from EMEKA OKONKWO in Abuja, Nigeria
ABUJA - THE hefty financial penalty a British court has slapped on Nigeria after a failed gas project has brought to the fore the habitual failure by governments in resources-endowed African countries to breach contracts and only to pay when dragged to court.
Recently, the English High Court ordered Nigeria, the continent’s largest producer of crude oil, to pay Process and Industrial Developments (P&ID) US$9 billion after the British Virgin Islands-registered firm successfully sued.
The ruling, which gives the engineering and project management company the right to seize assets amounting to that figure (20 percent of Nigeria’s currency reserves), bordered on a 20-year contract signed in 2010 for P&ID to build a gas processing plant.
Nigeria was to receive the gas free of charge to boost its erratic national electric grid.
P&ID anticipated benefiting through the sale of lucrative by-products including butane, ethane and propane of the international market, with expected profits running to billions of dollars.
According to the agreement, the Nigerian government was to construct a gas supply pipeline to the P&ID facility to be located in the southern state of Cross River.
The contractual breach emanated from the government’s failure to build the pipeline, despite the foreign company spending $40 million on the project.
In 2012, P&ID filed a case against Nigeria in London.
The deal was signed during the presidency of Goodluck Jonathan (2010-15), which did not reach a settlement out of court with P&ID.
The current administration of his successor, Muhammadu Buhari, has dithered paying up over the fact that this is inherited debt.
P&ID initially got the award in 2015, amounting to $6,6 billion for loss of income and $2,3 billion in potential interests.
The tribunal in the British capital concluded that Nigeria was liable for renounce the agreement with P&ID, hence had to pay.
Relations between the two parties have since soured with the company alleging a systematic campaign of harassment, intimidation and illegal detention of a number of individuals associated with P&ID or the contract signed in Nigeria.
In September, Abubakar Malami, Nigeria’s Attorney General, was quoted at a press conference as announcing the progress of the “intensive and extensive investigation” the Economic and Financial Crimes Commission (EFCC) commenced against those involved with P&ID.
EFCC last month secured the conviction of commercial director of P&ID, Mohammed Kuchazi and the company’s director of process, Adamu Usman at the Federal High Court in the capital Abuja.
The duo was arraigned on an 11-count charge bordering on “obtaining by false pretence; dealing in petroleum products without appropriate license; money laundering and failure to register P&ID with the Special Control Unit against Money Laundering (SCUML) as required by law, amounting to economic sabotage against the Nigerian state.”
The court sentenced the company to wind up in Nigeria and that its properties must be forfeited to the federal government.
P&ID has dismissed the probe in Nigeria as a “sham trial.”
“P&ID calls on the Government of Nigeria to accept its responsibilities under the law and to cease this sham investigation,” the company stated.
Brendan Cahill, the co-founder of P&ID, stated the company was eager to deliver the project but the government did not uphold its side of the contract thus the project failed.
“Having been unable to find a willing partner in government to resolve the matter forced us to seek remediation for the repudiation of our contract, which has resulted in an arbitration award against Nigeria,” Cahill said.
If the Buhari government does not comply with the court orders, its commercial assets abroad could be seized.
Nigeria has appealed against the conviction.
Buhari, at the recently-held United Nations General Assembly in New York, was quoted as saying the P&ID deal was “a scam designed to dupe Nigeria.”
Africa Briefing noted that the issue of government reneging on contracts and resistance to paying were common in Africa, especially by governments of resource-rich countries.
In 2017, United States-based firm, APR Energy, sued the Angolan government in the US to the tune of $45 million.
This came after the company secured a deal with the Ministry of Energy and Water to supply equipment and services in a major power generation project for the capital Luanda.
The deal signed in 2012 ran into problems after Angola, the continent’s second-biggest producer of oil, dallied on payments.
Despite executing the projects APR was sent from pillar to post after the Ministry of Finance and National Electricity Transmission Network (RNT) traded blame on the situation.
Payment only came after APR threatened to pull the plug power on plants in 2016.
It also came after the Ministry of Energy and Water became aware of proof the minister, João Baptista Borges, allegedly made bribery attempts.
Africa Briefing stated that such acts of rent-seeking and corruption by public officials did no credence to Africa.
“Until those in responsible positions discharge their duties with integrity, judgement debts will continue to be the norm rather than exceptions,” the organisation stated.
Also in Angola, former Vice President, Manuel Vicente, is a embroiled in a legal dispute involving businessman Rui Miguel Casimiro Tati and another businessman-cum-politician Eugenio Manuel da Silva Neto Neto (Geny Neto).
Tati is suing for $10 million for services he claims to have provided in establishing a consortium between Neto’s GLS Holding and the US multinational General Electric (GE).
The partnership aimed to build an underwater equipment factory and a service centre for the oil industry in the northwestern Soyo town.
However, the factory was never built despite the announcement of an investment of over $170 million.
Severe revelations have emerged at the case ongoing at the Luanda Provincial Court indicating the involvement of Vicente, who was the head of the state-owned Sonangol at the time of the partnership.
It is alleged Vicente misused his influence to facilitate the formation of the GLS-GE consortium.
Legal experts refer to this as influence peddling.
According to anticorruption and prodemocracy group, Maka Angola, Vicente wanted to make the most of immunities and privileges that his ruling party status accorded him.
“This case shows how Manuel Vicente allegedly misused his influence to favour a friend (Neto), removing a company (GE) from a blacklist that was not known to exist in Sonangol, and forgiving that same company for an unknown crime,” Maka Angola stated.
- CAJ News