Appeal against $200m Deposit on P&ID Case Not Lost, Says FG

The federal government yesterday disclaimed a report that it had
lost its appeal against the order of a British commercial court
directing it to deposit $200 million as security before the court
could grant a stay of execution of the $9.6 billion judgment debt
awarded in favour of a British Islands firm, Process and Industrial
Developments (P&ID) Limited.

Justice Christopher Butcher of the Commercial Court in London
had in August awarded the sum of $9.6 billion judgment debt against
Nigeria over an alleged botched gas contract between the country
and P&ID.

However, following Nigeria’s appeal against the judgment, the
London court ordered the country to deposit $200 million as
security into the court’s account while granting request to stay
execution of the $9.6 billion award in favour of P&ID.

The court, in addition, gave Nigeria up till November 25 to make
the deposit but the federal government appealed the court’s
decision.

But a news report claimed that at the hearing of the appeal on
Friday the court refused to grant Nigeria’s bid to stop the deposit
of the security.

However, reacting to report that the government failed in its
bid to stop the $200 million security deposit, the Solicitor
General of the Federation and Permanent Secretary of the Ministry
of Justice, Mr. Dayo Apata (SAN), said the government did not lose
its appeal, adding that the report in the media was “wrong and
twisted.”

Apata stated that parties in the suit would appear before the
court today for the court’s decision on whether to allow bank
guarantee in place of actual payment, adding that there are
indications from Friday’s proceedings that the court might accept a
bank guarantee.

“There is no loss of any appeal. The media reports are wrong and
twisted,” Apata said, adding: “We are in court on Monday (today)
again for Butcher’s decision on whether he will substitute actual
payment for bank guarantee. He was said to have indicated on Friday
that a satisfactory bank guarantee would be acceptable to him.”

P&ID was reported to have claimed that Nigeria failed to
avoid the deposit of $200million security required to stay the
execution of the $9.6 billion judgment debt.

The report added that Nigeria accordingly agreed to pay the $200
million security deposit as ordered by Justice Christopher Butcher
of the Commercial Court in London in September.

The report was tied to a statement from P&ID, wherein the
federal government’s legal team was quoted to have said that
Nigeria has agreed to pay the security deposit.

The statement read in part, “Before Justice Butcher today
(Friday) in London, the Nigerian legal team acknowledged that
President Buhari has authorised the steps to provide a bank
guarantee for the $200m in security that was ordered by the English
Court in September.

“Moreover, the following steps have already been taken by the
Nigerian Government: Ministry of Finance has received approval to
proceed with obtaining the bank guarantee; Minister of Finance has
submitted a request to the Central Bank of Nigeria to proceed with
procuring the bank guarantee; the Central Bank of Nigeria has
submitted a request to an unnamed foreign correspondent bank to
issue the bank guarantee from London and provide the relevant
information to the court.”

However, Apata dismissed the report, saying parties will appear
before the court today (Monday) on the issue.

P&ID had in 2012 instituted the legal battle against Nigeria
in the Court of Arbitration in the UK in 2012 following Nigeria’s
refusal to carry on with the GSPA agreement entered with the firm
in 2010.

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 terms, 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.

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

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.

But the federal government has continued to maintain that
P&ID never began the construction of the project facility for
which it claimed about $40 million in preliminary expenses.

The government said the firm’s claim in the arbitration
proceedings was mainly for loss of profit for the entire
twenty-year term of the GSPA, “initially claiming the sum of US$1.9
billion and later increasing its claim to US$5.9bn.

Solicitor General of the Federation had in a statement on August
16, said though the arbitral tribunal had on January 31, 2017
rendered its final award against the Ministry of Petroleum
Resources in the sum of $6.597 billion together with pre-award
interest at the rate of 7% per annum effective from March 20, 2013
and post award interest at the same rate till date of payment, the
government had challenged the decision.

Meanwhile, the Abuja Division of the Federal High Court had on
September 19 convicted and subsequently ordered the winding up of
P&ID and its Nigerian affiliate, P&ID Nigeria Limited.

The court also ordered the forfeiture of “the assets and
properties” of the two firms to the Nigerian government.

Justice Inyang Ekwo made the orders after the two firms, through
their representatives, pleaded guilty to the 11-count charges of
fraud, money laundering, tax evasion and other sundry charges in
connection with a year 2010 contract leading to the recent
controversial judgment of a British court recognising the award of
$9.6bn in favour of P&ID by an arbitration panel.