Oil Firms, Others Sued for Failing to Pay Net Profit Interest

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Davidson Iriekpen

Justice Mohammed Idris of the Federal High Court, Lagos will on Thursday hear a suit filed by Multinational Technologies Limited, DIL Company Limited and Mrs. Izarene Zellotis Adams against Niger Delta Petroleum Resources Limited, Niger Delta Exploration and Production Limited, UBA Trustees Limited, Dr. Layi Fatona, Mr. Goodie Ibru, and Securities and Exchange Commission (SEC) for failing to pay net profit interest (NPI) entitlements as at when due and in the appropriate sums.

In the suit, the petitioners, chronicling how the crisis started, averred that in 2000, they, together with other third parties, came together to explore certain opportunities in the oil and gas industry, to promote indigenous participation of Nigerians through the investment in and development of marginal fields; a concept which was hitherto unknown in Nigeria.

They contended that they and their co-promoters in pursuit of this strategic objective incorporated the NDPR Limited as a special purpose vehicle to acquire and develop marginal fields on terms agreeable to all parties.

The petitioners added that by virtue of a Farm Out Agreement dated August 7, 2000 between the Nigerian National Petroleum Corporation/Chevron Nigeria Limited (NNPC/CNL) Joint Venture, and NDPR Ltd, NDPR Ltd became the direct beneficiary of an assignment of rights to the Ogbele Marginal Field in OML 54, and a right of first refusal to the Omerelu Marginal Field in OML 53.

They stated that to fund the object of the acquisition and the requisite petroleum operations, as warehoused with the 1st respondent, they, together with some other third parties, promoted and established NDEP Plc as a vehicle for raising capital from the stock and capital markets, and also to accommodate the interest of the investing public further to the desire to seek alternative funding to facilitate the development and production of the Marginal Fields.

They stated that as part of the arrangements for the development and production of the Ogbele Marginal Field, a Joint Venture Agreement (JVA) dated February 19, 1997 was entered into between NDPR Ltd, NDEP Plc, Jerez Nigeria Ltd, Chemur Nigeria Ltd and Computer Bureau Ltd.

Under the JVA, the parties granted to NDPR Ltd a 20 per cent combined NPI in the Ogbele Marginal Field production as consideration for this, and for its business development and promotion efforts, provided that 25per cent of the said NDPR Ltd’s 20per cent NPI shall be placed in a trust for the host communities in accordance with the provisions of an Environmental Trust Deed executed by NDPR Ltd on behalf of the parties to the JVA. The deduction of the said 25 per cent from NDPR Ltd’s 20per cent NPI left NDPR Ltd with the remaining 15per cent NPI.

Thereafter, by virtue of a Share Purchase Agreement dated May 9, 2003, NDEP Plc purchased NDPR Ltd as a wholly owned subsidiary for a consideration that was calculated as the net present value of the NPI held by NDPR Ltd under the JVA net of all amounts owed by NDPR Ltd and net of the NDPR Ltd’s agreed share of common costs of the acquisition. Accordingly, the sale was settled in two elements, viz: 50 per cent in NDEP Plc’s shares; the remainder 50 per cent in NDPR Ltd’s Irredeemable Participating Investment Notes (NDPR – IPINs), that is, a NPI expressed as IPINs valued at 7.5 per cent of NDPR Ltd’s NPI.

By virtue of the arrangement mentioned above, the original promoters/shareholders of NDPR Ltd, which include the petitioners, were granted an NPI in the Ogbele and Omerelu Marginal Fields as consideration for transferring their holdings and interests in NDPR Ltd to NDEP Plc.

The plaintiffs stated that further to this arrangement, on June 1, 2003, an Irredeemable Participating Investment Notes Trust Deed was created between NDPR Ltd and UBA Trustees Ltd for the benefit of NDPR Ltd’s IPIN holders wherein NDPR Ltd appointed UBA Trustees Ltd as trustees for NDPR Ltd’s IPIN holders which include the Petitioners.

They further averred that by the arrangement, the shareholders and promoters of NDPR Ltd had a carried interest of 15 per cent, while NDEP Plc undertook the sole responsibility to bear the costs of field development.

According to the petitioners, the arrangement between the parties required payments to be made quarterly to NDPR Ltd’s IPIN holders, as creditors of NDEP Plc in accordance with the provisions of the IPIN Trust Deed and such payments were understood to be on the same rank and or category of monies payable to the host community and were to take precedence over payments for other debts and expenses of the company. They added that though this arrangement was initially put into effect by the management of NDEP Plc at the inception, these payments subsequently became irregular, insufficient and arbitrary to the detriment of their interests.

They said in the course of time, it became obvious that their interests were being severely eroded by the way and manner payments due were made and the affairs of NDPR Ltd and NDEP Plc were being run by Dr. Layi Fatona and Mr. Goodie Ibru.

They alleged that the respondents have carried on in a manner that was oppressive or unfairly prejudicial to or unfairly discriminatory against them, and further thereto, have unilaterally changed the category or classification of the payments due to them.

The petitioners therefore petitioned the matter to UBA Trustees Ltd, Economic and Financial Crimes Commission (EFCC), and Securities and Exchange Commission (SEC).

They concluded that this led to a forensic audit in 2009 and another forensic audit under the auspices of the EFCC in 2011, and that both audits found the management of NDPR Ltd and NDEP Plc liable to them.
The petitioners therefore want the court to declare, among things that the continuous gross under-declaration of the incomes and profits of the 2ndrespondent and the non-payment of the NPI and other entitlements of them is illegal, prejudicial and interests.

They also want the court to restrain the 6threspondent from approving, endorsing, registering or according recognition or giving any effect to the resolutions of the 2nd respondent purportedly passed on August 24, 2013 to the extent that it affects the right of the petitioners, and if any approval, endorsement, registration or recognition has been given, an order of injunction compelling the 6threspondent to quash, cancel, reject or howsoever called such approval, endorsement, registration, recognition or effect already given to the resolutions.

They equally want the court to compel the 1st, 2nd, 4th and 5th respondents to render full and proper accounts to them as at date of this action, of all crude oil, incomes and profits accruing from the Ogbele.