The decision of a court in the United Kingdom to award $9.6billion judgment debt to an Irish-based company, Process and Industrial Developments (P&ID) Limited, for a failed gas processing plant project in Calabar, has caused disquiet in the polity. In the controversial contract awarded to P&ID by the Ministry of Petroleum Resources in 2010, the initial judgment against the Ministry of Petroleum Resources in January 2017 was $6.597billion.
The amount increased to $9.6billion when the Arbitration Tribunal added pre-award interest at the rate of seven per cent per annum, effective from March 20, 2013, together with a post-award interest at the same rate from the date of the contract award.
The interim award judgment, if enforced, would give P&ID the right to seize Nigeria’s assets in any of the 160 countries that form part of the New York Convention, which is a global pact for the recognition and enforcement of arbitration awards. Therefore, if the judgment debt stands, it will negatively affect Nigeria.
According to the Debt Management Office (DMO), the $9.6billion judgment debt represents about 22 per cent of Nigeria’s external reserves, which stood at $43.67bn in August. The judgment debt is also 36 per cent of the 2019 federal budget and 45 per cent of government-projected revenue for the year. It is also 20 per cent of Nigeria’s Gross Domestic Product (GDP). Altogether, the money has far-reaching implications for the economy.
Since the UK court decision became public knowledge, it has generated diverse reactions, but most of them condemned the judgment. The Federal Government has also responded to the judgment. Even though the judgment debt would not endanger the nation’s assets abroad, the government described the damages given to P&ID as unreasonable, excessive, unjustifiable and far beyond any legitimate protection of the commercial interest of the company.
In a press conference in Abuja, last week, the Federal Government stated that the contract was fraudulent and designed to fail from the start, and that the company never performed as agreed, therefore, necessitating the case going to arbitration.
However, the management of the P&ID denied the allegation. The matter is likely to be decided at the Arbitration Court this month. President Muhammadu Buhari has ordered the Economic and Financial Crimes Commission (EFCC), the National Intelligence Agency (NIA) and the Inspector-General of Police (IGP), Mohammed Adamu, to investigate the matter. According to the Minister of Information and Culture, Lai Mohammed, the President’s decision to probe the firm and its activities was based on the fact that the Federal Government suspected foul play in the contract.
Considering the hefty judgment debt, we urge the Federal Government to appeal against the ruling of the UK court. While we welcome the multi-agency probe on the matter, the government should work assiduously to upturn the judgment or amicably resolve the issue. Nigerians would be glad if the matter is resolved forthwith.
It is our considered view that the government has a good case to present on appeal, one of which is the right to defend its sovereignty and the assets of the people of Nigeria. In that regard, we urge the government to avail itself of defences customarily afforded by sovereign states under the United Kingdom Sovereign Immunity Act to stave off any enforcement of the judgment debt.
It is heartening that the Federal Government will challenge the UK court’s ruling in the United States. Government needs a coordinated response to make progress on the matter. It should not be based on the weak link that the Federal Ministry of Petroleum Resources does not have oil wells, marginal fields or gas products and therefore, does not have the right to award a contract of that nature. The prospect of winning the case may be daunting, but it is not impossible if the government presents a strong case.
In all, the government should take available legal steps to prevent the enforcement of the $9.6billion fine. Henceforth, it is important to draw useful lessons from the botched contract. Interestingly, the Minister of Justice and Attorney General of the Federation, Abubakar Malami, has vowed that henceforth, his office will vet contracts, Memoranda of Understanding (MoU) and other agreements entered into by Ministries, Departments and Agencies (MDAs) before Nigeria is committed to any obligation. This will ensure that relevant laws are not breached again.