Understanding The Nigeria - P&ID $9.6 Billion Legal Battle
Reports have revealed that a British court has ruled that an engineering and project management company, Process and Industrial Developments Ltd., has the right to seize $9.6bn in Nigerian assets.
The ruling delivered on Friday 16th August, 2019 by Justice Butcher, bordered on a 2010 contract Nigeria signed with P&ID, with the intent that P&ID would build a state-of-the-art gas processing plant to refine natural gas also known as wet gas and that Nigeria would receive it free of charge to power its national electric grid.
According to reports, the agreement states that the lucrative natural gas liquid by-products (propane, ethane, butane) of this processing would be sold by P&ID in the international market, with expected profits which would be in billions of dollars. Nonetheless, it is essential to note that the agreement suffered a setback and, in 2013, P&ID won a $6.6bn arbitration case against the Federal Government.
In a report done by Nigerian Tribune in February, the breach of contract between P&ID and Nigeria had been heard variously at the United States District Courts of Columbia, the United States Court of Appeal, as well as the Business and Property Courts of the United Kingdom.
The dispute that led to arbitration between FGN and P&ID arose from a 20-year Gas Supply and Processing Agreement (GSPA) entered in 2010 between FGN (through the Ministry of Petroleum Resources) and P&ID in respect of an accelerated gas development project in Nigeria.
Responding to this, Faith Nwadishi says the contract is only an error which shouldn’t have happened. According to her, “there is a procurement law that sets out policies for procurement in this kind of business. However, this particular contract didn’t follow the procurement procedure existing since 2007. Secondly, the company is not a well known company in the oil & gas industry. The company has also engaged in many businesses not very well known. Nigeria also signed to end gas flaring. The company doesn’t even have the procurement power needed to end the gas flaring. There was a loophole and there are individuals that wanted to make money.”
She explains what gas flaring is and how Nigeria has persistently been losing on gas while digging for crude oil.
Reacting, Gholahan says it’s a crazy deal that was not warranted at all. “If you look at it very well, you would know that it should have been an open and shut deal. This is going down as probably one of the biggest scams to hit a nation. These guys talked about 20 years projected profits and now they are saying they want to collect the money. They claimed they have brought $40 million dollars into Nigeria but CBN says it couldn’t trace it. But there’s no gas infrastructure on ground. It got worrisome when T.Y Danjuma said the $40 million the company claimed to have invested is his own money. This means the company didn’t spend a dime of its own money on the contract.”
Achike Chude says we have to look at the political climate that we find ourselves in Nigeria and under which this thing takes place. “There was a president sick and on his death bed when these things were playing out. A cabal had taken over the reign of the country at that time. So many processes of accountability exist to make sure that a contract such as this one would not even see the light of day. There are people who should have been involved but when certain projects come up in Nigeria, all of these processes will be over-ridden.”
What are those benefits that Nigeria could have derived if Nigeria's deal with P&ID wasn't breached?
What are the methodologies you would suggest to FG on how to avoid future occurrences of a breach of agreement?
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Gbolahan Olojede - Chartered Accountant/Public Policy Analyst
Faith Nwadishi - National Convener, Women in Extractives & Immediate Past Member, EITI International Board, representing Anglophone Africa
Achike Chude - Policy and Development Analyst
Morning Crossfire with Wemimo Adewuni (@wemimospot) & Sheriff Quadry (@SheriffQuadry), alongside Achike Chude (@achike12)
Written by Jude Chukwuemeka