Nigeria may lose UK assets, as London Arbitration Tribunal fines FG $8.9 billion

British firm, Process and Industrial Developments Limited (P&ID) has won it case against Nigeria at the London Arbitration Tribunal, and this may cost Nigeria its assets in the United Kingdom.

Process and Industrial Developments Limited was awarded $8.9 billion in damages and interest by the London Arbitration Tribunal award in the breach of contract case instituted by the British firm.

Genesis of the court case

Nairametrics had previously reported that the British firm dragged the Federal Government of Nigeria before a United States District court in Colombia to enforce an arbitral award of $8.9 billion against the latter.

The Ministry of Petroleum Resources and P&ID had entered into a 20 years agreement to “help Nigeria harness its abundant natural gas reserves to solve the growing electricity crisis”.

The fine was as a result of the contractual breach of three previous administrations of Presidents Olusegun Obasanjo, Umaru Yar’Adua and Goodluck Jonathan.

The judgment debt arose from the country’s failure to perform its contractual obligations under a gas supply and processing agreement it signed with P&ID. The judgment sum had snowballed into $9 billion as a result of interest calculated at seven per cent from the date the decision was reached by an arbitration tribunal in the UK, according to court papers.

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According to the UK Tribunal 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.

Breakdown of Court case

The company had initially proposed a settlement of $850 million on May 3, 2015, but the offer was rejected by the government when it was tabled before President Buhari and Vice President Yemi Osinbajo on May 30, 2015. The initial settlement is less than 10 per cent of the current judgment sum.

According to a lead judgment by Lord Hoffman, P&ID had initiated moves to recover a judgment debt of $6.6 billion in damages plus $2.3 billion in uncollected interest, which was calculated at $1.2 million a day.

In a report by The Nation, if Nigeria fails to pay the judgment fine before February 15, P&ID can enforce the award against the country by seizing its assets in the United Kingdom (UK).

FG reaction to tribunal judgment

The Director Press for Ministry of Petroleum, Idang Alibi confirmed the financial obligation. He said both the Federal Ministry of Petroleum Resources and the Federal Government are aware of the judgment and are doing something about it but gave no further details. He, however, said the ministry will respond to the matter at the appropriate time.

Seizure of Nigeria’s asset

With the tribunal granting the seizure of some of Nigeria’s asset by Process and Industrial Developments Limited if the government fails to pay the fine, there is doubt over which asset will be seized by the British firm, with oil revenues being the likely target.

The company can enforce the award against Nigeria by seizing her assets in the UK if P&ID is successful at the hearing scheduled for this month. The tribunal ruling would give the company permission to enforce the award.

Nigeria’s foreign currency reserves is about $43.2 billion which means the P&ID judgment alone will take over 11 per cent of the entire reserves.

Source: Nairametrics

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