Economy & Politics
UK court receives $200 million bank guarantee from Nigeria
The Nigerian government has paid a bank guarantee of $200 million to a London high court to secure a stay of execution on asset seizure by P&ID.
A London high court has received a bank guarantee of $200 million from the Federal Government of Nigeria to secure a stay of execution on asset seizures of up to $9 billion related to a failed gas project involving Process and Industrial Developments Limited (P&ID).
Nigeria had settled for the decision in order to avoid the United Kingdom (UK) company taking over some of its assets located in the United States or UK. The $9 billion awarded to P&ID against Nigeria for damages is equivalent to almost 2.5% of the country’s annual gross domestic product.
What happened?
P&ID‘s contract with the Federal Government started in 2010 when former President Umaru Musa Yar’Adua authorised partnerships with private companies to fix the power problem in Nigeria. P&ID signed an agreement with the Ministry of Petroleum Resources in January 2010.
Abubakar Malami, SAN
Breakdown of the deal
Nigeria planned to pipe natural gas from two offshore oil rigs to a refinery that would be built by P&ID. Founded in 2006 by two Irishmen, Michael Quinn and Cahill, P&ID was to remove hydrocarbons from the gas and send the fuel to Nigerian power plants.
It was disclosed that P&ID wouldn’t get paid for the service but it could keep and sell the hydrocarbon byproducts, which themselves had value, with the government getting a cut. But the project fell through.
P&ID then filed a lawsuit against Nigeria in 2012 after all attempts to negotiate a deal with the government failed. A tribunal was organised in London under the rules of the Nigerian Arbitration and Conciliation Act as part of the original contractual agreement between the parties. The tribunal ruled that Nigeria was liable for $6.6 billion in damages, but interests accrued daily since 2013, increasing the liability to $9 billion.
Speaking on the recent development, a Reuter report disclosed that a spokesperson for the Attorney General said Nigeria had applied for an alternative to hold off the arbitration ruling.
He said, “This variation in security, which was proposed by Nigeria as an alternative solution during a procedural hearing on 22nd November, has been accepted by the court and P&ID.”
However, in the same report, a spokesperson for the British company said P&ID hoped the Nigerian government would “accept the reality of the arbitration tribunal award and the decisions of the English Court.”
Why Nigeria should worry
A hedge fund managed by VR Capital Group took a large stake (25%) in P&ID. With the backing of the hedge fund and Lismore Capital Ltd, P&ID hired lobbyists, lawyers, and a public relations firm late last year to fight the case while Nigeria has recruited London-based law, firm Mishcon de Reya and QC of Brick Court Chambers to its legal team.
Note: Two representatives of P&ID pleaded guilty before the Federal High Court in Abuja to the charges levelled against them by the Economic and Financial Crimes Commission (EFCC) in relation to the contract leading to the controversial $9.6 billion court judgment given by a British court against the Nigerian Government.
Business News
CBN’s MPC unlikely to cut rates, even as Nigeria’s foreign reserves hit $36.16 billion
Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira.
The CBN’s Monetary Policy Committee (MPC) is expected to leave the interest rate of 13.5% unchanged during its meeting later today.
The projection is coming on the heels of macroeconomic fundamentals released by the National Bureau of Statistics (NBS), which showed that inflation rose to 12.34%; its seventh consecutive monthly rise and highest level since April 2018.
Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira. Therefore, in order to minimise the risk of exacerbating inflationary pressures, the CBN is unlikely to further cut rates. This possible outcome from the MPC meeting will help stimulate economic growth, just like it did in 2019.
Meanwhile, despite the foreign exchange liquidity crisis being experienced in the currency spot market, data obtained from CBN revealed that the country’s foreign exchange reserves have further increased to $36.16 billion (Gross Estimate) as of 28th of May, 2020.
(READ MORE: Naira depreciates to N460/$1 at the parallel market, despite improved liquidity)
The surge in Nigeria’s external reserves is due to the fact that the price of crude had gained more than 40% since the deadly COVID-19 pandemic started, coupled with reports that foreign investors are returning to Nigeria. The disbursement of $3.4 billion emergency facility by the International Monetary Fund (IMF) to CBN has also been a contributing factor.
Recall that the CBN Governor, Godwin Emefiele, had promised more liquidity in the currency market, assuring that all genuine dollar demands would be met.
However, an Interest rate expert, Ola Oladele, during a phone chat with Nairametrics, advised that the CBN should keep its word by boosting Nigeria’s Forex supply as the persistent downtrend in the currency black market continues. She said:
“The depreciation of the naira in the parallel market as a result of low supply of FX from official sources and less optimistic outlook on the economy due to falling oil prices.
“The BDCs haven’t received supply from official sources since our borders were closed and the crash in oil prices has made natural sellers of FX more cautious.
“We hope that the recent statements by the regulator will restore confidence and subsequently, supply to the market.”
Economy & Politics
Fourth Mainland Bridge to begin before December
The bridge is also designed to be a two-level bridge – the upper level will function as a means for vehicular traffic, while the lower level will stimulate and accommodate pedestrian, social, commercial and cultural interactions.
The Lagos state government has announced that in line with its vision for a smart city, work on the Fourth Mainland Bridge, will commence before the end of year 2020.
In addition to this, construction of the Lekki Regional road will also commence within the next seven months.
Special Adviser to the Lagos State Governor on Works and Infrastructure, Engr. Aramide Adeyoye disclosed this during the Ministerial Press briefing organised by the State Government
The architectural design done by NLE works proposed a design speed of 140km on the bridge, with 8 interchanges to facilitate effective interconnectivity between different parts of the State, and a Four-lane dual carriageway with each comprising 3 lanes and 2metres hard shoulder on each side.
(READ MORE: British High Commission releases flight schedule for final evacuation)
The bridge is also designed to be a two-level bridge – the upper level will function as a means for vehicular traffic, while the lower level will stimulate and accommodate pedestrian, social, commercial and cultural interactions.
The proposed 38 km long fourth mainland bridge is expected to run through Lekki, Langbasa and Baiyeiku towns along the shoreline of the Lagos Lagoon estuaries, further running through Igbogbo River Basin and crossing the Lagos Lagoon estuaries to Itamaga Area in Ikorodu. It will then cross the Itoikin road and the Ikorodu – Sagamu Road to connect Isawo inward Lagos Ibadan Expressway at Ojodu Berger axis.
All of these routes are known to be traffic prone areas, and the construction of the bridge will ease traffic on these routes, thus reducing commute time for residents.
Recall that in April, the state government had shortlisted about 10 firms out of the 32 that expressed interest in the construction of the fourth mainland bridge. The bridge was estimated to be worth about N844 billion.
According to Engr. Adeyoye, the 10km long Lekki regional road will span “Victoria Garden City Scheme 1, connect VGC, Ikate Elegushi, Ikota, Chevron Drive, Ajiran, Pinnock Beach Estate, Gracefield Island and Orange Island, up to Freedom Road to Freedom Way at Lekki”
Upon completion, this road will greatly ease traffic along the axis, serving as an alternative to the Lekki-Epe Expressway, which is already congested and is currently the only road serving the Lekki sub-region which connects directly to the Osborne/Third Mainland bridge corridor, Adeyoye assured.
(READ MORE: LIRS further extends deadline for filing annual tax returns by one month)
More projects to come
Adeyoye noted that there are other ongoing projects such Agege-Pen Cinema, Agric-Ishawo Road and the Lagos-Badagry Expressway, as well as the infrastructural upgrade of Oniru network of roads, namely Muri-Okunola Extension, Ligali Ayorinde and Akin Olugbade, along with seven major junctions in Iru-Victoria Island Local Council Development Area.
Completed projects listed by Engineer Adeyoye include Iworo-Ajido and Epeme Roads phases 1 and 2, and the 6.65km two-lane single carriageway with a 300m bridge of 9m width, which was constructed by CCECC.
Business News
AfDB’s Akinwumi Adesina hits back, denies allegations against him
“I maintain my innocence with regard to trumped-up allegations that unjustly seek to impugn my honor and integrity, as well as the reputation of the African Development Bank.” -Adesina
In reaction to the new, independent probe that was ordered by the board of African Development Bank (AfDB) into his activities, AfDP’s incumbent president, Akinwunmi Adesina, said he is not guilty of any wrongdoing. He also vowed to remain in office.
Adesina’s response to the fresh investigation was disclosed in a press statement that he personally and released on Wednesday, May 27, 2020. Adesina hit back at ‘unprecedented attempts by some people to tarnish his reputation’ and stated that he would continue to work with all the shareholders. In his statement, Adesina also expressed confidence that a fair and transparent probe would eventually prove his innocence. He said:
“I maintain my innocence with regard to trumped-up allegations that unjustly seek to impugn my honor and integrity, as well as the reputation of the African Development Bank.
“I am confident that fair, transparent and just processes that respect the rules, procedures and governance systems of the bank, and rule of law, will ultimately prove that I have not violated the code of ethics of this extraordinary institution.”
(READ MORE: AfDB wins industry gong for pioneering 2019 social bond issue)
The AfDB boss also cited his heroes, Nelson Mandela and Kofi Annan, whose lives proved that human beings can grow through the pain.
Akinwumi Adesina, who is the first Nigerian to lead the largest multilateral financial institution in Africa and among the top 5 in the world, had previously dismissed the allegations as spurious, unfounded, and blatantly false. The allegations from the whistleblowers border on claims of giving contracts to acquaintances, appointing friends and relatives to strategic positions, amongst others.
READ ALSO: AfDB bows to pressure from U.S, orders an independent probe of Akinwumi Adesina
#UPDATE The president of the African Development Bank (AfDB), Akinwumi Adesina, hit back at accusations of corruption and vowed to continue working https://t.co/FGtkKj5WgS
— AFP news agency (@AFP) May 27, 2020
The U.S treasury secretary, Steven Mnuchin, in a letter to the AfDB board, expressed serious concerns about the questionable internal investigation and hurried dismissal of the allegations by the ethics committee of the bank. He thereby called for an independent inquiry into the matter, having feared that dismissing the allegations without appropriate investigation would tarnish the reputation of the bank.
READ ALSO: Presidency denies canceling memos, appointments approved by Abba Kyari
In the meantime, it appears that the AfDB President has the support of some leading African countries including Nigeria and South Africa, as he canvasses vote for a second term in office.
As a show of support, a former Director-General of Securities and Exchange Commission and current Vice President of the World Bank Group, Arunma Oteh, issued a tweet describing Adesina as a man of integrity and a great leader who remains the best man to lead the AfDB.
@akin_adesina, President @AfDB_Group is a man of integrity & a great leader. He remains the best man 2lead Africa’s great institution 4the next 5 years. I was #AfDB Staff17 years – loan officer 4North & West Africa -Treasurer and Group VP https://t.co/zYBOZ2T8ZY
— Arunma Oteh (@aoteh) May 25, 2020
