The Nigerian government is expected to lose an estimated $ 6 billion because of corruption in the sale of the Oil Prospecting Licence (OPL) 245 to Shell and Eni Oil in 2011.
The Oil field 245 said to be one of the largest in the world is being extracted by the two oil companies despite corruption allegations and charges in courts both in Italy and Nigeria.
A report released on Monday by Global Witness, ‘Take The Future: Shell’s Scandalous Deal For Nigeria’s Oil,’ investigates the deal and its shortfalls.
It states that a new analysis of the deal shows it included generous terms that deprive the Nigerian people of $6 billion potential revenue.
“The deal for the OPL 245 licence includes previously unreported terms that left Nigeria without share of profit from oil produced to which it was entitled from the block, resulting in an historical poor deal for Nigeria,” the report stated.
It said the deal hid huge generous fiscal terms for the companies. The deal between Shell, Eni, Nigerian government officials and Malibu Oil and Gas called for a Production Sharing Agreement (PSA) to be signed between only Shell and Eni subsidiaries.
The report noted that this departs from the standard procedure of a production sharing contract (PSC) that is agreed between the contractor and the state.
It noted that the exclusion of the Nigeria State from the PSA resulted in the removal of a central feature of production sharing contract that is a proportion of the oil produced known as ‘profit sharing’ is allocated to the government.
Global Witness also said Shell knew their billion dollar payment for the deal was going not into the public purse but would fill private pockets.
It said Shell and Eni and some of their most senior executives are now facing bribery charges in Italy and Nigeria, in one of the biggest corporate corruption cases in history.
Prosecutors allege that their $1.1bn payment for the block in 2011 funded bribes to key ministers.
The trial is continuing and the defendants have denied wrongdoing, the anti-corruption group said.
“This amount of money would be enough to educate six million teachers in Nigeria. It really can’t be underestimated just how big a deal this could be for a country that right now has the highest rates of extreme poverty in the world,” Ava Lee, a campaigner at Global Witness told the BBC’s World Business Report.
