London Court Gives P&ID Permission to Seize $9bn Nigerian Assets
A London court in United Kingdom has given Process and Industrial Development Limited(P&ID) the permission to seize Nigerian assets worth $9bn.
The ruling is the conclusion of a case, which began in 2010 when a pact to build a gas processing plant in Calabar, Cross River State, was breached between Nigeria and the Irish firm after Nigeria failed to live up to its side of the deal, according to a report by cityam.com.
Economic Confidential recalls that P&ID had in 2013 won a $6.6bn arbitration case but that figure rose to $9bn when the estimate of what the company could have earned over the course of the 20-year agreement was calculated.
The Nigerian Government had tried to nullify the award, insisting that it was not a case to be heard outside its shores but the British judiciary rejected the argument.
Nigeria will now lose a whopping $9 billion worth of assets in the UK to the British firm, which two years ago got an arbitration award of $6.6billion against the country for breach of agreement.
The balance of $2.6 billion is interest at seven per cent on the principal award effective from March 20, 2013, the date of declaration of dispute. This could be more, as interest continues to mount, growing at a staggering rate of $1.3 million per day.
Nigeria’s crippling liability, a substantial 11 per cent of its entire external reserves put at $43.2 billion, arose from a dispute between it and the British Virgin Islands’ company over a Gas Supply and Processing Agreement (GSPA) signed in January 2010.
After a couple of legal challenges to the award failed, in part due to carelessness of its officials in the foreign and justice ministries, two enforcement proceedings are now pending in the UK and the US.
While the proceedings in a US Federal District Court in Washington has entered appeal stage at the instance of Nigeria, the one in the UK is due for enforcement hearing on February 15, a day before the presidential election that President Muhammadu Buhari is strenuously pursuing.
The presiding arbitrator, Lord Hoffmann, was former Lord of Appeal in Ordinary, during whose tenure, it was the highest judicial position in the UK, and the equivalent of today’s UK and Nigerian Supreme Court. The other arbitrators, Evans and Ojo were former chief justice of Dubai International Financial Centre Courts (and the English Court of Appeal) and former attorney-general of Nigeria respectively.
P&ID, an engineering and project management company with about 30 years’ experience in Nigeria, founded by two Irish, Michael Quinn and Brendan Cahill, had entered into the GSPA with Nigeria in 2010, stating that the company would build a state-of-the-art gas processing facility along the country’s coast.
The project was to refine associated natural gas (also known as wet gas) into non-associated natural gas (lean gas) to be used by Nigeria in powering its national electric grid. Nigeria was to supply P&ID with agreed-upon quantities of wet gas, at first 150 million, and eventually, 400 million standard cubic feet (SCF) per day for a 20-year period at no cost.
This, however, required Nigeria to construct a pipeline to carry the gas to P&ID facility. The company was in turn to strip away the heavy hydrocarbons known as Natural Gas Liquids (NGLs) that make the wet gas unsuitable for electricity generation, then return to Nigeria the lean gas created at no cost, while P&ID would have the right to the by-products received from processing the gas.
The project, however, collapsed two years later because of the failure of the federal government to secure a supply of wet gas or to build the pipeline to bring gas to the processing plant, forcing the company to declare a dispute.
In January 2013 P&ID gave the government one more chance to secure a supply of wet gas, but to no avail, leaving P&ID with no choice but to bring the contract to an end and pursue damages.
“It is unfortunate for the Nigerian people that the government caused such a promising project to fail and result in an arbitration award against it of billions of dollars that it now shows no interest in satisfying or even trying to resolve amicably on a reasonable basis” said Brendan Cahill, a co-founder of P&ID, when contacted by THIS DAY.
“This is a sad ending to a project that would have delivered electricity to millions of families across Nigeria, and brought significant income to the Nigerian treasury,” he said.
If as, P&ID expected, the UK court grants enforcement on 15 February, the company will be entitled to seize Nigeria’s commercial assets in London, the world’s leading financial centre. In previous high-profile enforcement cases against sovereign states, wide-ranging disclosure orders have been made in respect of assets, and major assets such as ships have been seized.
After Argentina defaulted on its sovereign debt, creditors detained the Argentine naval vessel ARA Libertad when it docked in the Ghanaian port of Tema in 2012. For many years Argentina found itself largely locked out of the global capital markets. Argentina’s foreign reserves, and other assets, were legitimately targeted. Nigeria can ill afford to find itself in a similar dilemma.
