British firm moves to recover judgment debt from Federal Government.
A British firm, Process and Industrial Developments Limited (P & ID), has initiated moves to recover from the Federal Government a judgment debt of $6.6 billion in damages plus $2.3 billion in uncollected interest, which is calculated at $1.2 million a day.
It was learned that the judgment debt arose from Nigeria’s failure to perform its contractual obligations under a gas supply and processing agreement it signed with P & ID. The sum had snowballed into $9 billion as a result of interest calculated at seven percent from the date the decision was rendered by an arbitration tribunal in the UK.
In the ruling, it was noted that the agreement was executed on January 11, 2010, by P & ID and the Ministry of Petroleum Resources for and on behalf of the Federal Government to refine associated natural gas (also known as wet gas) into non-associated natural gas to be used by Nigeria in powering its national electric grid.
According to court documents, the ruling also stated that the tribunal found that Nigeria had repudiated the agreement by failing to satisfy its contractual obligations and eventually abandoned the project contemplated thereunder, causing the British firm to lose substantial profits it would have earned over the 20-year period during which Nigeria was to supply the company with natural gas.
Under the agreement, the P&ID project would have generated 3000 megawatts of electricity for Nigeria. Natural gas that was being flared off would instead have been processed and used to generate electricity for Nigerians.
Court documents also showed that March 20, 2013, was the date on which P & ID accepted Nigeria’s repudiation of the agreement, however, the Federal Government did not move to set aside the final award at the seat of arbitration, and under English law, the deadline for doing so has long since passed.
It was gathered that the failure to accept and secure a settlement led to saddling Nigeria with over $9 billion of additional debt.
Earlier efforts to settle the contractual breach were said to have been stalled by the Nigerian government.
“On May 3, 2015, P&ID offered to settle the dispute with the Nigerian government for $850 million. On May 30, 2015, the matter was brought before President Muhammadu Buhari and Vice President Yemi Osinbajo. The government rejected the $850 million settlement which was less than 10 percent of the current judgment sum.”
It was further learned that if P & ID is successful at the hearing next month in a British court, it can enforce the award against Nigeria by seizing its assets in the UK.