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Published On: Thu, Sep 5th, 2019

This is daylight robbery

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Nigeria risks losing over $9bn in damages to an Iris gas supply and engineering company, Process and Industrial Development Ltd., based in the British Virgin Islands, over a contract agreement that failed. The amount represents one-fifth of Nigeria’s foreign reserves estimated in August this year to amount to $45bn. A commercial court in London August affirmed a tribunal’s 2017 judgment against the federal government of Nigeria for failure to meet its contractual obligation, asking that it pay P&ID $6.6bn. The commercial court, in confirming that order August 16 2019 raised the amount to $9.6bn, including revenues the firm would have earned over a 20-year period.
The dispute began in 2010. Peoples Daily had learnt that Brendan Cahill, founder of P&ID, and his late business partner, Michael Quinn, signed a contract with Nigerian petroleum ministry officials in which it was agreed that the government would install pipelines and supply the gas that would connect to P&ID’s “state-of-the-art gas processing plant” in Calabar, Cross River State, to be built free of charge. The intention was to convert wet natural gas to dry gas to power the country’s national electric grid, improving supply. P&ID would sell 15% of the propane, ethane and butane by-products on the international market, with an expectation of generating “$5bn to $6bn in profit over a 20-year period”. In return, Nigeria would receive 85% of the gas at no cost for generating electricity.
In 2012, however, the deal fell through after the federal government allegedly failed to install pipelines or supply the gas. At the heart of the matter, said the government, was the fact that the company did not build the promised processing plants. P&ID claimed it was the government’s conduct that prevented them from fulfilling their side of the agreement.
The position of the Nigerian government thus far has been to challenge the UK’s jurisdiction to hear the matter. It says the deal was done in Nigeria and the case should be heard here. However, Justice Christopher Butcher found in favour of P&ID, enforcing the $9bn award. It gives the company the right to seize the government’s assets anywhere in the world. Reacting to the decision, CBN governor Godwin Emefiele, said in a recent interview: “We know that the implication of that judgment has some impact on monetary policy and that is why the CBN is going to step forward and strongly defend the country and the reserves of the Federal Republic of Nigeria … The Nigerian government is considering its next move. There are sufficient and strong grounds on the basis of which we could file a stay of execution and also an appeal against that judgment. There are certain anomalies in the process leading to the award of that contract which are being looked into by the Economic and Financial Crimes Commission.”
One of the “anomalies” could be the fact that the contract never made it to the federal executive council which ought to have discussed and approved it in the first place. This was revealed by the federal attorney-general and minister of justice at the time, Mr. Michael Aondooakaa. “I can tell that no such contract was brought for deliberation to the best of my knowledge. I did not see such a contract and since the news broke I have been wondering how this was possible.” He backed the government’s effort to reverse the judgment and remedy the embarrassing situation. His position corroborated that of present Minister of Justice Abubakar Malami that the contract “was designed to fail ab initio.”
P&ID’s lawyers are jubilating that the Nigerian government has found itself in a fix, such that it will be forced to do a last minute deal with the company. However, Vice-President Yemi Osinbajo, himself a lawyer, has said no deal. He addressed a meeting of the Economic Management Team last weekend in Abuja. A female member was quoted as saying, “We invited our lawyer to update us on the matter and what next action needs to be taken,” she said. That “next action”, it is obvious, involves an application for stay of execution of the award and an appeal. But this has to be done quickly to stop P&ID which is already steps ahead of the government in the matter. Its lawyer Andrew Stafford QC said: “P&ID is committed to vigorously enforcing its rights, and we intend to begin the process of seizing Nigerian assets in order to satisfy this award as soon as possible.”
Besides the legal path the government has to take, a thorough home inquiry has to be done. Questions need to be asked and answers demanded. For instance, if the contract was not approved by FEC who did? Did someone take advantage of the incapacitation of Mr. Umaru Ya’adua, who was President at the time, to feather their nests? President Muhammadu Buhari must set up this investigation quickly to get to the heart of this huge national embarrassment.

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