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Rockcity INSIGHT – P&ID vs. Nigeria: What Went Wrong In a Nutshell

Rockcity INSIGHT:

While it would be dishonest to say a lot of news savvy Nigerians have not heard about the
Nigeria/P&ID saga, it is safe to say that most people do not know the facts behind it. Why is
that? Easy! There’s a whole lot of conflicting stories on the internet from both sides right from
the nascent of the fracas in 2012 when P&ID dragged the Nigerian government to a commercial
court in the arbitration venue, London, England. How a deal that is meant to generate interest to
both parties turned out to become a dragged out litigation process is not clear to many. In this
report, I hope to make some, if not all of the facts clear. Before I go ahead to feed you the
details, for the sake of some readers who know little to nothing about this story, I’ll first describe
the principals in this interesting story and the roles they should/got to play.

The curtain opens as Process and Industrial Development (P&ID), an engineering and project
management company which was started by two Irish nationals in 2006 to specifically target the
implementation of an energy project in Nigeria enters a huge 20-year natural gas and
processing agreement (GSPA) with the federal government of Nigeria through its ministry of
petroleum resources in the first month of 2010. This deal would see Nigeria provide a steady
supply of natural gas otherwise known as wet gas through a government pipeline to a P&ID
production facility at no cost to P&ID. In return, Nigeria would get supplies of lean gas at no cost
to the Nigerian government. The lean gas was supposed to be effectively used in generating
electricity in the oil rich country.

It would be misleading to state everything above without mentioning the guiding clauses in this
huge agreement. Firstly, as mentioned above, this agreement is to span for a duration of 20
years. That is, ceteris paribus, this deal should work out to the benefit of both parties till the year
2030. What went wrong? We will get to that!
It would be unnecessary to bore you with all the clauses so let’s go over the ones that are
important to this expose. Surprised that it’s tagged an “expose”? Well, let’s just say you’ll find
out and decide if it is an expose or not.
Clause 20 of the Natural Gas and Processing Agreement (GSPA) states that;
A) The agreement is to be construed in accordance with the laws of the Federal
Government of Nigeria (FGN)
B) In the event of a dispute regarding the interpretation or execution of the agreement
which both parties are unable to amicably resolve, either party will serve on the other, a
notice of arbitration
C) The arbitration award shall be final and binding upon the parties involved
D) The venue of the arbitration shall be London, England or otherwise as agreed by the
parties.
Everything seemed to be going well. There were no issues and typical Nigerian nature, no one
suspected a thing despite the fact that the project did not kick off two years after the agreement
was signed. What happened next broke the ice.


Remember that nothing happened and no one heard anything after the agreement took place?
Well, P&ID broke the ice! Sequel to a dispute that arose between the engineering and project
management company and the Nigerian government which could not be settled amicably, P&ID
served the Nigerian government a notice of arbitration which claimed that the Nigerian
government didn’t supply wet gas as agreed in the GSPA. The Federal Government of Nigeria
however argued that it couldn’t have supplied wet gas to P&ID when P&ID hadn’t set up the
facility yet. This claim and counterclaim was the beginning of a downward slope and a legal
battle that would go on for years. Naturally, in accordance with the Nigerian Arbitration and
Conciliation Act of 2004, the matter went to a tribunal in London, England but not after the
tribunal affirmed jurisdiction on the issue. The tribunal started a procedural hearing to determine
if, truly, the Nigerian government breached the agreement and as expected, the Nigerian
petroleum ministry tried to settle with P&ID out of court with an agreement to pay $850 million in
instalments which was Submitted before Former President Goodluck Jonathan left office.
In July 2015, the tribunal confirmed that the Nigerian government really breached the terms of
agreement and ruled that the company be paid damages alongside accrued interest. What did
the Nigerian government do about this? You’d be shocked. The Nigerian government did
nothing. Yes, you read that right, nothing was done about that ruling. No response, no reaction,
just silence from the Nigerian government for more than 4 months. When the government finally
responded through its witness, Ms. Folakemi Adelore, it argued that it hadn’t responded
because of an administration change. Yes, Nigeria had a new government in place and new
ministers, as well as a new attorney general was coming on board. In light of this, the Nigerian
government asked for an extension to be able to process and take steps on the arbitration
tribunal ruling. This request was outrightly denied by Judge Philips, the judge who heard the
tribunal at the commercial court.


Unsuccessful with the appeal in London, the Nigerian government, desperate to overturn the
ruling, brought the case to the federal high court in Nigeria to request essentially the same
extension which judge Philips denied. As expected, it got what it wanted as the federal high
court proceeded to set aside the tribunal’s procedural order No. 12 which spurred P&ID’s anger
as they’ve had a lot of back and forth regarding the seat of arbitration which the tribunal ruled as
London, England, in accordance with the terms of the GSPA.
The Lagos ruling didn’t stop the arbitration process in London though. It was only a matter of
time till P&ID got a favourable ruling which came in the first month of 2017 as the tribunal
concluded that P&ID would have played its part had the Nigerian government honoured the
terms of the agreement. What are the implications of this ruling? Well, the Nigerian government
was mandated to pay over $6.5 billion which was the 2017 value of profit P&ID would have
earned. In addition to that, the government was also mandated to pay accrued internet on the
amount at 7% per annum from 2013. How did the Nigerian government respond to this ruling?
Once again, total silence. The government failed to pay this money, neither did it appeal the
ruling.

Sick of the silence, P&ID went back to the arbitration court in England in March 2018 to seek the
enforcement of the final award which may see Nigeria lose some foreign assets. The Nigerian
government did not respond until October 2018 when it acknowledged the ruling and applied for
relief of sanctions. Laughable right? Well, there’s more. The relief appeal was heard by Justice
Christopher Butcher in which the Nigerian government tried to argue that the final award ruling
of the arbitration tribunal was “excessive and punitive”. Once again, the Nigerian government
lost! as in August 2019, Justice Butcher ruled In favour of P&ID, stating that the award was
enforceable. Meanwhile, back home, the Nigerian government had started a criminal
investigation into P&ID’s procurement of the deal and applied at the High Court of Justice to
extend the deadline in a bid to challenge the award based on the emergence of new evidence.
The English court granted this request on grounds that the Nigerian government had
“established a strong prima facie case” that would indict P&ID in engaging in fraud and bribery
while trying to procure the 2010 agreement and during the arbitration process. The english court
has not set aside the award but a trial on these new findings is set for January 2023
As it is, Nigeria had appealed the award and its enforcement ruling at the United States Court of
Appeals, District of Columbia Circuit again alleging that P&ID had paid bribes in a bid to secure
the lucrative contract. This appeal was argued on the 10th day of November 2021 and decided
on the 11th day of March 2022. The whole argument and decision is captured in the document below.

This move is the latest in the P&ID vs FGN saga and about the only significant headway the
Nigerian government has made in the whole case.

Remember that I called this piece an expose? Let me explain. The legal battle that has been going on for years between both parties could have been avoided if Nigeria had public office holders who were dedicated to the goodwill of the country. Imagine a deal of that magnitude going down but everything about it was treated with levity. It would be safe to assume that P&ID, knowing the rot in the Nigerian system, envisaged a breach of agreement and was waiting to feast. After all, if the evidences the Nigerian government claims to have are anything to go by, they greased palms for it. It could have been an orchestrated plan to rip the country of its already limited foreign reserves but what do we know?

Reuben Abati said it all in his review of the case.

Rockcity INSIGHT

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