- An avoidable resource depletion by government
Hardly has there been a need for greater sensitivity to Nigeria’s resource management on the part of government leaders. Recently, a London judge granted a British firm, Process and Industrial Developments Ltd (P&ID), right to seize $9 billion in assets from the Nigerian government, over the country’s failure to comply with contractual obligations to build a gas processing plant in Calabar.
First, some details about the 2010 contract between the Umaru Musa Yar’Adua government and P&ID. On January 11, 2010, the Ministry of Petroleum signed a contract on behalf of the Federal Government to supply gas for a factory that P&ID had agreed to build. By 2013, no factory to collect the gas was built by P&ID, just as no pipeline to supply gas had been built.
P&ID alleged that after signing the agreement, the Nigerian government reneged on its obligation after negotiations were opened with Cross River State government for allocation of land for the project. And in August 2012, P&ID served the Nigerian government a Request for Arbitration. Between 2012 and 2019, penalties against Nigeria had grown from $800 million under Jonathan to $1.9 billion as first claim of loss of profit by P&ID, later to $6.3 billion and currently $9 billion. None of these amounts, as well as the $250 million once proposed by a former attorney-general, Bayo Ojo, should have been part of Nigeria’s loss, had Nigerians involved in preparing and signing the contract done their homework diligently.
The greatest surprise is that this contract was signed at a time that some of Nigeria’s best brains: Ngozi Okonjo-Iweala and Rilwanu Lukman were ministers of finance and petroleum, respectively, and President Yar’Adua was living between Nigeria and Saudi Arabia on account of illness.
Second, lessons from this saga. The first lesson is that Nigeria has failed since 2010 to insulate a culture of impunity that has flourished in the country for decades from the culture of respect for international contractual obligations. Third, governments seem to have ignored the principle that democratic governance is a continuous process that shouldn’t get ruptured because of change of persons or political parties after elections. Even though the contract was made during the administration of Yar’Adua, there was no rationale for the Jonathan administration that was part of Yar’Adua’s to delay in bringing this matter to closure during its own tenure of five years.
Further, a contract in which Nigeria is reported to have suspended its right to sovereignty ought to have been the first case to come before the Economic and Financial Crimes Commission (EFCC), soon after the inauguration of President Buhari’s government. It is embarrassing that half a century after independence Nigeria could enter into an international contract that looks stacked against the country’s interests. How else could any rational person(s) have approved Article 6B of the contract that did not hinge gas supply on provision of infrastructure to receive such supply?
Depressing as the matter is, it is proper that the Federal Government has assured the country that “Nigeria is making vigorous efforts to defend its interest in this matter and would not relent in exploring every viable option in doing so.” Beyond following this pledge to the letter, officials who in any way had contributed to this fiasco since 2010 ought to be identified and prosecuted. What further crime of economic sabotage could any person or group have committed against the country than making it vulnerable to $9 billion fine?
It is, therefore, proper that the Chairman of the EFCC has disclosed that the commission had commenced investigation into the circumstances leading to the $9billion judgment against Nigeria. As the Federal Government embarks on its latest model of damage control, those with authority over the country’s funds need to remember that prevention is always better and cheaper than cure.
Nigeria should not lose such a huge amount of money to a firm which, according to the Central Bank of Nigeria governor, Godwin Emefiele, did not invest a cent in the project.
