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What is it with the Nigerian Government and Reneging on Contracts?

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By MaryJane Ogeah

Contracts: A trend of declining trust has been underway in Nigeria for many years as copious evidence attests, and with the laxity herein, nobody seems to see that, when trust sinks beneath a certain point, many people may come to view the entire spectacle of politics and public life as a sham.

The Nigerian atmosphere is currently fraught. With the news of looming imposition of $2.3 billion fine arbitration in France for the Federal Government’s violation of contract obligations, uncertainty and perhaps fear of the unknown has kept the government and even the citizenry on their toes.

While the country may not be bothered about morality, that is, drawing from the widely held view that ‘breach of contract is immoral’, it most definitely should worry about public perception and trust.

During the government of Olusegun Obasanjo in 2003, a $5.8bn contract was awarded to Sunrise Power and Transmission Company Limited, SPTCL, for the construction of the Mambilla Hydroelectric Power Project. SPTCL, claimed that after they were duly awarded the contract, some ‘vested interests’ in government in 2017 signed another contract with three Chinese companies, Sinohhydro Corporation of China, China Ghezouba Group Corporation of China and China Geo-Engineering Group Corporation, to form a joint venture for the execution of the same project. Ipso facto, the company who claims to have spent millions of dollars in pursuit of a means of execution, initiated legal proceedings against the government and its Chinese partners before the International Chamber of Commerce in Paris, France, over an alleged breach of contract.

In a real world such as ours, it is understandable for things to go wrong or for delays to crop up to cause a breach of contract. But when it becomes a pattern to not hold up to own end of the bargain, then there is a problem. Nigeria has a terrible history of hastily signing agreements she has no means to see through and it is sadly reinforcing the negative perception the world already has of us.

The year 2005 was a memorable one in Nigeria, Virgin Nigeria, in which Branson’s Virgin Atlantic has a 49 per cent stake, was launched to great fanfare under then-President Olusegun Obasanjo. But a new government took over, an acrimonious row broke out and terms of the agreement was considered invalid and struck out.

When in 2007, the Musa Yar’adua’s Government announced the cancellation of a contract awarded to the German engineering company, Siemens, following a bribery scandal that implicated some former government officials, not many questions were asked considering the ripples the news caused especially as it was a case of corruption that affected government officials.

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In 2012, the government terminated the N3.79 billion management contract awarded to a Canadian coy, Manitoba Hydro for the management of the Transmission Company of Nigeria, TCN. This time, criticisms trailed the decision because the reason for the termination was lack of due process in the award of the contract. How could it have taken over three months for government to decipher that the process was jumped?

Shortly after Buhari’s government took over the mantle in 2015, they breached the offshore processing and crude swap deals for refined oil products between state-oil firm NNPC and oil traders. According to President Muhammadu Buhari, he approved the cancellation so as to re-evaluate the whole contracts to extract some favourable terms (since it was initiated by his predecessor). Although, the deal is currently back on track, critiques say it was totally unnecessary to have been hitherto cancelled.

In 2016, the Nigerian government reneged on their partnership deal with SystemSpecs Nigeria, the indigenous technology firm that owns Remita, an e-payment platform powering and housing the Treasury Single Account. The CBN directed that all the revenues made so far, at the time, be returned and they suspended all charges on the platform. This deal is also currently back on track and like the crude swap deal, knocks followed the action as it was more of a witch hunt than an attempt at due process.

In 2017, through government’s directive, the Nigerian Ports Authority (NPA) terminated the boats pilotage monitoring and supervision agreement that the agency had with Intels Nigeria Limited. Controversy trailed the government’s decision as it was considered a political victimisation rather than a move to correct an infraction.

In a memo, President Buhari instructed that the $195 million maritime contract being powered by an Israeli firm be terminated in 2018.

Just recently, July 2019 to be precise, following the resolution that Nigerian Security Printing & Minting Company (NSPMC) will now handle all e-passport printing contracts, the contract with foreign organisations including Greater Washington and SocketWorks was cancelled.

Napoleon Bonaparte’s quote; “take time to deliberate; but when the time for action arrives stop thinking and go in” makes perfect sense, but clearly not to the Nigerian government who would rather take the big leap into signing a contract even before thinking to what end said contract is.

Enough is enough! It is high time the government started making good of their promises and keeping to their end of bargains. With the SPTCL’s case, Nigeria stands the risk of plunging deeper into financial difficulties not to mention that it threatens the nation’s fiscal sustainability. But financial loss is not the only erroneity this sceptical attitude is doing to the country. The fact that there is a case alone muddles the country’s name and considering that Process and Industrial Development (P&ID) an obviously fraudulent company might cost the country $9 billion, it could only be a matter of time before other aggrieved and greedy Shylocks sink their fangs on the country’s bleeding skin and we may just as well be saying goodbye to business deals between the country, its citizens and other nations.

Maryjane Ogeah is a member of a Lagos based Civil Society Organisation in Nigeria.


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