P&ID vs NIGERIA; How did we get here?
The Federal government of Nigeria, through the Ministry of Petroleum signed an agreement with eight companies on an Accelerated Development Policy. One of the companies it signed this agreement with is the Process and Industrial Development company (P&ID), a limited liability company.
According to the agreement, Nigeria was meant to supply natural (wet) gas at no cost to P&ID through the Nigeria government’s pipeline. In return, P&ID was to process this natural gas and return to the government of Nigeria as lean gas at no cost which would be used for power generation. It would generate 2,000 megawatts of electricity. P& ID would also sell some by- products in the international market and the Federal government will have a 10% shareholding in the business. The agreement didn’t go as planned as both parties couldn’t implement their plans. P&ID argument was that the Federal government breached the contract; the federal government refused to install pipelines and supply gas that it spent $40 million on feasibility studies, project management costs, licences e.t.c
Two years later, P&ID served the Nigeria government a notice of arbitration on the ground that the Federal government of Nigeria had failed to make the natural gas available and therefore, their contract has been breached. P& ID claimed the sum of $1.9 billion against the Ministry of Petroleum, then increased it to $6.59 billion, thereafter to $8.1 billion. As at now, the court decided that the Nigerian government will pay $1.2 million daily (accrued interests) and this raised the value to $9.6billion. The amount served was in line with net present value of the profit P&ID would have made.
Before the claims increased, The Ministry of Petroleum attempted to reach an agreement with P&ID. The Nigeria government decided to pay $850 million installmentally. However, it needed approval from the President then, Goodluck Johnathan. Unfortunately, the letter for approval was sent a week before he left office. A change in administration caused a delay in approving the settlement and P&ID company already took the case down to court. The Nigerian government engaged the services of professionals such as Olasupo Shasore, SAN of Twenty Marina Solicitors LLP), Bayo Ojo and also the services of Stephenson Harwood (a United Kingdom based Law firm). The Nigeria Government will have to pay $9 billion as a fine or risk having its assets seized. The FGN is trying to appeal on this decision.
The Minister of finance, Mrs Zainab Ahmed announced that ‘paying a fine of $9billion will seriously affect the economy and inflict more pains on the people.’ The CBN governor, Godwin Emefiele, said the name of the company; P&ID cannot be found in their books, and that there is no trace of any equipment or machine that the company had ever come to establish in Nigeria despite claiming to have invested $40 billion.
Also, The Attorney General of the federation and Minister ofJustice, Abubakar Malami questioned both parties; P&ID and the Ministry of Petroleum for not involving the International Oil Companies, IOCs and the Nigerian Petroleum Development Company, NPDC when it is obvious the Ministry of Petroleum does not produce or supply anything. He said that the project was designed to fail and to make quick gains.
In view of the circumstances unravelling around this case, the Attorney General of the Federation on approval of the President has ordered the anti-crime agencies to make a thorough investigation and identify and prosecute the culprits involved. The Economic and Financial Crimes commission (EFCC), the National Intelligence Agency (NIA), and the Inspector of General Police (IGP) will conduct the ‘full-scale criminal investigation’.
The Nigeria economy is still struggling to maintain stability. Making a payment of $9.6 billion as a fine will wreck the economy as this constitute about 22.01% of our external reserves (as at August, 2019). The Minister of Finance rightly said it, it will seriously affect our economy and will inflict more pain on the people. If the Federal Government decides not to pay this fine, the British court already ordered that assets worth $9 billion should be seized by P&ID. This is a great threat and this case will pose more threat to our nation’s relationship with other countries. This case already brought a bad image to the country’s foreign trade affair and will scare foreign investors. It is worthy to note that the Nigeria government gains a certain percentage of GDP from foreign investment.
The question is how did we get here? Can we say this is a case of some corruption? The contract between both parties sounds beneficial especially to the Nigeria Government (more income, employment opportunities, improvement in electricity). No explanation has been given on why the contract was breached. Also, the Attorney General of the Federation pointed that the Ministry of Petroleum shouldn’t be the one to sign the contract since there are other bodies involved. We can’t however, conclude that it is a case of corruption since the CBN announced that there are no traces of the foreign company; P&ID in their books despite their claims.
As we can’t fully point out to the answer on how we got here. Let us hope the anti-crime agencies, after their ‘full-scale criminal investigation’, will provide us with our answer, but there is another question, the case has been on for long, why is it now the Federal Government is making an investigation?The investigation started after the British Court gave its judgment. The investigation should have occurred immediately the case started. Patience is a virtue they say, letus remain patient for the outcome of the investigation and hope that our appeal will be granted.
By Oladele Abigail
Oladele Abigail, an economics student of Bowen University who applies her passion for writing to her career path.
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