Smarting from $9.9bn P&ID Liability, FG Risks Fresh $3.5bn Judgment Debts

Obinna Chima and Martins Ifijeh 

As the federal government tries to wriggle its way out of the failed gas project proposed to be executed by an Irish-owned firm, Process and Industrial Developments (P&ID) Limited, that has plunged the country into a $9.9 billion judgment debt, Nigeria risks fresh multi-billion US dollars judgment debts in several other cases if the federal government decides to stay aloof in pending arbitrations, THISDAY’s investigation has revealed.

Documents obtained by THISDAY from sources in the Ministry of Justice showed that the federal government has fresh arbitration cases that might cost the country over $3.5 billion.

For instance, there is the Interocean Oil Development Company and Interocean Oil Exploration Company versus the Federal Republic of Nigeria, which is still pending; while the debt in the case between Nigerian Agip Exploration Limited et al versus the Nigerian National Petroleum Corporation was put at $500 million.

Similarly, there is also the Shell Nigeria Exploration and Production Company Ltd et al versus the Nigerian National Petroleum Corporation, whose debt if it goes against Nigeria, according to the document, is put at $1.4 billion.

In addition, there is Statoil (Nigeria) Limited et al versus the Nigerian National Petroleum Corporation – $1 billion; the Federal Government of Nigeria versus Resort International Limited – N88,070,917,933 ($243million); Shell Nigeria Ultra Deep Limited versus the Federal Republic of Nigeria; Guadalupe Gas Products Corporation versus Nigeria as well as the Arbitration CAS 2014/A/3744 & 3766, Nigerian Football Federation (NFF) versus the Fédération Internationale de Football Association (FIFA), that was awarded on May 18, 2015. This arbitration, however, was a declaratory award with no monetary claim.

Furthermore, the document also showed that there is a Land and Maritime Boundary case between Cameroon and Nigeria – Cameroon v. Nigeria: Equatorial Guinea intervening – as well as the United States —Import Prohibition of Certain Shrimp and Shrimp Products- (India; Malaysia; Pakistan; Thailand v United States), whereby Nigeria is among the third parties.

THISDAY gathered that some other cases where Nigeria is a third party include Australia — Certain Measures Concerning Trademarks and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging- (Ukraine v Australia); and Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging – Communication from the Appellate Body- (Honduras v Australia).

Speaking on Arise News Channel, a sister broadcast arm of THISDAY Newspapers, the Chief Executive Officer of the Nigerian Institute of Chartered Arbitrators (NICA), Mrs. Shola Oshodi-John, said the federal government lost the P&ID case because it refused to renegotiate with the benefiting company.

Oshodi-John, who doubles as the registrar of the institute, said government could have been able to take the case out of the arbitration court in the early years of the case, adding that government’s bureaucracy and many other factors ensured it degenerated to this level.

 She said: “From my own understanding, during ex-President Goodluck Jonathan’s administration, the federal government was willing to pay $800 million to P&ID because the company had spent money on feasibility studies and felt it had lost revenue, which includes the loss of income for the period of 20 years when this contract would have run.

“So, they tried to step out of court to come to an agreement, but unfortunately, there was a change in government; Jonathan was leaving while President Muhammadu Buhari was coming in. So, I don’t know the reason why this present government did not revisit this matter to ensure the negotiation was complete. Some people said it was because Nigeria was in recession, but then again, the government could have brought everyone to the table to say let us renegotiate or let us do this in phases because the programme was actually to favour Nigerians. This contract would have ended gas flaring in Nigeria. If you live in the Niger Delta, you would know gas flaring is one of the major environmental hazards in the country.

“We made certain steps to address this, but it just didn’t work; maybe because of the way the Nigerian bureaucracy is structured. Even as far back as three months ago, we offered to help in renegotiating with P&ID, but we didn’t hear from anyone.”

She identified Nigerian officials’ reluctance to carry all experts along on matters of such importance as the reason why such an issue was treated with levity.

She said: “The issue we face in Nigeria is that we think because someone is in a particular position the person can provide the required expertise.

“In a situation like this, what Nigeria needed was core professionals; people that have expertise in contract negotiations and drafting, people that have expertise in public and private partnership contract, those are the people that should have been on the team.

“If you do a background check, you would find out that there was no such expertise available to Nigeria, because if we did they would never assign a contract like that. For your information, P&ID did not fulfil their own part of the contract.”  

However, the Minister of Justice and Attorney General of the Federation, Mr. Abubakar Malami (SAN), has vowed to prosecute all government officials involved in the failed P&ID gas project.

He had told journalists at his first post-inauguration press conference in Abuja that drawing a lesson from the development, the federal government had taken steps to protect Nigeria from losing monies as a result of legal battles arising from breakdown in contractual obligations.

Under the impending regime, being put in place in the wake of the $9.9 billion arbitration award to the Irish firm over the failed gas project, the AGF said his office would now vet contracts, Memorandum of Understanding (MoUs) and other agreements entered into by Ministries, Departments and Agencies (MDAs) before they commit Nigeria to any obligations.

Malami said the policy would be executed under a structured and systematised compliance programme for statutory entities that would be domiciled in the office of the Solicitor General.

The aim of the impending policy, according to Malami, is to ensure that all relevant laws are not breached thereby reducing, if not totally eliminating, potential liability by the federal government that may arise from acts of commission or omission of the MDAs.

Also speaking on ARISE TV, the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said the controversial P&ID judgment was nowhere near $9 billion or even $500 million.

 He said: “So, the question is, at what point of negligence did this pothole become a drench? Who are the people that could have taken action before we got here?

“I have no doubt in my mind that the higher court in Britain will give a ruling which is much better than what we have now because what we have now sounds absurd. But we are in a world of laws and if you sleep on your rights, there is a price to it.

“Have we learnt any lesson from this and how many more problems are in the woodwork that might come up?”