Nigeria on Monday argued before a London High Court that the country was a victim of bribery and deception in the controversial Process and Industrial Developments (P&ID) gas deal.
Africa’s largest economy this week seeks to overturn the $11 billion debt judgement awarded in favour of the company.
The P&ID controversy dates back to January 2010 when the company signed a gas supply and processing agreement with the Ministry of Petroleum Resources on behalf of the Nigerian government.
Under the terms of the agreement, P&ID was to build and operate an Accelerated Gas Development project to be located at Adiabo in Odukpani Local Government Area of Cross River State. The Nigerian government was to source natural gas from oil mining leases (OMLs) 123 and 67 operated by Addax Petroleum and supply to P&ID to refine into fuel suitable for power generation in the country.
However, P&ID alleged that after signing the agreement, the Nigerian government reneged on its obligation after negotiations were opened with the Cross River State government for allocation of land for the project.
The company said the failure to construct the pipeline system to supply the gas frustrated the construction of the gas project, thereby depriving it of the potential benefits from over 20 years’ worth of gas supplies.
It added that attempts to settle out-of-court with the Nigerian government failed.
Background
In August 2012, P&ID served the Nigerian government a Request for Arbitration but Nigeria argued before the tribunal that “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.”
The tribunal ruled that Nigeria’s obligations under Article 6B were not conditional upon P&ID having constructed the gas processing facilities.
In the tribunal’s eventual verdict, the damage suffered by P&ID was the loss of net income the company would have received if the government kept its side of the contract. Two members of the three-man tribunal, Lord Hoffmann and Anthony Evans, held that P&ID’s expenditure and income should have been about $6.597 billion if the GSPA was duly performed by the government.
Both officials said the award should be paid together with interest at the rate of 7 per cent from March 20, 2013.
The other member, who is Nigeria’s former Attorney-General and Minister of Justice, Bayo Ojo, 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. Apart from being a new company incorporated in 2006, Mr Ojo noted the project could not have started yielding benefits earlier than 2015.
In September 2020, the Nigerian government secured a judgement of a British court to suspend the unfavourable ruling over the scandal. A commercial court in the United Kingdom granted Nigeria’s appeal for a stay of execution of the award of $8.9 billion (about N3.2 trillion) in favour of P&ID.
The interest has now grown to just over $11 billion, or around 30 per cent of Nigeria’s foreign exchange reserves, according to Reuters.
Trial
On Monday, at the start of an eight-week trial in London’s high court, Mark Howard, a lawyer representing Nigeria, told the court that P&ID obtained its contract “by telling repeated lies and paying bribes to officials.”
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As a result, the lawyer claimed that P&ID “corrupted” Nigeria’s lawyers to obtain confidential documents during the arbitration,” Reuters reported.
Mr Howard noted in court documents that P&ID paid bribes and relied on false evidence “to dupe (Nigeria), the tribunal and this court into giving P&ID an extraordinary amount of money on the back of a campaign of bribery, corruption and deception”.
The company, however, said the gas processing agreement was “a genuine contract which P&ID genuinely wanted to perform”.
In court documents, P&ID lawyer, David Wolfson, said Nigeria’s loss in the arbitration “had nothing to do with any corruption”.
Mr Wolfson will make opening arguments on behalf of P&ID on Tuesday.
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