•As UK-based P & ID seeks to enforce $9b damages
Nigerian, which is already facing myriads ofeconomic challenges, budget deficit and huge external debt may lose over $13.3 billion, which amounts to N4.076 trillion in legal charges incurred by the administration of President Muhammadu Buhari.
The money, which could rise as a result of increasing interest charges include $11 billion that has already been awarded against the Nigerian government and another possible $2.3 billion fine in arbitration over breach of contract.
This is coming as one of the beneficiaries and United Kingdom (UK) based company, Process and Industrial Development (P&ID), is set to ask the courts to enforce a $9 billion (€8 billion) award against the Nigerian government in a legal dispute over a gas processing plant that was never built.
Speaking on the issue, the Chief Executive Officer (CEO) of The Competere Group, a legal and trade advisory firm in London, Mr. Shanker Singham, expressed worry over “the damage being done by a range of investor disputes where basic property and contractual rights are being violated seems to be on the increase.
“The erosion of Nigeria’s commitment to the rule of law is highly worrying, both from a political and an economic perspective.”
According to Singham, the most notable disputes are with South Africa telecom MTN Group, an energy project with P&ID, and a hydroelectric contract between Sunrise Power and Chinese investors.
Forbes had reported that in the P&ID case, a London court in January 2017 said Nigeria owed the company $6.6 billion plus interest, a significant percentage of Nigeria’s $44 billion of foreign currency reserves.
Both P&ID and Sunrise have been a thorn in Nigeria’s side, with Nigeria’s government on one side saying they were duped by P&ID as far back as 2012, and courts ruling against their defense on the other. So far, these two disputes alone have easily led to more than $11 billion in international legal awards against the Buhari government.
As for the P&ID saga, the company’s main complaint relates to the government’s failure to complete a pipeline and other critical infrastructure. The project would have generated annually up to 2,000 megawatts of electricity for residential and commercial use. The company initiated arbitration proceedings in 2012, the standard legal set up for international investor disputes.
“Whether its calculations regarding its supposed investments and foregone profits are plausible is a different matter—but the government never made any effort to challenge them anyway. Nor is it surprising that Nigeria failed to show up to court hearings in the case,” says AKE Group’s Bruckmeier. “This is exemplary of the unprofessional and nonchalant attitude Nigeria often displays in such matters.”
“We are well aware of the government’s efforts to characterize P&ID, and its founders, as frauds,” Brendan Cahill, the company’s founder, told Nigerian daily This Day Live on May 15 in a Q&A published on its website.
“The arbitrators in London spent five years carefully reviewing the written agreement and all the facts surrounding the deal, and in the end, they unanimously concluded that Nigeria was to blame for the deal’s collapse and had to pay damages to P&ID,” he says. “Not once during those five years did Nigeria present the courts with any evidence that there had been some kind of fraud—because there wasn’t one.”
That battle continues in the courts..then there is Sunrise Power.
Sunrise recently brought Nigeria and its Chinese partners before the International Chamber of Commerce in Paris. Nigeria faces another $2.3 billion fine in arbitration over breach of contract. Sunrise was behind the Mambilla hydroelectric dam project. It would have been Nigeria’s biggest hydropower plant, capable of generating 3,050 megawatts of power.
There have been no new developments in the arbitration case as of May 20 until when the P & D case is to be heard in the British Court next week.
P& ID seeks to enforce payment of damages
Reports monitored in the British media indicate that the case, which is already in a British court, is set to come up for hearing next week.
P&ID, an Irish-owned firm linked to Dublin-based Industrial Consultants International, had finalized an agreement in 2010 to build a gas refinery in Nigeria to fuel power plants for the country.
However, the project never went ahead.
As a result, P&ID dragged the Nigerian government to court in 2012. Interestingly, the company was awarded $6.6 billion in damages in 2015. Subsequent interest charges have increased this to around $9 billion.
The case is due before the British commercial court next week where P&ID will seek to have the award enforced while the Nigerian government will seek to have it set aside.
Industrial Consultants director, Brendan Cahill, founder of P&ID with his late business partner, Michael Quinn, recently revealed that the company intended to pursue the case.
He, however, stressed that P&ID was “open to a settlement on a reasonable basis” if it found someone in the Nigerian government willing to help resolve the dispute.
The Nigerian government, headed by President Muhammad Buhari who has just been sworn in for a second term in office, had issued a statement earlier this year contesting the size of the award.
Reports say that the administration argues that as the project never started, there was no physical work done, therefore, the scale of the damages were not warranted.
Cahill has said that this was simply the Nigerian government’s attempt to evade dealing with the dispute. He also rejected what he called efforts to characterise P&ID and its founders as frauds.
P&ID agreed with the Nigerian government in 2010 that it would build a gas processing facility in which the country would hold a 10 per cent stake. The processing plant was meant to refine gas and supply 85 per cent of it to the Nigerian government to fuel electricity generators.
P&ID was to be allowed to sell the remaining 15 per cent at commercial rates, paying 10 per cent of the revenue to the Nigerian government.
As part of the deal, Nigeria was meant to build a pipeline and secure gas supplies that could be shipped through this to the plant for processing.
P&ID blamed the government’s failure to do this for the project collapsing in the first place.
Reports say that P&ID offered to settle the case for $850 million in May 2015 while the arbitration was continuing, but a change of government in Nigeria appears to have prevented talks on that proposal from going ahead.