British firm, P&ID offers Nigeria olive branch over contract dispute

Admin, Wednesday, May 15, 2019

LAGOS – Nigeria stands to lose up to $9 billion worth of its foreign assets following an enforcement application to US and UK courts by Process and Industrial Development (P &ID), a British firm tied up in a legal dispute with the Federal Government.  The court case arose out of the failure of a contract awarded the company in 2010 to process wet gas to power Nigeria’s generating plants.

In January 2017, a London tribunal, organized under the rules of the Nigeria Arbitration and Conciliation Act, ordered Nigeria to pay P&ID $6 billion in damages, plus $2.3million in uncollected interest. That figure has since been attracting interest at the rate of $1.2 million per day, and currently stands at over $9 billion. The next hearing on the case will come up in a London court on Tuesday, May 21, 2019.

Mr. Brendan Cahill, Founder, Process and Industrial Development (P &ID) said that the company looks forward to the UK and US courts granting enforcement rights that will allow P&ID to collect what is rightfully its.  “If history is any guide – just look at how creditors seized Argentina’s naval frigate while docked in Ghana. Efforts by Nigeria to evade this judgment will inevitably fall flat. The ball is in Nigeria’s court, if the government is prepared to find a good-faith solution”, he said.

Cahill however indicated that the company was open to negotiations with the Nigerian government to settle the dispute out of court.  He said: “P&ID remains open to a settlement on a reasonable basis, but we need a willing partner in government to help resolve this matter. The onus is on the Nigerian government to act in good faith to find a solution”.

After the P&ID’s Gas Supply and Processing Agreement with the Federal Government failed, the company initiated arbitration proceedings in London, in line with the original contractual agreement between the parties.

Cahill said the company decided to go to court after several attempts at salvaging the deal were botched.  He said: “P&ID’s Gas Supply and Processing Agreement (GSPA) failed when the government did not uphold its commitments. In August 2012, after several attempts over two and half years by P&ID to salvage the agreement, including offers to renegotiate the deal, the company initiated arbitration proceedings”.

Cahill is sadden by the failure of such a promising project and government’s lack of interest in trying to resolve the dispute amicably, adding that original project would have brought power and economic growth to Nigeria by supplying free natural gas for electricity generation, as well as building a highly successful commercial venture with a share of profits going to the Nigerian government.

“The P&ID project would have supplied 2,000 megawatts of electricity in a country where tens of millions do not have access to electricity. The award judgment was handed down by the independent arbitration panel because it represented the loss of profits for P&ID over the 20 years of the project”, he explained.

In late February this year, the Office of the Attorney-General of Nigeria (AGF) issued a statement contesting the huge amount the court awarded P & ID as damages, largely on the grounds that the project did not actually kick off the ground.

But Cahill reacted to the statement, explaining that the company had already put in years of planning, field work, design and on-the-ground preparation. He stated: “We spent two and a half years offering solutions, while the government consistently failed to deliver its side of the contract. This is a tragic ending to a venture that would have delivered low-cost electrical energy to hundreds of thousands of households throughout Nigeria, and would have brought vital revenue to the Nigerian treasury”.

Cahill and his late partner, Michael Quinn, had over 30 years’ prior experience of executing successful engineering projects in Nigeria before the failed P&ID project that is now in dispute.