THISDAY Guide to FG, P&ID Failed Gas to Power Project via thisdaylive
In this special report, Davidson Iriekpen, Tobi Soniyi and Obinna Chima, examine the genesis of and collapse of the failed gas to power deal between an Irish firm, Process and Industrial Developments Limited, and the Ministry of Petroleum Resources, on behalf of Nigeria, which gave birth to the raging $9.6 billion arbitral award and recent UK enforcement judgment in favour of the company
The matter became more pronounced when a hedge fund managed company, VR Capital Group, which had knowledge of the matter, in March this year, took as much as 25 per cent stake in P&ID. Besides, the EFCC found that there was collusion between some officials of the Ministry of Petroleum Resources and P&ID to defraud the country.
On Monday, Vice President Yemi Osinbajo, a learned silk and professor of Law, lead a legal team to meet with a British lawyer, believed to have represented Nigeria in the enforcement proceedings in the US and UK, to find a way out of the logjam.
THISDAY gathered that the key players in the P&ID deal included the late Minister of Petroleum Resources, Dr. Rilwan Lukman, who as the Honorary Advisor on Energy and Strategic Matters to the Yar’Adua, ensured that the deal received the attention of the late president. According to the agreement, the initial volume of gas was about 150 million cubic feet of gas per day, which would be ramped up to about 400 million cubic feet per day during the 20-year period.
It said: “Since the commencement of the arbitration, P&ID has repeatedly made clear to Nigerian leadership that it is open to a reasonable settlement offer, and Nigeria’s leaders have repeatedly failed to make one. Even after the arbitration tribunal ruled in favour of P&ID, the Buhari administration would not pay the award or make a reasonable settlement offer. As a result, P&ID now is asking the U.S. and U.K. courts for permission to enforce the award.
But on the advice of the former Attorney General of the Federation, the federal government opted for an amicable settlement with P&ID. Thereafter, Shasore applied two weeks later to the Federal High Court in Nigeria, which issued a 3-page order in 2016, setting aside and/or remitting for further consideration or part of the liability award.
In its final award on 31st January, 2017 but released on 10th February, 2017 the tribunal awarded the claimant the sum of $6.597 billion plus interest at the rate of seven per cent, from 20th March 2013. In his response on 18th April 2017, the vice president approved the recommendations of the AGF, which included a negotiation of the award with the P&ID.
b. The outstanding sum was to be paid through an asset that would be determined by the Minister of Petroleum Resources. He further stated that the P&ID had proceeded to instruct its counsel to approach the court without further notice to the federal government to recover the judgment debt and would only consider a pure settlement of the award.
In response to the petitioner’s application for default judgment, the federal government’s counsel on 12 June, 2018 filed a motion to set aside the clerk’s entry of default for defective service, which was conceded to by the petitioner and it applied to the court to cure the deficiency by serving a fresh process on the Ministry of Foreign Affairs and Ministry of Petroleum Resources through courier or normal mail.
The MSPR and AGF were also to reopen negotiations with P&ID, with a view to arriving at a settlement in the neighbourhood of $250million in line with the recommendation and dissenting view of the Nigerian appointed arbitrator, Ojo.
The position of the government in the United States proceedings was to resist enforcement of the award on the basis that Nigeria as a sovereign state has an absolute right to obtain an authoritative determination of its sovereign immunity. In a ruling on 9 October 2018, the District Court granted a stay of proceedings pending a determination of the appeal.
The 21st May, 2019 fixed for hearing on the merits of the application for permission to enforce the award was adjourned at the instance of the court due to “Judicial Availability” to 14th June, 2019. However, due to the large volume of gas being flared by Addax Petroleum in the company’s Oil Mining Lease 123 in Adanga area of Cross River State, the project was shifted to Calabar, Cross River State, to utilise the flared gas.
P&ID was said to have received allocation of land from the Cross River State Government at Adiabo in Odukpani Local Government Area of the state. But before the completion of the Adanga-Calabar pipeline contract, Addax Petroleum was said to have told the other stakeholders in 2011 that it would not be able to provide the required wet gas for Phase 1 of the P&ID project because it would also require a certain volume of lean gas for reinjection into OML 123.
Mohammed said the deal with P&ID was fraudulent and that Buhari had directed the Economic and Financial Crimes Commission , Nigerian Intelligence Agency and the Police to investigate the troublesome transaction. But two arbitrators, Mr. Chikwendu Madumere and Ms. Remi Awe, who spoke separately with THISDAY were of the view that no amount of merry-go-round would save Nigeria from the judgment debt.
“It is painful, it should not have happened but we are beyond that point now. It is too late. All that is left is to sit down with them and talk. “The only option now is to negotiate as an award has already been given and the government was well represented at the sittings”, she said. She warned that if Nigeria’s assets were seized based on this judgment debt, Nigeria could not retaliate by seizing British assets in Nigeria “because this is not a case between governments. It’s purely a commercial transaction between a UK company and the Nigerian government.”
Former president of the Nigerian Bar Association , Mr. Olisa Agbakoba, SAN, advised the federal government to exhaust all legal options at the appellate level to reduce the judgment debt. He said while the award is excessive and unreasonable, there was still need to dialogue with the P&ID for a negotiation of the award.
In order to forestall P&ID-like situations in the future, Agbakoba advised Buhari to issue an Executive Order for the establishment of a national arbitration policy. He said had the federal government heeded the advice to establish the policy over the years, the P&ID imbroglio would not have arisen.
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