lagos lawyer, Oluwakemi Balogun SAN, the deponent averred thus,
Up until 2016, the Federal Government of Nigeria FGN through PPFRA administered subsidized Petroleum under the Petroleum Support Fund PSF scheme.
Under the scheme, the PPPRA issues import allocation license to petroleum marketing companies to import specified amount of Gasoline into Nigeria to be sold at prices determined by the Federal Government of Nigeria irrespective of the total cost associated with the importation of the said product, the licensed Petroleum marketing company then compute their entire cost in line with PPPRA’S approved template and apply for a refund of the shortfall between the actual landed cost of the Gasoline and the pump price of the product. The shortfall is referred to as the PETROLEUM SUBSIDY
Under the Petroleum Support Fund PSF scheme , licensees are permitted to enter into License Utilization Agreements LUAs with third party oil marketing companies to aid collaboration and assist licensees mitigate the financial risks associated with each relevant transaction and in order to enable the licensees meet their obligation under the term of licenses issued to them by PPPRA.
In 2011, PPPRA Issued Eterna Plc with license to import 25,000 metric tonnes of PMS under the PSF scheme. In executing the contract, the plaintiff entered into lincense Utilization agreement LUA with the SAHARA ENERGY RESOURCES LIMITED vide a joint venture agreement for the delivery and sale of 15,000MT by Sahara Energy resources. Escrow account was opened with ACCESS BANK where all the proceeds would be transferred to Sahara Energy as per the terms of the Escrow agreement.
Bunmi Agagu averred further that sequel to the execution of the joint venture agreement, Eternal PLc and Sahara Energy undertook 3 PMS transactions under the PSF scheme, in respect of which the total sum of N4.2billion is due to them from the Federal Republic of Nigeria.
However despite the verification and clearance of the transactions for payment by PPPRA, the ministry of finance has refused to pay the said sum because Sahara Energy has failed to pay the requisite Petroleum Equalization Fund PEF and PPPRA administration charges in the cumulative sum of N247. 6million. In the Oil and Gas Industry, payment of Petroleum Equalization Fund, PEF and the PPFRA’S administrative charges is a condition precedent to the issuance of requisite sovereign debt note for payment of Petroleum Subsidy under PSF scheme.
Aside the failure to pay the requisite PEF and PPPRA’S administrative charges as agreed in the Joint Venture agreement, Sahara Energy resource company also failed to comply with its express responsibilities containing in the joint venture agreement to with, follow up on the PPPRA and the debt management office on the issuance of the payment advise for PEF and submit the sovereign debt note the Central Bank with the required instructions to the Central bank to pay the sum of money on the note in accordance with the instruction provided by PPPRA.
The failure of PPPRA and ministry of Finances to pay the aforesaid subsidy sum and Sahara Energy Resources Limited’s failure to follow up on them, the Escrow account opened with Access bank Plc for the purpose of the Joint Venture Agreement still remain unfunded and no sum is available therein that could be to the Sahara Energy pursuant to the JVA as PPPRA and ministry of Finances’ to liquidate the subsidies in the sum of N4.2billion and interest accrued therein is due to the plaintiff and Sahara Energy under the PSF scheme is having serious effect on the plaintiff’s operations as well as balance sheet as the plaintiff is now heavily indebted to its bankers by reason thereof whilst it is the responsibility of Sahara Energy resources to ensure that outstanding subsides are paid.
Despite the demand letters written by the Eterna Plc to the ministry of finance requesting the latter to issue the requisite sovereign Debt Note in the sum of N4.2billion, due to the plaintiff and Sahara Energy as subsidies the PPPRA have failed to pay the said sum.
When the plaintiff suspected that the reluctance of the PPPRA and ministry of Finances to pay the outstanding subsides may be occasioned by reason of the ongoing spurious subsidy probe being carried out by Economic And Financial Crime Commission, the Eterna Plc through its banker, Access bank Plc issued a bank guarantee in the sun ofN 1.6billion being the amount involved in the probe in favour of ministry of finance. The probe is unconnected with the transaction that took place under PSF scheme.
Despite the failure of Sahara Energy to follow up the PPPRA and ministry of finances as contacted under the LUA and ensure that the sum of N 2.7 billion out of the outstanding sum of N4.2billion due to the plaintiff and Sahara Energy is paid, the company wrote a threat letter to Eternal Plc titled “statutory demand for payment of outstanding sum of N2.7 billion.
The plaintiff belief that unless the court restrain Sahara Energy Resources Company , The company will carry out its threat into effect by surreptitiously seeking an order of winding up against Eterna Plc.
Consequently, the plaintiff is urging the court for an order of perpetual injunction restraining Sahara Energy resources and its agents from disturbing their smooth operations of the company by not presenting petition for winding up and other ancillary reliefs in relation to non-payment of the subsides in the sum ofN2.7billion out of the outstanding sum of N4.2billion together with accrued interest to which Sahara Energy is entitled from the PPPRA and ministry of finance.
Sahara Energy Resources Limited has filed notice of preliminary objection to the suit.
Meanwhile, the presiding Judge Justice Rilwan Aikawa has adjourned till 3rd of October, 2018 for hearing of notice of discontinuance filed by Mr. Oluwakemi Balogun SAN on behalf of Eterna Plc.