March 1, 2024

Oredola Adeola

A London High Court has officially commenced eight-week proceedings over an appeal filed by the Nigerian Government to overturn an award worth $11bn, issued by a London arbitration tribunal in 2017 in favour of Process and Industrial Developments Limited (P&ID).

P&ID was originally established by two Irish nationals. Ownership of the firm has since passed to two Virgin Islands-based entities.

EnergyDay gathered that the case was a contract for a gas project awarded by Rilwan Lukman former Minister of Petroleum Resources, with the involvement of Taofiq Tijani, Special Assistant to the Minister of Petroleum Resources as well as the Nigerian National Petroleum Corporation (NNPC) in 2010, in which the gas deal was offered to a company called Process and Industrial Developments Limited (P&ID) that proposed to build a gas plant in the country.

The gas deal and the plant however did not come on a stream, leading to long legal battles and arbitration claims by P&ID in London court.

After years of a legal tussle between the Nigerian Government and P&ID, a London-based arbitration tribunal, in 2017, gave a verdict that Nigeria did not fulfill its side of the contract and awarded the country a sum of $6.6 billion-plus post-judgment interest at seven percent for a breach of a Gas Supply Processing Agreement (SPA) as compensation P&ID.

The arbitration award sum which is now worth $11bn and is more than a quarter of Nigeria’s foreign exchange reserves, which stood at $37 billion at the end of November.

British court in 2020 granted the Nigerian Government’s request for additional time and later a full trial to challenge the final arbitral.

The Court granted Nigeria the permission to proceed it appeal, having established a strong case that the contract was “procured by bribes”, the arbitration was “tainted” and that there was “a possibility” that Olasupo Shasore, the state’s lawyer during most of the arbitration, was “corrupted.”

The Government claimed that it has sufficient evidence to prove to the Court that the Gas Supply and Processing deal awarded to P&ID was procured by bribes paid to insiders as part of a larger scheme to defraud Nigeria.

The Nigerian Government thereafter hired Mark Howard, a British lawyer, who had filed “new and substantive” fraud allegations in the foundation of the contract to overturn the underlying award.

Nigeria’s British lawyer, had during the pre-trial review in December 2022, said, “Our case is it was bribery to get the contract, ongoing bribery to keep everyone on board, bribery of the two London-based British lawyers which is serious misconduct.

 

HOW THE CONTRACT WAS AWARDED

EnergyDay in a background check of the basis of the contract discovered that Nigeria was expected under the contract to supply natural gas (“wet gas”) at no cost to P&ID’s proposed facility which had then not been constructed.

The proposed facility was expected to process raw gas to remove natural gas liquids and return lean gas to Nigeria at no cost for use in power generation and other purposes.

According to Jonathan Bonnitcha, an Economic Law and Policy Program analyst, both the contract and the circumstances relating to its conclusion were unusual.

He said that the contract was based on an unsolicited proposal presented to the Nigerian government by P&ID, adding that no tender was conducted.

Bonnitcha said, “Moreover, P&ID did not appear to have the experience in the gas sector that would be expected of a company responsible for a multibillion-dollar project, it was an offshore entity with “no assets, only a handful of employees, and was without a website or other presence.

The analyst further revealed that under clause 20 of the contract, the parties agreed that the contract was governed by Nigerian law and that disputes under it would be resolved through arbitration at the “venue” of London, England.

EnergyDay gathered that with the commencement of the weeklong final trial, the Nigerian government is confident that justice will finally be served.