With Yar’Adua on Sick Bed, Two UK Paper Coys Outsmarted Nigeria

•May get away with 20% of external reserves, 2.5% GDP
•My hands are clean, says Jonathan

The several months late President Umaru Yar’Adua spent on the
sick bed prior to his demise on May 5, 2010, paved the way for
Process & Industrial Developments Limited (P&ID), a tiny
natural gas company to hoodwink the federal government into
allegedly signing a gas supply and processing agreement (GSPA)
which may cost the country a whopping $9 billion following last
week’s British Commercial Court ruling, THISDAY findings have
shown.

If the judgment is executed and the aforementioned amount is to
be paid, the UK firm might walk away with 20 per cent of Nigeria’s
external reserves, which stood at $44.425 billion as of last
Thursday, and 2.5 per cent of Nigeria’s Gross Domestic Product
(GDP).

This is just as former President Goodluck Jonathan has washed
his hands of the matter, saying that the controversial contract was
signed in January of 2010, while he became acting President on
February 9, 2010. Jonathan, who said this through his former aide,
Reno Omokri, insisted that the cabal held sway during that period
Yar’Adua was ill.

Meanwhile, a hedge fund managed company, VR Capital Group, which
had knowledge of the matter, had in March this year, taken as much
as 25 per cent stake in P&ID. Since then, the company has been
trying to pull levers of power in the U.S. and the U.K. to make
Nigeria settle or, failing that, enable the company to start
seizing assets, Bloomberg reported.

The saga began almost a decade ago. Despite the country’s ample
natural resources, Nigeria’s state-owned electric and petroleum
companies have struggled to power the country. To help fix the
problem, in 2010, late President Yar’Adua had authorised
partnership with private companies to develop the nation’s energy
infrastructure.

The Ministry of Petroleum Resources then, headed by late Rilwanu
Lukman, had struck the agreement in January 2010 with P&ID,
which was founded in 2006 by two Irishmen, Michael Quinn and
Cahill.

However, a source at the Nigerian National Petroleum Corporation
(NNPC) yesterday told THISDAY that, “the firm awarded $9 billion
judgment debt against Nigeria never scratched the ground to
commence the project.

By the terms of the agreement, P&ID was to build and operate
an accelerated gas development project at Adiabo in Odukpani Local
Government Area (LGA) of Cross River State. The agreement required
the federal government to supply natural gas from Addax
Petroleum-operated Oil Mining Leases (OMLs) 123 and 67 for P&ID
to refine into fuel suitable for power generation in the
country.

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.

But P&ID alleged that after signing the agreement, the
federal government reneged on its obligation after it had opened
negotiation with the Cross River State government for allocation of
land for the project.

Sources within the Cross River State government told THISDAY
yesterday it was unaware of any negotiations for land allocation to
P& ID by the previous administration in the state. P&ID
claimed that the failure of the federal government to construct the
pipeline system to supply the gas frustrated the construction of
the gas project, and deprived it the potential benefits expected
from 20 years’ worth of gas supplies.

The company said attempts to settle out-of-court with the
federal government failed.

The British firm, in August 2012, served the federal government
a Request for Arbitration.

But in its swift defence, the federal government told the
arbitration tribunal, “The failure of P & ID to acquire the
site and build Gas Processing Facilities was a fundamental breach
and that no gas could be delivered until this has been done.”

Despite the federal government’s sound argument, the tribunal
ruled that the Nigerian government’s obligations under Article 6B
were not conditional upon P &ID having constructed the gas
processing facilities.
In July 2015, the arbitral tribunal ruled that the federal
government had repudiated its obligations under the GSPA and that P
& ID had been entitled to accept the repudiation and claim
damages for breach.

But on December 23, 2015, the Nigerian government asked the
tribunal to set aside the award but the tribunal dismissed the
application on February 10, 2016, paving the way for the hearing on
July 22 to 24, 2016 to determine the damages.

Despite the fact that P & ID did not commence any project in
Nigeria to be entitled to any damage, the tribunal in its opinion
ruled that the damage suffered by the British firm was the loss of
net income the company would have received if the federal
government had kept its side of the contract.
According to two members of the three-man tribunal, Lord Hoffmann
and Anthony Evans, P&ID’s expenditure and income should have
been about $6.597 billion if the GSPA was duly performed by
government.

Both officials said the award should be paid together with
interest at the rate of seven per cent from March 20, 2013.
However, the third member of the tribunal, who was Nigeria’s former
Attorney-General and Minister of Justice, Chief Bayo Ojo (SAN), in
his minority ruling, said although P&ID was entitled to
compensation for the breach, its damages could not have been more
than three years from the date of the alleged breach. Ojo argued
that apart from being a new company incorporated in 2006, the gas
project could not have started yielding benefits earlier than
2015.

So, on January 31, 2017, Ojo said the highest amount payable as
damages to P&ID should not be more than $250 million.
However, the final award remained unsettled since 2013, leading to
the claim that it had attracted additional $2.3 billion in
uncollected interest as of March 2018.
The tribunal claimed the damages were calculated as the present
value of 20-year income, minus certain capital and operating costs
incurred from building and running the refining facility.

“The final award is governed by such a treaty — the New York
Convention. So, Nigeria’s status as a foreign sovereign does not
deprive this court of jurisdiction to confirm the award,” P&ID
said in its March 16, 2018 application seeking enforcement of the
award.
But the federal government opened initial negotiations for the
settlement of the award, though the efforts were not
successful.

Nevertheless, a British Commercial Court had on Friday affirmed
the ruling of a London Arbitration Tribunal which in January 2017,
awarded $6.6 billion judgment debt against the federal government
over alleged breach of a GSPA it allegedly signed with a British
firm, P&ID. The tribunal had ruled that Nigeria was liable for
$6.6 billion in damages, which increased to well over $9 billion
with interest accruing daily.

The closely held company could enforce an arbitration award that
entitles it to the sum as though it were a UK court order,
Bloomberg quoted Judge Christopher Butcher to have said in the
ruling.

The gas company, which is backed by a Cayman Island-based hedge
fund, was awarded $6.6 billion in an arbitration case in January
2017, following a dispute over a 2010 gas deal and interest
payments made it to rise to $9 billion.

The Nigerian government has yet to make a payment, Butcher said
in his ruling.

“P&ID is committed to vigorously enforcing its rights, and
we intend to begin the process of seizing Nigerian assets in order
to satisfy this award as soon as possible,” the company’s lawyer
Andrew Stafford said.

Butcher rejected Nigeria’s objections both to the arbitration
process including the jurisdiction as well as the amount of the
award and said he would, “make an order enforcing the Final Award
in the same manner as a judgment or order of this Court to the same
effect.”

The British court decision was sequel to the March 16, 2018
proceedings in the Court by P &ID, seeking leave to enforce the
Final Award in the same manner as a judgment.
But the federal government on Friday said it had commenced move to
reverse the judgment and had already instructed its lawyers to
initiate appeal proceedings against the judgment at the British
court.

This was contained in a statement from the Federal Ministry of
Justice, signed by the Solicitor-General of the Federation, Dayo
Apata.
Apata, while assuring that the federal government would do
everything possible to defend vigorously its interest and that of
the people of Nigeria, said part of the move was to seek for a Stay
of Execution of the said judgment, adding that the issue was a
current litigation issue at the United States of America.

In a statement, Brendan Cahill, one of P&ID’s founders,
said, “it is disappointing that Nigeria chose to repudiate the
terms of a deal that would have benefited the country by bringing
electricity to millions of its citizens.” He said the company,
“backed by its investors,” would pursue enforcement of the
award.

Jonathan Washes Hands of $9bn Judgment Debt

Meanwhile, former President Jonathan yesterday denied the
involvement of his administration in the controversial judgment
debt. He accused the Buhari administration of trying to make a case
against him and his administration by claiming they were
responsible for the $9 billion judgment against Nigeria.

Omokri, said in the statement yesterday that the desperate
attempt by the agents of the Buhari administration to “rewrite
history will backfire just like other past futile propaganda of
this goebellian government”.

The statement urged Nigerians, especially journalists, to peruse
the court filings, stressing that they are public documents.

Citing a quote from the court filings in the case, Omokri said,
“P&ID submits that it entered a gas supply and processing
agreement with Nigeria’s Ministry of Petroleum Resources in January
2010. Pursuant to the agreement, P&ID claims that it would
build the necessary facilities and then refine natural gas into
non-associated natural gas for a period of 20 years.”

According to Omokri, “This transaction occurred in January of
2010. Former President Jonathan was not President in January 2010.
During that time, he was completely shut out of power by an
unelected cabal that ran Nigeria during the period of the
ill-health of the late President Yar’adua, before the National
Assembly courageously intervened on February 9, 2010.”

Omokri added that the cabal not only fought against the
ascension of then Vice President Jonathan to the office of acting
President, but also took documents, including budgets and
contracts, to Saudi Arabia and claimed that the then ailing
President Umaru Musa Yar’adua had signed them. He recalled that the
cabal had announced on December 28, 2009 that Yar’adua had signed a
supplementary budget and other documents from his sick bed in Saudi
Arabia, without the foreknowledge or acquiescence of the then Vice
President Jonathan or the Executive Council of the Federation.

“In fact, a week later, the Conference of Nigerian Political
Parties (CNPP) came out with an exposé alleging that the signatures
on the documents were forged and Femi Falana (SAN) took up the case
in court,” Omokri alleged.

Omokri accused the then Minister of Petroleum, the late Dr.
Rilwanu Lukman, of packaging and arranging the signing of the
contract with P & ID, and alleged that Lukman was also a member
of the cabal.

“Mr. Lukman and other members of the cabal treated then Vice
President Jonathan with disdain and kept him in the dark about
their actions because he had no executive authority, as the then
President was unable to hand over to him as constitutionally
stipulated due to the suddenness of his ill health,” he said.

“That same cabal has resurrected and has now coalesced around
President Muhammadu Buhari, with some of them being made either
ministers, or formal and informal advisers. As a matter of fact,
the main man behind that cabal is now one of the closest persons to
General Buhari,” Omokri added.

However, the judgment has raised some difficult questions, with
many asking: who signed the contract with P&ID? What were the
obligations of the parties? What obligations did the firm perform
to warrant a $9 billion cost?

What amount of money did the firm invest in Nigeria in
furtherance of the contract? Where is the office of the firm
located in Nigeria? Who are the staff and principal officers of the
firm in Nigeria? What was the level of the investment of the firm
in Nigeria before the contract was terminated? What was the loss of
the firm in monetary value before the termination of the contract?
How did the contract come about in the first place and why was it
signed and by whom? Where are the offices of the firm in Europe?
And how many people is the firm employing in Europe and other parts
of the world? How much of the terms of the contract did the firm
meet before the termination of the contract? And they had accepted
$800m as full and final settlement in 2015.

The sum was to be paid over a period of five years.

How did that agreed figure in 2015 now become $9b in 2019. Was
the Agreement vetted by the office of the Attorney General of the
Federation before it was signed by the Ministry of Petroleum
Resources?