By Charles Kumolu

1. In 2010, the late President Umar Yar’Adua authorised partnership with private companies to develop Nigeria’s energy infrastructure.
2. The Ministry of Petroleum Resources then, headed by the late Alhaji Rilwanu Lukman, struck a gas supply and processing agreement (GSPA) with Process and Industrial Development (P&ID) founded in 2006 by two Irishmen, Michael Quinn and Brendan Cahill.
3. 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 per day, which would be ramped up to about 400 million cubic feet per day during the 20-year-period.
4. The British firm, in August 2012, served the Federal Government a Request for Arbitration.
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.”
5. Tribunal ruled that the Nigerian government’s obligations under Article 6B were not conditional upon P &ID having constructed the gas processing facilities.
6. In July 2015, the arbitration 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.
7. 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.
8. The tribunal ruled that the damage suffered by the British firm was the loss of net income the company would have received if the 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 the government. They said the award should be paid together with interest at the rate of seven per cent from March 20, 2013. 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. On January 31, 2017, Ojo said the highest amount payable as damages to P&ID should not be more than $250 million.
9. Final award remained unsettled since 2013, leading to the claim that it had attracted an 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.

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10. “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.
11. The federal government opened initial negotiations for the settlement of the award.
12. A British Commercial Court affirmed the ruling of the tribunal
13. The federal government said it had commenced moves to reverse the judgment and had already instructed its lawyers to initiate appeal proceedings against the judgment at the British court.
14. Solicitor-General of the Federation, Dayo Apata, assured that government would do everything possible to defend vigorously its interest and that of the people of Nigeria, pointing out that part of the moves was to seek for a Stay of Execution of the said judgment. He added that the issue was a current litigation issue in the United States.
15. In a counter-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.
16. Former President Goodluck Jonathan disowned the contract, saying it was signed in January 2010 while his predecessor was battling a terminal illness whereas he assumed office as President in February of the same year. “
17. Jonathan through his former aide, Reno Omokri, said Lukman and other members of his group treated then Vice President Jonathan with disdain and kept him in the dark about their actions because he had no executive authority, as then-President was unable to hand over to him as constitutionally stipulated.
18. The Minister of Justice and Attorney General of the Federation, Mr Abubakar Malami (SAN), vowed to prosecute all those involved in the failed gas project.
19. P&ID confirmed it had instructed its lawyers to identify Nigeria’s assets that could be targeted to recover the $9.6billion. It hinted at the possibility of seizing Nigerian naval vessels or oil cargoes.
20. The $9.6billion judgement debt is about one-third of Nigeria’s 2019 federal budget of about $29billion and about 20 per cent of the nation’s foreign reserves.

Vanguard