The several months late President Umaru Yar’Adua spent on the sick bed prior to his demise on May 5, 2010, paved the way for Process & Industrial Developments Limited (P&ID), a tiny natural gas company to hoodwink the federal government into allegedly signing a gas supply and processing agreement (GSPA) which may cost the country a whopping $9 billion following last week’s British Commercial Court ruling, THISDAY findings have shown.
If the judgment is executed and the aforementioned amount is to be paid, the UK firm might walk away with 20 per cent of Nigeria’s external reserves, which stood at $44.425 billion as of last Thursday, and 2.5 per cent of Nigeria’s Gross Domestic Product (GDP).
This is just as former President Goodluck Jonathan has washed his hands of the matter, saying that the controversial contract was signed in January of 2010, while he became acting President on February 9, 2010. Jonathan, who said this through his former aide, Reno Omokri, insisted that the cabal held sway during that period Yar’Adua was ill.
Meanwhile, a hedge fund managed company, VR Capital Group, which had knowledge of the matter, had in March this year, taken as much as 25 per cent stake in P&ID. Since then, the company has been trying to pull levers of power in the U.S. and the U.K. to make Nigeria settle or, failing that, enable the company to start seizing assets, Bloomberg reported.
The saga began almost a decade ago. Despite the country’s ample natural resources, Nigeria’s state-owned electric and petroleum companies have struggled to power the country. To help fix the problem, in 2010, late President Yar’Adua had authorised partnership with private companies to develop the nation’s energy infrastructure.
The Ministry of Petroleum Resources then, headed by late Rilwanu Lukman, had struck the agreement in January 2010 with P&ID, which was founded in 2006 by two Irishmen, Michael Quinn and Cahill.
However, a source at the Nigerian National Petroleum Corporation (NNPC) yesterday told THISDAY that, “the firm awarded $9 billion judgment debt against Nigeria never scratched the ground to commence the project.
By the terms of the agreement, P&ID was to build and operate an accelerated gas development project at Adiabo in Odukpani Local Government Area (LGA) of Cross River State. The agreement required the federal government to supply natural gas from Addax Petroleum-operated Oil Mining Leases (OMLs) 123 and 67 for P&ID to refine into fuel suitable for power generation in the country.
According to the agreement, the initial volume of gas was about 150 million cubic feet of gas per day, which would be ramped up to about 400 million cubic feet per day during the 20-year period.
But P&ID alleged that after signing the agreement, the federal government reneged on its obligation after it had opened negotiation with the Cross River State government for allocation of land for the project.
Sources within the Cross River State government told THISDAY yesterday it was unaware of any negotiations for land allocation to P& ID by the previous administration in the state. P&ID claimed that the failure of the federal government to construct the pipeline system to supply the gas frustrated the construction of the gas project, and deprived it the potential benefits expected from 20 years’ worth of gas supplies.
The company said attempts to settle out-of-court with the federal government failed.
The British firm, in August 2012, served the federal government a Request for Arbitration.
But in its swift defence, the federal government told the arbitration tribunal, “The failure of P & ID to acquire the site and build Gas Processing Facilities was a fundamental breach and that no gas could be delivered until this has been done.”
Despite the federal government’s sound argument, the tribunal ruled that the Nigerian government’s obligations under Article 6B were not conditional upon P &ID having constructed the gas processing facilities.
In July 2015, the arbitral tribunal ruled that the federal government had repudiated its obligations under the GSPA and that P & ID had been entitled to accept the repudiation and claim damages for breach.
But on December 23, 2015, the Nigerian government asked the tribunal to set aside the award but the tribunal dismissed the application on February 10, 2016, paving the way for the hearing on July 22 to 24, 2016 to determine the damages.
Despite the fact that P & ID did not commence any project in Nigeria to be entitled to any damage, the tribunal in its opinion ruled that the damage suffered by the British firm was the loss of net income the company would have received if the federal government had kept its side of the contract.
According to two members of the three-man tribunal, Lord Hoffmann and Anthony Evans, P&ID’s expenditure and income should have been about $6.597 billion if the GSPA was duly performed by government.
Both officials said the award should be paid together with interest at the rate of seven per cent from March 20, 2013.
However, the third member of the tribunal, who was Nigeria’s former Attorney-General and Minister of Justice, Chief Bayo Ojo (SAN), in his minority ruling, said although P&ID was entitled to compensation for the breach, its damages could not have been more than three years from the date of the alleged breach. Ojo argued that apart from being a new company incorporated in 2006, the gas project could not have started yielding benefits earlier than 2015.
So, on January 31, 2017, Ojo said the highest amount payable as damages to P&ID should not be more than $250 million.
However, the final award remained unsettled since 2013, leading to the claim that it had attracted additional $2.3 billion in uncollected interest as of March 2018.
The tribunal claimed the damages were calculated as the present value of 20-year income, minus certain capital and operating costs incurred from building and running the refining facility.
“The final award is governed by such a treaty — the New York Convention. So, Nigeria’s status as a foreign sovereign does not deprive this court of jurisdiction to confirm the award,” P&ID said in its March 16, 2018 application seeking enforcement of the award.
But the federal government opened initial negotiations for the settlement of the award, though the efforts were not successful.
Nevertheless, a British Commercial Court had on Friday affirmed the ruling of a London Arbitration Tribunal which in January 2017, awarded $6.6 billion judgment debt against the federal government over alleged breach of a GSPA it allegedly signed with a British firm, P&ID. The tribunal had ruled that Nigeria was liable for $6.6 billion in damages, which increased to well over $9 billion with interest accruing daily.
The closely held company could enforce an arbitration award that entitles it to the sum as though it were a UK court order, Bloomberg quoted Judge Christopher Butcher to have said in the ruling.
The gas company, which is backed by a Cayman Island-based hedge fund, was awarded $6.6 billion in an arbitration case in January 2017, following a dispute over a 2010 gas deal and interest payments made it to rise to $9 billion.
The Nigerian government has yet to make a payment, Butcher said in his ruling.
“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,” the company’s lawyer Andrew Stafford said.
Butcher rejected Nigeria’s objections both to the arbitration process including the jurisdiction as well as the amount of the award and said he would, “make an order enforcing the Final Award in the same manner as a judgment or order of this Court to the same effect.”
The British court decision was sequel to the March 16, 2018 proceedings in the Court by P &ID, seeking leave to enforce the Final Award in the same manner as a judgment.
But the federal government on Friday said it had commenced move to reverse the judgment and had already instructed its lawyers to initiate appeal proceedings against the judgment at the British court.
This was contained in a statement from the Federal Ministry of Justice, signed by the Solicitor-General of the Federation, Dayo Apata.
Apata, while assuring that the federal government would do everything possible to defend vigorously its interest and that of the people of Nigeria, said part of the move was to seek for a Stay of Execution of the said judgment, adding that the issue was a current litigation issue at the United States of America.
In a statement, Brendan Cahill, one of P&ID’s founders, said, “it is disappointing that Nigeria chose to repudiate the terms of a deal that would have benefited the country by bringing electricity to millions of its citizens.” He said the company, “backed by its investors,” would pursue enforcement of the award.
Meanwhile, former President Jonathan yesterday denied the involvement of his administration in the controversial judgment debt. He accused the Buhari administration of trying to make a case against him and his administration by claiming they were responsible for the $9 billion judgment against Nigeria.
Omokri, said in the statement yesterday that the desperate attempt by the agents of the Buhari administration to “rewrite history will backfire just like other past futile propaganda of this goebellian government”.
The statement urged Nigerians, especially journalists, to peruse the court filings, stressing that they are public documents.
Citing a quote from the court filings in the case, Omokri said, “P&ID submits that it entered a gas supply and processing agreement with Nigeria’s Ministry of Petroleum Resources in January 2010. Pursuant to the agreement, P&ID claims that it would build the necessary facilities and then refine natural gas into non-associated natural gas for a period of 20 years.”
According to Omokri, “This transaction occurred in January of 2010. Former President Jonathan was not President in January 2010. During that time, he was completely shut out of power by an unelected cabal that ran Nigeria during the period of the ill-health of the late President Yar’adua, before the National Assembly courageously intervened on February 9, 2010.”
Omokri added that the cabal not only fought against the ascension of then Vice President Jonathan to the office of acting President, but also took documents, including budgets and contracts, to Saudi Arabia and claimed that the then ailing President Umaru Musa Yar’adua had signed them. He recalled that the cabal had announced on December 28, 2009 that Yar’adua had signed a supplementary budget and other documents from his sick bed in Saudi Arabia, without the foreknowledge or acquiescence of the then Vice President Jonathan or the Executive Council of the Federation.
“In fact, a week later, the Conference of Nigerian Political Parties (CNPP) came out with an exposé alleging that the signatures on the documents were forged and Femi Falana (SAN) took up the case in court,” Omokri alleged.
Omokri accused the then Minister of Petroleum, the late Dr. Rilwanu Lukman, of packaging and arranging the signing of the contract with P & ID, and alleged that Lukman was also a member of the cabal.
“Mr. Lukman and other members of the cabal treated then Vice President Jonathan with disdain and kept him in the dark about their actions because he had no executive authority, as the then President was unable to hand over to him as constitutionally stipulated due to the suddenness of his ill health,” he said.
“That same cabal has resurrected and has now coalesced around President Muhammadu Buhari, with some of them being made either ministers, or formal and informal advisers. As a matter of fact, the main man behind that cabal is now one of the closest persons to General Buhari,” Omokri added.
However, the judgment has raised some difficult questions, with many asking: who signed the contract with P&ID? What were the obligations of the parties? What obligations did the firm perform to warrant a $9 billion cost?
What amount of money did the firm invest in Nigeria in furtherance of the contract? Where is the office of the firm located in Nigeria? Who are the staff and principal officers of the firm in Nigeria? What was the level of the investment of the firm in Nigeria before the contract was terminated? What was the loss of the firm in monetary value before the termination of the contract? How did the contract come about in the first place and why was it signed and by whom? Where are the offices of the firm in Europe? And how many people is the firm employing in Europe and other parts of the world? How much of the terms of the contract did the firm meet before the termination of the contract? And they had accepted $800m as full and final settlement in 2015.
The sum was to be paid over a period of five years.
How did that agreed figure in 2015 now become $9b in 2019. Was the Agreement vetted by the office of the Attorney General of the Federation before it was signed by the Ministry of Petroleum Resources?