DAILY FILE – A 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 documents obtained at the weekend, 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.
If Nigeria fails to pay the judgemnt fine before February 15, P&ID can enforce the award against the country by seizing its assets in the United Kingdom (UK).
Reacting to the development, the Director Press, Ministry of Petroleum, Mr Idang Alibi confirmed the financial obligation.
He said both the Federal Ministry of Petroleum Resources and the Federal Government are aware of the judgment and are doing something about it but gave no further details.
He, however, said the ministry will respond to the matter at the appropriate time.
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 the country’s 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 that 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.
According to court documents, the ruling also stated that 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 that March 20, 2013, was the date on which P & ID accepted Nigeria’s repudiation of the agreement, however, the 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 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 Vice President Yemi Osinbajo. The government rejected the $850 million settlement which was less than 10 per cent of the current judgment sum.
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