The Corporate name “Process and Industrial Developments Limited” (P&ID) which was founded by 2 Irish gentlemen, was until lately, probably, only known to very few Nigerians. However, despite the clearly parlous state of our economy, Nigerians may have to shell out about $9bn, i.e. almost 20 per cent of our current foreign reserves, to this British, Virgin Island offshore, registered company, which claims to have spent $40million, on a gas refining facility, before the Nigerian Government, unilaterally, reneged on a 20 year Gas Supply and Processing Agreement, which was jointly endorsed in 2010.
Under the agreement, Nigeria would supply the ‘wet gas’ released from the oil drilling process to P&ID to refine, in a reportedly Greenfield facility, which will, ultimately, produce the “lean gas”, used to fire power stations, and which will also serve other domestic and industrial applications.
Notably, in 2010, when the late Dr. Rilwan Lukman, who was Minister for Petroleum, signed the Agreement, President Umaru Yar’Adua was on extended medical vacation to Saudi Arabia! The agreement demanded that, Nigeria would ensure daily supply of 150million standard cubic metres of ‘wet gas’ (this would rise to over 400millionscm over time), by building the necessary pipelines from the OMLS 67 and 123 oil well licenses, operated by Addax Petroleum to P&ID’s proposed facility in Cross River State. Ultimately, P&ID failed to build the Gas Refinery, because according to them, the Nigerian Government did not build the gas pipeline to the proposed site of P&ID’s plant.
Inexplicably, however, the Nigerian authorities apparently went to sleep after the agreement, and failed, even after 3 years, to build the required pipelines, while P&ID, presumably folded their hands and also waited!
Nonetheless, P&ID, claimed to have, already invested upto $40million on preliminary expenses on the stalled project, even though, there was no evidence, that it had even acquired any land, talk less of building any facility at Adiabo in Odukpani Local Government Area of Cross River State! Notwithstanding, in March 2013, P&ID, initiated arbitration for restitution in London.
Thereafter, later in July 2015, an Adhoc Tribunal in London, approached by P&ID, concluded that Nigeria reneged in its agreement with the Oil & Gas Company. Nigeria’s Lawyers rejected the judgement and proceeded to file a fresh action in Nigeria, where a Lagos High Court, set aside the Liability Award of the London arbitration.
Notably, nonetheless, despite the Lagos Court’s judgement, Nigeria’s Lawyers continued to attend proceedings in London to determine the extent of damages, even when our Legal Team did not directly challenge the facts, and assumptions or, indeed, the basis of the calculation of the bloated award. Ultimately, in January 2017, by a majority of 2-1, the London Tribunal awarded $6.6bn to P&ID as damages. The Nigerian, appointed arbitrator, Bayo Ojo (SAN), patriotically, dissented the award and in his own opinion, estimated the Claimant’s loss at just about $250m over 3 years.
Subsequently, in 2014, the Goodluck Jonathan Administration, reportedly reached a final settlement for $850m, but this payment was also not effected, before Jonathan handed over to Muhammed Buhari, who won the 2015 elections. Thereafter, the new Administration, decided against settlement and conversely, decided to set aside the clearly oppressive $6.6bn award which was now further compounded by an additional $2.3bn interest element to become $8.9bn!
Invariably, P&ID remained relentless, and ultimately in March 2017, filed a petition, in a US Court, to similarly endorse the award; there was, inexplicably, regrettably, no legal representation for Nigeria at that hearing!
However, in their focused pursuit, P&ID also brought up proceedings in London, to ENFORCE the tribunal’s judgement; although, Nigeria was allowed upto 15th August 2018 to file an acknowledgement of service, regrettably, the present government, unduly, delayed and ultimately filed the acknowledgement of service in October 2018, reportedly because, internally, Officials in Nigeria’s Ministry of Justice, apparently, simply filed the notice of the award, without escalating this obviously “terrorist” onslaught on our paltry reserves and the welfare of all Nigerians, particularly, the 100million Nigerians who now live below the poverty line, to make us the World’s Poverty Capital!
Notably, however, the relevant Justice Ministry Officials, later awoke to the urgency of the matter, after the deadline for filing and acknowledgement of service had again lapsed and after P&ID’s Solicitor, subsequently, sent a notice of the Court’s approval for enforcement to Nigeria’s Lawyers.
Nevertheless, the English Court took a charitable disposition to the oppressive impact that the huge levy of $8.9bn would have on the economy and welfare of millions of Nigerians, and therefore indulged Nigeria to submit a belated counter argument, to overturn or reduce the enforcement proceedings; consequently, the Court, granted Nigeria a fresh hearing for 21st May 2019. Sadly, in August 2019, the Court ultimately, upheld the London Arbitration panel’s judgement for enforcement, i.e. the right to seize any Nigerian Government asset, anywhere in England or the USA, in order to recover their debt.
In retrospect, the full execution of the agreement, between the Nigerian Government and P&ID, would have probably changed the landscape of the Nigerian Oil & Gas industry and also clearly impacted, positively, on the level of our foreign reserves, and employment, and possibly also lowered our carbon footprint!
Notably also, under the agreement, Nigeria would have received 85 per cent of the refined gas from P&ID’s facility, “free of charge” (FOC), for power generation, which will cost effectively drive our heavy industries and provide more electricity and cheaper cooking gas for more Nigerians nationwide. Furthermore, according to the agreement, P&ID would retain the balance 15 per cent of the refined “clean gas” and the other process by-products, such as methane, propane and butane which, would be primarily exported to enhance Nigeria’s foreign reserves; in addition, Nigeria would benefit in profit sharing from its 10 per cent stake in P&ID!
Arguably, from the above, the significant economic and social benefits which Nigeria would have derived from the botched agreement with P&ID, makes a macabre mockery of the continuous extension of the evident devastation, caused by the horrid products of ceaseless gas flaring, which, inevitably, imposes severe long term health and economic challenges on the indigenes of oil producing areas, who have, clearly, become disenfranchised and oppressed, even when they live in otherwise, well endowed oil producing communities, which produce well over 60 per cent of government revenue.
The humongous and clearly destabilizing $8.9bn award, notwithstanding, it goes without saying that both Nigeria, as well as hired foreign Attorneys would still be paid in tens of millions of dollars, since, a mere 1 per cent, would easily earn about $90m or over N27bn as legal fees alone.
The terms of agreements with P&ID and the subsequent default is symptomatic of the often reckless and insensitive approach to Agreements endorsed by the Nigerian Government over the years. Curiously, last year, while commenting on the need for circumspection before Nigeria’s endorsement of AfCFTA, the Vice President, who is also a Professor of Law, decried the quality of agreements signed by Nigerians Officials, and wondered whether or not these Officials had the nation’s interest at heart! Regrettably, Osinbajo has, inexplicably failed, so far, to identify and review any of such unfavourably skewed agreements endorsed by Nigeria.
Although, the Presidency, last week, threatened to investigate and punish anyone adjudged negligent on this $8.9bn award, in retrospect, however, in 1985, a certain General also cancelled Lagos State Metroline contract, at a loss of over $78m, for no known viable reason; in retrospect, this deal would have relieved the public transportation chaos and provided regular jobs, with significant time savings for everyone in Lagos State.
Furthermore, in 2000, a Civilian President also summarily terminated a contract, after 9 days between Lagos State and the now defunct United States ENRON Group to provide about 3000MW to power Lagos State homes and industries. (See also “The Parable of a Fool and his Money @ www.betternigeriannow.com).
SAVE THE NAIRA, SAVE NIGERIANS!!!