Eze Onyekpere
[email protected][1]; 08127235995
The governance of Nigeria is always in the news for the wrong
reasons; incidentally, most of the challenges facing the nation are
avoidable. With our economic indicators virtually facing south,
while our debt to revenue profile has hit 70%, the news that a
British commercial court has imposed $9bn damages or fine against
the Federal Government of Nigeria for violation of contract
obligations calls for extremely sober reflections. It is a strong
threat to our national fiscal sustainability considering that $9bn
is about the actual retained revenue that accrued to the federal
treasury in the 2018 fiscal year.
In our usual lackadaisical manner, the country signed a gas
harnessing agreement with a company called Process and Industrial
Development. The company was to process the gas for local
consumption and for export while Nigeria was bound to supply the
gas feedstock through building a gas supply pipeline to terminate
at the location of the gas processing plant. One hundred and fifty
million standard cubit feet (mscf) of gas per day was to be
supplied to P&ID plant and gradually increasing up to 400mscf
per day in the later stages of the project. Eventually, Nigeria
defaulted and did not build the gas pipeline while P&ID did not
invest a kobo in the project. But the company later initiated
proceedings for loss of potential income and revenue which after so
many years of back and forth, culminated in the award.
It is on record that the company did not invest a kobo and had
not even acquired land for the gas plant before the Federal
Government’s default. Yet, $9bn was awarded against Nigeria.
So many issues are raised by this award, coming at a time we can
hardly get enough retained revenue to fund recurrent expenditure.
It is the position of this column that this kind of threat provides
opportunities to be harnessed for the reform of our fiscal
governance laws and policies. If we must suffer loss, it must be
one from which we can draw lessons for progress and to block the
pipes of mischief which enable us to say “never again”. In every
thereat, there must be an opportunity to develop a strength and to
learn the right lessons.
The first issue is that Nigerian governments must stop entering
into contracts and obligations they are not ready to implement. Our
lack of respect for the sanctity of contracts ends in our
jurisdiction. Other countries and partners, whether public or
private, take themselves very seriously and do not enter into
frivolous contracts they are not ready to implement. Signing a
contract and announcing it to Nigeria add no value to the local
economy or the security and welfare of Nigerians without the
requisite will to implement the same. It is also believed that the
government officials packaging the business would not have any
opportunity for private gain if the contract is not implemented. To
stop this trend involves the design of processes that ensure the
buy-in of every ministry, department or agency and stakeholder
necessary to guarantee the implementation of the project. This will
involve high levels of public-public consultation and engaging the
private sector to ensure that the project is not swept under the
carpet.
The second issue is that every new government in Nigeria sees
itself as not bound by agreements and obligations entered into by
the previous government even when the two governments come from the
same political party and one handed over to the other. For
instance, that a contract was signed by the Umaru Yar’Adua
government, of which Goodluck Jonathan was the deputy, can be no
excuse for the abandonment of the contract after the demise of
President Yar’Adua by the Jonathan administration. Was the need for
gas gathering and processing for local consumption and export
overtaken by any supervening events during Jonathan’s presidency?
Discerning Nigerians will recall that President Olusegun Obasanjo’s
National Economic Empowerment and Development Strategy led to the
few achievements of his administration and before he left office,
NEEDS 2 was at an advanced stage when virtually all stakeholders
had been consulted and NEEDS 2 awaited a few inputs at the highest
level to get it ready for implementation. But as soon as Yar’Adua
took over power, he abandoned NEEDS 2 for his Seven-Point Agenda.
This was done despite the fact Obasanjo virtually handpicked and
installed him as President.
This attitude was also the same that led to the Muhammadu Buhari
government to have a non-challant attitude towards payment and or
engaging the less the $850m negotiated settlement done by the
Jonathan administration, when it became clear that Nigeria had
defaulted in this contract under consideration. The Buhari
administration had two options, either to pay or further negotiate
the award before it got out of hand. To stop this attitude, we need
the Project Continuity and Implementation Act which will bind
governments to continue and fully implement existing projects
before staring new ones. To abandon an existing project or to stop
the same, the government must show cause and reason(s) using
empirical evidence, to justify that the project is no longer in the
overall national interest and thereafter, the government would be
duty bound to bring the process of the project to a closure either
through negotiations or requisite settlements that will close the
file of the project.
The third issue is that Nigeria has been signing agreements
where all the penalty clauses are tilted against the country and we
have little or no protection whilst all the benefits from the
agreement accrue in favour of the other parties. This is not the
first time we signed such agreements. How on earth did we end up
signing an agreement that entitles a company to claim loss of
earnings without having invested a kobo? Who was the lawyer that
drafted the agreement and how much was he paid? Was it a private
legal practitioner or a team of lawyers in the Ministry of Justice?
Who reviewed the draft to make inputs? Did the company use its
lawyers to produce the agreement and simply asked the
representatives of the Nigerian government to sign? When the blind
and or ignorant leads their colleagues or even persons who can see,
they are bound to enter a ditch if they are under obligation to
follow wherever they go. Nigeria has produced enough quality legal
practitioners and scholars of national, regional and international
repute, professional jurists of the highest learning, character and
reputation; to fall for this kind of cheap blackmail is the worst
thing to happen to this country.
To stop this madness, we need to have a system of using our best
lawyers and jurists to draft and perfect agreements of this nature
and to defend our legal disputes. Poor lawyering was responsible
for our loss of Bakassi to Cameroon. Again, we did not use our
first eleven for that case. And now, this one.
Nigeria now needs to move expeditiously, in a targeted manner
and in the national interest to engage the company before our
assets are seized. We could possibly ask the company to come back
and we start constructing the requisite gas pipeline and fulfil our
own part of the obligation. Alternatively, we can negotiate the
award and see how we can reduce it to a minimum. It would not be an
easy negotiation but we cannot afford to sleep over this.
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