British Court Orders Seizure Of Nigeria’s $9bn Assets
A British court has given Process and Industrial Development Limited (P&ID) the go-ahead to seize Nigerian assets worth $9 billion.
P&ID got a judgement in its favour in London on Friday.
The judgement is the conclusion of a long-running saga over a 2010 deal in which the federal government agreed to supply gas to a processing plant in Calabar, Cross River State, that Process and Industrial Developments Ltd (P&ID) – a little-known firm founded by two Irish business men specifically for the project – would build and run.
The project collapsed because Nigeria did not meet its end of the bargain.
P&ID had won a $6.6 billion award at arbitration, based on what it could have earned during the 20-year agreement.
The firm is now claiming that the total owed has ballooned to $9 billon because of interest accrued since 2013.
The federal government has tried to nullify the award, saying it was not subject to international arbitration but British courts rejected the argument.
P&ID consequently asked the Commercial Court in London to convert the arbitration into a judgment, which would allow them to try to seize international assets.
Commenting on the judgement on behalf of the company, Andrew Stafford Q.C. of Kobre & Kim said: “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.
“The Court has ruled decisively in P&ID’s favour and has comprehensively rejected Nigeria’s efforts to avoid payment of this award of over $9.6 billion.
“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.”
P&ID, founded by Irishmen Michael Quinn and Brendan Cahill had entered into a 20-year gas and supply processing agreement (GSPA) with the federal government in 2010 to build a state-of-the-art gas processing facility in Calabar.
The plant, in which Nigeria was to have a 10% stake, was to refine associated natural gas into non-associated natural gas to power the national electric grid as conceived in 2006 when President Olusegun Obasanjo was in power.
The agreement stipulated Nigeria would receive 85% of the non-associated gas at no cost for electrical generation and industrialisation. P&ID would receive the remaining 15% of byproduct – methane, propane, butane – to sell on the commercial markets, of which Nigeria would receive proceeds from their 10% stake in the company’s ownership.
Based on the agreement, the government was to supply 150 million standard cubic feet (scf) of the gas per day to P&ID — rising to 400 million scf in the life of the project. The gas was otherwise being flared by the oil-producing companies.
The GSPA also required the government to build a gas supply pipeline to the P&ID facility.
P&ID said after spending several years preparing for the project, the project collapsed because the Nigerian government did not build a pipeline or secure supply of gas as stipulated in the agreement.
The judicial journey
In August 2012, the company initiated arbitration proceedings.
The tribunal was organised in London under the rules of the Nigerian Arbitration and Conciliation Act as part of the original contractual agreement between parties.
In January 2017, the tribunal ruled that Nigeria was liable for $6.6 billion in damages, which increased to $9 billion after interest.
Implications for Nigeria
For a start, Nigeria’s debt which was put at N24.9 trillion as of July 2019 would increase significantly without the government borrowing a dime.
At the official exchange rate of N305/$, this judgement debt is N2.7 trillion.
However, this amount might increase due to tax if the settlement is not resolved quickly.
Going by the court ruling, Nigeria will lose some prized assets.