A British court has ruled that an engineering and project management company, Process and Industrial Developments Ltd., has the right to seize $9bn in Nigerian assets.
The ruling, delivered on Friday (today) by Justice Butcher, bordered on a 2010 contract Nigeria signed with P&ID, to the intent that the latter would build a state-of-the-art gas processing plant to refine natural gas (“wet gas”) into “lean gas” that Nigeria would receive free of charge to power its national electric grid.
“The lucrative natural gas liquid by-products (propane, ethane, butane) of this processing would be sold by P&ID on the international market, with expected profits in the billions of dollars,” the firm stated on its website.
The agreement suffered a setback and, in 2013, P&ID won a $6.6bn arbitration case against the Federal Government.
The Nigerian Tribune had reported in February that the ‘P&ID V Nigeria’ case 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 medium referenced a press statement made available to newsmen by Salihu Othman Isah, Special Adviser on Media and Publicity to then Attorney General of the Federation and Minister of Justice, Abubakar Malami (SAN).
The Press release reportedly stated that it was entirely proper for Nigeria to “assert all available and proper defences to the claims brought by Process Industrial Development Limited.”
It reads that: “The attention of the Attorney General of the Federation and Minister of Justice has been drawn to series of online publications grossly misrepresenting facts of the (then) on-going litigation between Process and Industrial Developments Ltd (P&ID) Vs Federal Government of Nigeria (FGN) & Anor, pending before the United States District Court of the District of Columbia (District Court), the United States Courts of Appeals for the District of Columbia (Court of Appeal) and the Business and Property Courts of the United Kingdom (Commercial Court).
“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’s OMLs 67 and 123.
“P&ID never began the construction of the project facility, although it alleges it incurred about $40m in preliminary expenses.
“P&ID’s claim in the arbitration proceedings was mainly for loss of profit for the entire 20-year term of the GSPA, initially claiming the sum of $1.9bn and later increasing its claim to $5.9bn.
“The Arbitral Tribunal on 31st January 2017 rendered its Final Award against the Ministry of Petroleum Resources in the sum of $6.597bn, together with pre-award interest at the rate of 7% per annum effective from 20th March 2013 and post-award interest at the same rate till date of payment.”
Last February 15th, the United States Courts of Appeals for the District of Columbia issued a decision in favour of Nigeria by dismissing P&ID’s motion requesting the court to dismiss Nigeria’s appeal for lack of jurisdiction or to summarily affirm the scheduling order of the District Court.
On Friday (today), P&ID secured judgment at a British court authorising it to seize $9bn in Nigerian assets.
City A.M. which published the court ruling, stated that the British judge who delivered the ruling, said that P&ID “can take 20 per cent of Nigeria’s foreign reserves.”
“The figure was calculated based on what the company was estimated to have earned over the course of the 20-year agreement,” City AM said; noting that, “P&ID now says interest accrued means it is owed $9bn.”
“Today’s decision means that the arbitration is converted into a legal judgement, allowing P&ID to attempt a seizure of the assets.” City AM said.
It reported that Counsel to P&ID, Andrew Stafford, expressed satisfaction at the court judgment.
“We are pleased that the Court has rejected Nigeria’s objections both to the arbitration process and to the amount of the award, and that it will grant permission to P&ID to begin enforcement of the award in the United Kingdom,” Stafford was quoted to have said.
“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 P&ID Counsel added.
The Federal Government has yet to respond to the judgement.
Meanwhile, P&ID has a page dedicated to the matter on its website.
According to the information on its website, P&ID was founded and led by the duo of Michael Quinn and Brendan Cahill; and the firm has “over 30 years’ experience of project management and execution in Nigeria.”
On its website, the P&ID states its relationship with Nigeria, explaining what it said was the issue that culminated in Friday’s ruling.
It stated, “P&ID conceived and planned a project that would deliver much-needed power generation to millions of Nigerians, and create profitable by-products for sale on the international market.
“Under an agreement with Nigeria, P&ID would build a state-of-the-art gas processing plant to refine natural gas (“wet gas”) into “lean gas” that Nigeria would receive free of charge to power its national electric grid.
“The lucrative natural gas liquid by-products (propane, ethane, butane) of this processing would be sold by P&ID on the international market, with expected profits in the billions of dollars.
“In 2010, P&ID entered into a 20-year agreement with the federal government of Nigeria to execute this project.
“Under the agreement, the Nigerian government was to ensure that all necessary pipelines and related infrastructure were installed and that arrangements were made with agencies and third parties to deliver gas for P&ID to process.
“However, the Nigerian government failed to meet its commitments, causing the project to flounder. This meant Nigeria would lose the opportunity of a new power supply, and P&ID would lose 20 years’ worth of profits.”
Continuing, the engineering firm stated, “P&ID attempted on multiple occasions to find a solution, and yet Nigeria refused to come to the table.
“Arbitration commenced in 2012 before a tribunal in London. Although during the arbitration Nigeria claimed to be interested in reaching an amicable settlement with P&ID, in fact Nigeria never made a serious offer and it became clear that Nigeria was attending settlement discussions only to delay the proceedings.
“In July 2015, the tribunal in London unanimously concluded that Nigeria was liable for the government having repudiated the agreement with P&ID.
“In January 2017, the tribunal ordered the Nigerian government to pay P&ID $6.6 billion in damages, plus interest that is accruing daily at a rate of over $1.2 million and now stands at $2.8 billion.
“However, because the Buhari administration refuses to pay, P&ID has brought court proceedings, in both the U.K. and the U.S., to enforce the award. If P&ID is successful, they can enforce the award against Nigeria by seizing its commercial assets.”
The firm argued that, “In addition to the significance of the debt owed, the P&ID project represents a massive lost opportunity for Nigeria.
“The P&ID project would have generated annually up to 2,000 megawatts of power for electrical generation and industrialization.
“Nigeria lacks sufficient electricity to power a modern economy and support its rapidly expanding population – the major increase in low-cost electricity supply brought by the P&ID project could have been transformative for millions of Nigerians.
“At present, the World Bank estimates that only 59% of the country have access to reliable supply of electricity.”
Furthermore, the firm accused the Federal Government of breach of contract. The co-founder of P&ID, Brendan Cahill, said, “P&ID was eager to deliver this promising project in the hope of bringing electricity to millions and helping Nigeria reach its full potential.
“Unfortunately, the government did not uphold its side of the contract, so the project failed.
“Having been unable to find a willing partner in government to resolve the matter forced us to seek remediation for the repudiation of our contract, which has resulted in an arbitration award against Nigeria.”