Nigeria’s foreign assets as well as its oil vessels in international waters are at risk as a British company moves to enforce a $9bn arbitration award against the country over a breach of contract, TheCable can report.
Process and Industrial Developments Limited (P&ID), an engineering and project management company, is expected to get a final order from UK courts on February 15, 2019 to enforce the arbitration tribunal award against the government of Nigeria.
P&ID has also filed action to enforce the judgment in the US and there are indications that the company may seek similar orders in several European countries.
The arbitration award is roughly 11 percent of Nigeria’s entire foreign reserves which currently stand at $43.2bn.
Comparatively, the $9bn award is half of Nigeria’s earning from crude oil exports in the whole of 2018.
What was the contract?
P&ID, founded by Irishmen Michael Quinn and Brendan Cahill — with over 30 years of experience in engineering projects in Nigeria — had entered into a 20-year gas and supply processing agreement (GSPA) with the federal government in 2010 to build a state-of-the-art gas processing facility.
The plant, in which Nigeria was to have a 10 percent stake, was to refine associated natural gas into non-associated natural gas to power the national electric grid as conceived in 2006 when President Olusegun Obasanjo was in power.
Based on the agreement, government was to supply between 150 million standard cubic feet of the gas per day to P&ID — a figure expected to rise to 400 million scf in the life of the project. The gas was otherwise being flared by the oil-producing companies.
The GSPA also required the government to build a gas supply pipeline to the P&ID facility.
What went wrong?
P&ID said after spending over $40 million in preparatory work, the project collapsed because the Nigerian government did not build a pipeline as stipulated in the agreement.
With the ensuing crisis unresolved even after proposing an amendment to the agreement, P&ID commenced arbitration against Nigeria in August 2012 in London, UK.
In May 2015, while the arbitration was still on, P&ID agreed to settle the dispute upon payment of $850 million by the government, according to documents seen by TheCable.
However, President Goodluck Jonathan, who was about to leave office having been defeated in the presidential election, offered to pay $650 million but negotiations arrived at $800 million.
P&ID, TheCable learnt, agreed on the terms of payment to be made in installments.
However, Jonathan opted to leave the incoming government of President Muhammadu Buhari to handle the payment because his tenure was coming to an end.
Two days after Buhari was sworn in, the liability hearing took place in London and the dispute was resolved in favour of P&ID in July 2015, with the new administration not offering any settlement as proposed by Jonathan before his exit from power.
Nigeria asked the tribunal, in December 2015, to set aside the award completely but in January 2017, the tribunal finally ordered the government of Nigeria to pay P&ID $6.6 billion in damages and $2.3 billion in interest.
In June 2018, the US district court also ruled in favour of P&ID and affirmed the award by the UK tribunal, thereby making it enforceable in America.
What did Nigeria do?
Having lost the case in arbitration, allegedly worsened by the fact that it did not provide a strong legal challenge during hearing in the UK, Nigeria filed a notice of appeal in the US district court in October 2018, claiming foreign sovereignty immunity.
But the US court rejected Nigeria’s request to cancel the award, and the government headed to the UK court to get the sanctions waived.
An alleged mix-up at the ministry of justice in Abuja led a shoddy representation at the court, with the country missing the deadline for filing its acknowledgement of service and failing to file any substantive evidence.
This led to another punitive order against Nigeria, now requiring the country to pay P&ID’s costs for the hearing as the judge expressed displeasure at Nigeria’s conduct during the proceedings, according to court documents obtained by TheCable.
What happens next?
On February 15, a day to the Nigeria’s presidential election, the UK court is expected to make a final decision to give P&ID the go-ahead to enforce the tribunal award.
This will allow P&ID to seize Nigeria’s assets in the UK, including the country’s bank accounts, in order to implement the tribunal award — in the event that the government does not pay the judgment debt.
TheCable understands that P&ID is willing to enter a negotiated compensation with the federal government but there is yet no offer from Nigeria.
Nigeria is disputing the $9bn award on three grounds: that the arbitration seat should be in Nigeria and not UK, the amount awarded is too big and interests should be waived.
GTBank Releases Q1 2019 Unaudited Results…Reports Profit before Tax of N57.0Billion
Guaranty Trust Bank plc has released its unaudited Financial Results for the quarter ended March 31, 2019 to the Nigerian and London Stock Exchanges.
The Bank recorded positive performance across all financial metrics with gross earnings for the period growing by 1.2% to ?110.3billion from ?109.0billion posted in March 2018. Profit before tax improved to ?57.0billion from ?52.6billion recorded in the corresponding period of March 2018, representing a growth of 8.3%. Customers’ deposits also rose by 6.0% to ?2.410trillion in March 2019 from ?2.274trillion in December 2018, whilst the Bank’s Loan book grew by 1.6% from ?1.262trillion as at December 2018 to ?1.282trillion in March 2019.
Balance sheet remained strong with the Bank closing the quarter ended March 31, 2019 with Total Assets of ?3.556trillion and Shareholders’ Funds of ?627.2Billion. In terms of Assets quality, NPL ratio and Cost of Risk closed 7.03% and 0.05% in March 2019 from 7.30% and 0.34% in December 2018 respectively. In addition, coverage for NPL stood at 90.12% while Full Impact Capital adequacy ratio remained very strong, closing at 22.25%. On the backdrop of this result, Post Tax Return on Equity (ROAE) and Return on Assets (ROAA) closed at 32.79% and 5.76% respectively. These indices are pointer to GTBank’s strategic positioning in Nigeria and other Countries where the Group operates.
Commenting on the first quarter results, the Managing Director/CEO of Guaranty Trust Bank plc, Mr Segun Agbaje, said; “Going into 2019, we knew that it would be a challenging year, but our strategy and unwavering focus on delivering value for our customers and shareholders continues to underpin our ability to consistently deliver solid results despite changing market variables. We carried on the momentum of the previous year, posting strong growth in earnings, effectively managing costs and leveraging our digital-first customer-centric strategy to deliver world-class services that are simple, cheap and easily accessible.”
He further stated that; “Whilst ensuring the long-term growth of our business is the greatest value that we can create for our communities, we are also leveraging our resources, expertise and network to help people thrive. That’s why, from April 28 to May 1, 2019, we are organizing the biggest food and drink festival in Africa to give small businesses in the food industry the platform, network and access to the markets that they need to grow.”
GTBank has continued to be best in class in terms of Profitability, Efficiency and Capital among Peers and other Financial Institutions in Nigeria. This is evidenced by its Earnings per Share of ?1.74, Return on Equity (ROAE) of 32.79%, Cost to Income Ratio of 38.64% and Capital Adequacy of 22.25%. These metrics are a testament to the efficient management of the Bank. In recognition of the Bank’s bias for world class corporate governance standards, excellent service delivery and innovation, GTBank has been a recipient of numerous awards over the years. Some of the Bank’s recent awards include 2018 Bank of the Year – Nigeria from the Banker Magazine and 2018 Best Banking Group and Best Retail Bank Nigeria from World Finance Magazine.
”Stop panic buying, there Is enough fuel in circulation – NUPENG
The Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) has advised Nigerians to stop panicking on rumours of fuel subsidy and an increase in the pump price.
A statement released a signed by the NUPENG South West Chairman, Tayo Aboyeji, states that Nigeria has enough petrol and diesel circulating in every state.
“Nigerians should stop spreading and listening to rumours of government removing fuel subsidy and increasing the pump price of fuel. We are not aware of such move, there is enough fuel in circulation and no increase has been made so far, ” Aboyeji said
The NUPENG boss cautioned Nigerians of the impending dangers of storing and stockpiling fuel at homes and shops, especially during this hot weather.
“Careless storage of fuel can lead to fire disaster both in the house or in the car,” Aboyeji advised.
Most fuel stations in many parts of the country have been thronged by anxious Nigerians buying petroleum products to store at home.
UBA,Sahara Energy In Messy Fight Over 15bn Loan.
UBA Plc has filed a winding up petition against Sahara Energy Resource Limited (Sahara Energy) at a federal high court in Lagos.
The petition was based on a N15 billion loan owed by KEPCO Energy Resources Limited (KEPCO).
Sahara Energy had stood as a guarantor to KEPCO.
A winding up petition is a legal action taken by a creditor or creditors against an insolvent company that owes them money.
It can also be filed against a company or companies who have served as guarantors of the defaulter, and if approved by the court, will lead to a closure of or compulsory liquidation of all the debtors assets to repay the loan.
The petition was filed before Mohammed Liman, a judge of the high court, by Temilolu Adamolekun, UBA’s legal counsel.
The bank said KEPCO had through a loan, raised capital to fund the acquisition of Egbin Power Plant, operated by Sahara Power Group, a privately-owned power company under the Sahara conglomerate.
How the ‘N15 billion debt’ came about
In 2013, the federal government granted KEPCO, a Korean company 70% stake of Egbin power plant at a sale value of $407.3 million, which was equivalent to N64.35 billion at the existing exchange rate.
In order to fund that acquisition, the petitioner said KEPCO had applied for a credit facility from several banks, including UBA, with Sahara Energy standing in as a “corporate guarantor” to secure the loan.
FBN Capital Limited and First Nigeria Limited were appointed as the facility agent and security trustee respectively.
UBA had therefore granted KEPCO a loan to the tune of $35 million in August 2013.
The petitioner said KEPCO failed to meet its obligations even after restructuring the loan on two different occasions.
The interest on the rescheduled debt is said to have increased the facility to $42,282,430.49 or NN15,221,674,976.40 as of December 31, 2018.
The petitioner said Sahara Energy had been notified several times to fulfill its obligation as a guarantor but had not done so, hence the the need to file a winding up order.
“The company herein is insolvent and unable to pay its debt. In the circumstances, it is just and equitable that the company should be wound up,” the petition read.
The petitioner also sought “an order that the company, Sahara Energy Resources Ltd, be wound up by the court under the provisions of Companies and Allied Matters Act.”
Following an ex-parte motion filed by Adamolekun, the bank’s lawyer, Liman ordered that the winding up petition be advertised in the federal government’s official gazzette and a national daily newspaper.
But Sahara Group has denied being indebted to UBA, saying it neither has outstanding facilities with the bank nor did it borrow any money from UBA.
The firm added that it did not grant a direct guarantee to UBA on any loan transaction that UBA could unilaterally enforce or sue on.
“Our lawyers have been duly instructed and have taken all necessary steps to ensure that the order is discharged or set aside as soon as practicable,” Sahara Group said in a statement.
“Sahara Energy Limited (SERL) and the entire Sahara Group will vigorously pursue and defend UBA’s petition to its logical conclusion with a view to dismissing the petition.
“SERL will provide periodic updates to its esteemed clients, suppliers and bankers as may be necessary, of steps being taken in connection with the suits and the results of effort to set aside the order and strike out the suit.”
The hearing of UBA’s petition has been adjourned till April 30.
World News6 months ago
I laughed when I read the story that I gave Israel ultimatum to return Nnamdi Kanu – Lai Mohammed
News1 week ago
Umar Mohammed Bago, Man With Passion For Service
News4 weeks ago
NDLEA Closes In On Sanwoolu’s Aide, Funke Phillips
Society News5 months ago
EXCLUSIVE: The Complete Story of Dolapo Awosika, John Fashanu and Prophet Kasali Sex Mess
Crime2 weeks ago
*GRAPHIC PICTURES* Yet Again SARS Officers Kill Lady, Leaves Her Boyfriend Unconscious In Lagos
Crime1 week ago
Alleged Gang-rape: Court Denies Babcock Varsity student Bail
Society News1 week ago
Nigerian Multimillionaire Oilman Igho Sanomi Raises $1.5 Million For Cancer Research UK
Crime1 week ago
Mother weeps profusely in court as suspected killers of her first class daughter plead not guilty