The minister of justice and attorney general of the federation, Mr. Abubakar Malami has said that the federal government would prosecute anyone found culpable in the agreement between Nigeria and a foreign firm, P & ID that led to the award of $9bn judgment debt against the country.
Malami, who stated this in his maiden speech when he resumed work in Abuja on Thursday, said the matter would not be swept under the carpet adding that the deal was not made in the interest of the country.
“As a government we would not fold our hands, we shall do everything to bring to book all those involved in the conception, negotiation, signing and execution of the agreement,” he said.
It would be recalled that a British court had ruled that an engineering and project management company, P&ID had the right to seize $9bn in Nigerian assets.
The ruling, delivered on Friday, August 16 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.
It would be recalled that in January 2010, the federal government entered into a 20-year gas and supply processing agreement (GSPA) with P&ID to build a gas processing facility. P&ID was to refine associated natural gas into non-associated gas to power the national electric grid. Dr Rilwanu Lukman, who died in 2014, was the minister of petroleum at the time (President Umaru Musa Yar’Adua was on a medical trip to Saudi Arabia).
In the agreement, Nigeria was to receive 85 per cent of the refined non-associated gas, free of charge, for power generation and industrialisation. P&ID would receive the remaining 15 per cent and the by-products – namely methane, propane and butane – which it would export. Nigeria would also benefit from the export proceeds through its 10 per cent stake in P&ID. As in all agreements, there are obligations on both parties: the Nigerian government was to supply 150 million standard cubic feet (scf) of gas per day to the plant. This was to rise to 400 million scf in the life of the project. The gas was otherwise being flared by the oil-producing companies.
But there was an initial obligation on the country — the GSPA required the government to build a gas supply pipeline to the P&ID facility to be located in Adiabo, Odukpani local government area of Cross River state. The gas was to be sourced by the government from OMLs 67 and 123 operated by Addax Petroleum. And this was where everything began to go wrong. Nigeria did not build the pipeline. P&ID said it had spent about $40 million on the project and the failure of Nigeria to build the gas pipeline had breached the agreement. The crisis went unresolved and in August 2012, the company activated the arbitration clause, filing a case of breach of contract against Nigeria in London.
P&ID sought a compensatory award for loss of “potential” income. Nigeria argued that P&ID was supposed to have acquired the land in Cross River and built the processing facility before the government could build a gas pipeline to site. The company, however, argued that Article 6(b) of the GSPA did not state any such pre-condition.
Apparently, the federal government had not shown any seriousness in building the pipeline and P&ID too had started foot-dragging. With the way the arbitration was going against Nigeria, the federal government started making moves to settle the dispute out of court. Offers were made to P&ID to that effect.
P&ID agreed to accept $850 million in compensation, negotiated down from an initial proposal of $1.5 billion by a government committee. The payment was to be made in four tranches — $100 million at first and then in three installments of $250 million each. These were in the last days of President Jonathan, who had lost his re-election bid. He still wanted the figure reviewed downwards, but decided to leave matters for in-coming President Muhammadu Buhari.
However, the Buhari administration, without a cabinet in place, did not follow up. P&ID then got the award in July 2015 — $6.6 billion for “loss of income” over the lifespan of the GSPA and $2.3 billion in interests.
