London Arbitration Tribunal has awarded $8.9 billion fine against Nigeria in favour of a British firm, Process and Industrial Developments Limited (P & ID).
According to ‘The Nation’, the P & ID had initiated moves to recover a judgment debt of $6.6 billion in damages plus $2.3 billion in uncollected interest, which was calculated at $1.2 million a day, according to a lead judgement by Lord Hoffman.
While the Nigerian Ministry of Petroleum is said to have confirmed the development, the paper further reports:
If Nigeria fails to pay the judgment fine before February 15, P&ID can enforce the award against the country by seizing its assets in the United Kingdom (UK).
The fine emanated from the contractual breach of three previous administrations of Presidents Olusegun Obasanjo, Umaru Yar’Adua and Goodluck Jonathan.
According to court papers, the judgment debt arose from failure to perform its contractual obligations under a gas supply and processing agreement it signed with P & ID.
The judgment sum had snowballed into $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 UK Tribunal ruling, it was noted 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 ruling also stated the Tribunal found 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 (Mw) of electricity for Nigeria.
Natural gas that was being flared off would instead have been processed and used to generate electricity for Nigerians.
Court documents also showed March 20, 2013 was the date on which P & ID accepted Nigeria’s repudiation of the agreement.
However, Nigeria did not move to set aside the final award at the seat of arbitration, and under English law, the deadline for doing so has long passed.
The failure to accept and secure a settlement has led to saddling Nigeria with over $9 billion of additional debt.
According to court documents, earlier efforts to settle the contractual breach had been stalled by the Nigerian government.
On 3 May 2015, P&ID offered to settle the dispute with the Nigerian government for $850 million.
On 30 May 2015, the matter was brought before President Buhari and Vice President Yemi Osinbajo.
The government rejected the $850 million settlement, which was less than 10 per cent of the current judgment sum.
It was also learnt at present there is no idea which Nigeria assets would be affected, as this has not been decided but oil revenues might likely be target.
