Templars secures Landmark Judgment in favour of Total

The dispute centered around the applicable price for valuing crude oil for purposes of calculating the petroleum profits tax liability of international oil companies operating exploration and production joint ventures with the national oil company, Nigerian National Petroleum Corporation (NNPC).

On behalf of Total, Templars lawyers had argued that the applicable price of crude oil for calculating taxes was the Realisable price, as defined under a Memorandum of Understanding entered into between Total and the Federal Government of Nigeria in 2000, as opposed to the Official Selling Price of crude unilaterally imposed by the NNPC. Agreeing with Templars, the Tax Appeal Tribunal held that the contractually agreed Realisable Price was the appropriate price to adopt in making the required calculation for the tax years in dispute, and that that price was consistent with the provisions of the Petroleum Profits Tax Act.

The judgment settles a long festering debate on the above subject within the Nigerian oil and gas industry.

The Templars team on the matter was led by Adewale Atake, Partner and Head of the Dispute Resolution Group and Dipo Komolafe, Partner and Head of the Tax Practice Group, who were assisted by Disputes Partner Godwin Omoaka, Managing Counsel Igonikon Whyte, and Associates Chidi Ejiofor and Sesan Sulaiman.

According to Komolafe, “We are excited to have won this victory on behalf of Total, and by extension, the other IOCs involved in similar joint venture arrangements with the NNPC… The TAT has shone a bright light for the industry to follow in relation to the years to which the MOU of 2000 apply”.