On Nigeria’s quest to stop the enforcement of a $9 billion arbitration award against it will now be heard by an English Commercial Court on June 14.
The case could not be heard on May 20 as previously scheduled due to an administrative hitch.
It was learnt that the court would likely make a pronouncement on the merit of Nigeria’s defence at its next sitting.
Process and Industrial Developments Limited (P&ID), a British engineering and project management company, had dragged the country to an arbitration in London in August 2012 alleging a breach of contract by the Federal Government.
In July 2015, the dispute was resolved in favour of P&ID, but Nigeria later unsuccessfully asked the English Commercial Court to set aside the award completely.
However in January 2017, the tribunal ordered the country to pay P&ID $6.6 billion in damages in addition to $2.3 billion in interest charges, amounting to about $9 billion in all.
Nigeria had sought an extension to defend its case to stop the enforcement of the award, which will put the nation’s foreign assets — including external reserves — at risk. After failing to file its defence, Nigeria was fined by the court which ordered the Federal Government to start paying part of P&ID’s legal costs.
Meanwhile even after the court had granted a second extension, Nigeria almost missed the deadline — only filing its defence one working day to the May 20 hearing date.
Sources said stated that officials of the Ministry of Justice arrived London ahead of the hearing only to discover that it would not hold as scheduled.
P&ID, founded by Irish men Michael Quinn and Brendan Cahill — with over 30 years of experience in engineering projects in Nigeria — had entered into a 20-year gas and supply processing agreement (GSPA) with the government in 2010 to build a state-of-the-art gas processing facility.
The plant, in which Nigeria was to have a 10 percent stake, was to refine associated natural gas into non-associated natural gas to power the national electric grid as conceived under the President Olusegun Obasanjo administration in 2006.
The agreement stipulated that Nigeria would receive 85 per cent of the non-associated gas at no cost for electrical generation and industrialisation while P&ID would receive the remaining 15 per cent of byproduct – methane, propane, butane – to sell on the commercial markets, of which Nigeria would receive proceeds from their 10 percent stake in the company’s ownership.
Based on the agreement, government was to supply 150 million standard cubic feet (scf) of the gas per day to P&ID — rising to 400 million scf in the life of the project. The gas was otherwise being flared by the oil-producing companies.
The GSPA also required the government to build a gas supply pipeline to the P&ID facility.
However things went awry when P&ID said after spending several years preparing for the project, it suddenly collapsed owing to the Nigerian government’s inability to build a pipeline or secure a supply of gas as stipulated in the agreement. With the ensuing crisis unresolved even after proposing an amendment to the agreement, P&ID commenced arbitration against Nigeria in August 2012 in London, UK.
In May 2015, while the arbitration was still ongoing, P&ID agreed to settle the dispute upon payment of $850 million by the government, but President Goodluck Jonathan, who was about to leave office having lost in the presidential election, provoked by P&ID’s offer, countered it and rather indicated a desire to hand over the negotiations to the incoming Muhammadu Buhari administration of President Muhammadu Buhari.