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.
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.
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.
Financial Autonomy: Governors, State Speakers reach agreement
The Governor also said that the final document of the agreement should be ready for implementation by May 2021.
The Governors’ Forum, Conference of Speakers of State Legislature and other governance stakeholders announced that they reached a resolution over the implementation of financial autonomy for State Legislature and Judiciary.
This was disclosed by the Ekiti State Governor and Chairman Nigeria Governors’ Forum, Kayode Fayemi, after the meeting, which was held in Abuja on Monday, and presided by the Chief of Staff to the President, Prof. Ibrahim Gambari.
What the Governor said
“We are here for legislative and judicial autonomy and Governors; Speakers of State Assemblies and the Judges of the States are on the same page as far as this issue is concerned,” he said.
We just emerged from a meeting with the Solicitor General of the Federation, the representatives of the judiciary and those of the Conference of Speakers and we are all in force; an agreement has been reached.
The issue is about implementation. There has been no objection from governors on judicial and legislative autonomy.
As a matter of fact, it would not have passed if governors were not in support in the first instance. So, that issue has been fully and holistically addressed,” Fayemi said.
The Governor also said that the final document of the agreement should be ready for implementation by May 2021 and urged striking workers to return to offices “because as far as this has gone, we have met with all the parties concerned and the President, through his Chief of Staff, has been monitoring what has been happening.”
What you should know
Nairametrics reported earlier this month that members of the Judiciary Staff Union of Nigeria (JUSUN) went on strike with the closure of Federal High Courts in different states across the nation. The union said the purpose of the strike was to draw attention to the financial autonomy of Nigeria’s Judiciary.
Finance Minister tasks FG and state governments to control spending
The Minister also denied claims that the FG printed N60 billion as top-up for March FAAC numbers.
The Minister of Finance, Zainab Ahmed, has called on Governments on all levels in Nigeria to control spending amid decreasing revenues and urged for prudent government spending. The Minister also denied claims that the Federal Government printed N60 billion as top-up for March FAAC numbers.
The Minister disclosed this in an interview on Monday and warned that the FG was not generating enough revenue to align with its spending habit.
Zainab Ahmed added that the FG would maintain its stance from January 2021 to end total fuel subsidies in Nigeria, and confirmed talks with organised labour on subsidy removal.
“As a nation, the Federal, State and Local governments must review expenditure patterns. We are spending too much and we are not generating enough,” she said.
What you should know
Nairametrics reported last month that the Debt Management Office had announced that Nigeria’s public debt at end of 2020 was N32.915 trillion. The DMO said the sum of the debt included the Debt Stock of the Federal and State Governments, as well as the Federal Capital Territory.
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