A London Arbitration Tribunal has awarded $8.9 billion fine against the federal government for breaching a contract with a British firm, Process and Industrial Developments Limited (P & ID).
The government’s contractual breach relates to the supply of an agreed quantities of wet gas at first-150 million standard cubic feet per day (scf/pd), and finally, 400 million scf/pd during the 20-year period of supply while the firm was to strip away the heavy hydrocarbons that make wet gas unsuitable for electricity generation and return the lean gas thus created to the country.
The refining process was to take place at the gas processing facilities to be built by P & ID in Calabar, Cross River State.
The fine, it was gathered, emanated from the contractual breach of three previous administrations of Presidents Olusegun Obasanjo, Umaru Yar’Adua and Goodluck Jonathan.
It was learnt that should Nigeria fail to pay the judgement fine before February 15, P&ID can enforce the award against the country by seizing its assets in the United Kingdom (UK).
Court documents show that P & ID had initiated moves to recover a judgment debt of $6.6 billion in damages in addition to $2.3 billion in uncollected interest, which was calculated at $1.2 million a day, according to a lead judgement by Lord Hoffman.
The judgment sum snowballed to $9 billion as a result of interest calculated at seven per cent from the date the decision was reached by an arbitration tribunal in the UK.
According to the tribunal, the agreement was executed on January 11, 2010, by P & ID and the ministry of petroleum resources for and on behalf of the federal government to refine associated natural gas (also known as wet gas) into non-associated natural gas to be used by Nigeria in powering its national electric grid.
The tribunal ruled that Nigeria had repudiated the agreement by failing to satisfy its contractual obligations and eventually abandoning the project contemplated there under, causing the British firm to lose substantial profits it would have earned over the 20-year period during which Nigeria was to supply the company with natural gas.
Under the agreement, the P&ID project would have generated 3000 megawatts of electricity for Nigeria.
Court documents also showed that March 20, 2013 was the date which P & ID accepted Nigeria’s repudiation of the agreement.
However, the federal government did not move to set aside the final award of the fine and under English law, the deadline for doing so had elapsed.
The failure to accept and secure a settlement led to fine.
According to court documents, earlier efforts to settle the contractual breach had been stalled by the Nigerian government.
On May 3, 2015, P&ID offered to settle the dispute with the Nigerian government for $850 million.
On May 30, 2015, the matter was brought before President Buhari and the vice president, Prof. Yemi Osinbajo.
The government rejected the $850 million settlement which was less than 10 per cent of the current judgment sum.
Meanwhile, it is uncertain which Nigeria assets would go for the fine but oil revenues might likely be targeted.
It was learnt that if P & ID is successful at the hearing scheduled for this month, it can enforce the award against Nigeria by seizing her assets in the UK.
The ruling would give the company permission to enforce the award.
Meanwhile, the director press, ministry of petroleum, Mr. Idang Alibi who confirmed the London ruling said both the federal ministry of petroleum resources and the federal government were aware of the judgment and were doing something about it, but he did not give further details.
