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Nigeria’s foreign reserves at risk over $9bn UK judgment

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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.

Cable NG

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GTBank Releases 2019 Half Year Audited Results, Reports Profit before Tax of N115.8Billion

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Guaranty Trust Bank plc has released its audited financial results for the half year ended June 30, 2019 to the Nigerian and London Stock Exchanges. 

The half year result shows positive growth across key financial metrics and reflects GTBank’s leading position as one of the best managed financial institutions in Africa. The Bank reported a Profit before Tax of ?115.8billion, representing a growth of 5.6% over ?109.6billion recorded in the corresponding period of 2018. The Bank’s loan book grew by 1.0% from ?1.262trillion recorded as at December 2018 to ?1.274trillion in June 2019 and customer deposits increased by 6.3% to ?2.418trillion from ?2.274trillion in December 2018.

The Bank closed the half year ended June 2019 with Total Assets of ?3.598trillion and Shareholders’ Funds of ?603.0Billion. In terms of Asset quality, NPL ratio and Cost of Risk improved to 6.8% and 0.2% in June 2019 from 7.3% and 0.3% in December 2018 respectively. Overall, asset quality remains stable with adequate coverage of 84.7%, while Capital remains strong with CAR of 23.5%. On the backdrop of this result, Return on Equity (ROAE) and Return on Assets (ROAA) stood at 33.7% and 5.8% respectively. The Bank is proposing an interim dividend of 30kobo per ordinary share of 50 kobo each for period ended June 30, 2019.

Commenting on the financial results, the Chief Executive Officer of Guaranty Trust Bank plc, Segun Agbaje, said; “We have delivered a good result inspite of a challenging market, characterized by varying degrees of uncertainty and a rapidly changing competitive landscape. Our strong financial performance is underpinned by our unwavering focus on delivering value for our shareholders and reimagining the role we play in our customers’ lives.”

He further stated that “In a rapidly changing world and increasingly unpredictable environment, we are committed to building a long-term business that is both nimble and focused on flawless execution. The progress that we have made over the past six months demonstrates that we have the right strategy and the dedicated team to deliver for all our stakeholders, even in difficult conditions.”

The Bank has continued to report the best financial ratios for a Financial Institution in the industry with a return on equity (ROE) of 33.7% and a cost to income ratio of 37.6% evidencing the efficient management of the banks’ assets. These ratios are a testament to the competent and experienced management and work-force, efficient balance sheet structure and operational efficiency 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 these include Africa’s Best Bank and Best Bank in Nigeria from Euromoney Magazine, and Best Banking Group and Best Retail Bank by World Finance Magazine.

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In commitment to transparency, NNPC announces new DSDP bid winners

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In line with its avowed commitment to transparency and accountability in all its activities as committed by the new Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, the National Oil Company has announced winners of its 2019/2020 Direct Sale of Crude Oil and Direct Purchase of Petroleum Products (DSDP) arrangement.

A release on Sunday in Abuja by the Corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, said following the completion of the 2019/2020 DSDP tender exercise, 15 consortia/companies made up of reputable and experienced international companies and Nigerian Downstream companies emerged successful to undertake the 2019/2020 DSDP arrangement.

The contract is for one year effective 1st October, 2019 to 30th September, 2020.

It listed the successful companies as follows:

1.  BP OIL INTERNATIONAL LTD./AYM SHAFA LTD.

2.  VITOL SA/CALSON-HYSON

3.  TOTSA TOTAL OIL TRADING SA/TOTAL NIG. PLC

4.  GUNVOR INTERNATIONAL B.V./AY MAIKIFI OIL & GAS CO. LTD.

5.  TRAFIGURA PTE LTD./A. A. RANO NIG. LTD

6.  CEPSA S.A.U./OANDO PLC

7.  MOCOH SA/MOCOH NIG. LTD.

8.  LITASCO SA/BRITTANIA-U NIG. LTD./FREEPOINT COMMODITIES

9.  MRS OIL & GAS COMPANY LTD

10. SAHARA ENERGY RESOURCE LTD

11. BONO ENERGY LTD./ETERNA PLC/ARKLEEN OIL & GAS LTD./AMAZON ENERGY

12. MATRIX ENERGY LTD./PETRATLANTIC ENERGY LTD./UTM OFFSHORE LTD./LEVENE ENERGY DEVELOPMENT LTD

13. MERCURIA ENERGY TRADING SA/ BARBEDOS OIL & GAS SERVICES LTD./RAINOIL LTD./PETROGAS ENERGY

14. ASIAN OIL & GAS PTE LTD./ EYRIE ENERGY LTD./ MASTERS ENERGY OIL & GAS LTD/CASIVA LTD

15. DUKE OIL COMPANY INCORPORATED.

The release stated that the tender process comprised technical and commercial bid submission respectively, evaluation and shortlisting, then commercial negotiations with prequalified companies and engagement of the successful consortia/companies by NNPC.

“Under the DSDP arrangement, the under listed fifteen (15) consortia/companies shall over the contract period, offtake crude oil and in return, deliver corresponding petroleum products of equivalent value to NNPC, subject to the terms of the agreement”, the release declared.

In his takeover note on 8 July, 2019, the newly appointed NNPC GMD, Mallam Kyari, had promised to open NNPC books to public scrutiny, saying as a publicly owned company Nigerians deserve to know about the operations of the Corporation. 

He reiterated his management’s team commitment to transparency and accountability when he had a maiden Town Hall engagement with the staff of the Corporation where he launched the team’s policy direction tagged: Transparency, Accountability, Performance and Excellence (TAPE).

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HY’ 19: GTBank posts N115.8bn pre-tax profit

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Guaranty Trust Bank plc has released its audited financial results for the half year ended June 30, 2019 to the Nigerian and London Stock Exchanges.

The half year result shows positive growth across key financial metrics and reflects GTBank’s leading position as one of the best managed financial institutions in Africa. The Bank reported a Profit before Tax of ?115.8billion, representing a growth of 5.6% over?109.6billion recorded in the corresponding period of 2018. The Bank’s loan book grew by 1.0% from ?1.262trillion recorded as atDecember 2018 to ?1.274trillion in June 2019 and customer deposits increased by 6.3% to ?2.418trillion from ?2.274trillion in December 2018.

The Bank closed the half year ended June 2019 with Total Assets of ?3.598trillion and Shareholders’ Funds of ?603.0Billion. In terms of Asset quality, NPL ratio and Cost of Risk improved to 6.8% and 0.2% in June 2019 from 7.3% and 0.3% in December 2018respectively. Overall, asset quality remains stable with adequate coverage of 84.7%, while Capital remains strong with CAR of 23.5%. On the backdrop of this result, Return on Equity (ROAE) and Return on Assets (ROAA) stood at 33.7% and 5.8% respectively.The Bank is proposing an interim dividend of 30kobo per ordinary share of 50 kobo each for period ended June 30, 2019.

Commenting on the financial results, the Chief Executive Officer of Guaranty Trust Bank plc, Segun Agbaje, said; “We have delivered a good result inspite of a challenging market, characterized by varying degrees of uncertainty and a rapidly changing competitive landscape. Our strong financial performance is underpinned by our unwavering focus on delivering value for our shareholders and reimagining the role we play in our customers’ lives.”

He further stated that “In a rapidly changing world and increasingly unpredictable environment, we are committed to building a long-term business that is both nimble and focused on flawless execution. The progress that we have made over the past six months demonstrates that we have the right strategy and the dedicated team to deliver for all our stakeholders, even in difficult conditions.”

The Bank has continued to report the best financial ratios for a Financial Institution in the industry with a return on equity (ROE) of 33.7% and a cost to income ratio of 37.6% evidencing the efficient management of the banks’ assets. These ratios are a testament to the competent and experienced management and work-force, efficient balance sheet structure and operational efficiency 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 these include Africa’s Best Bank and Best Bank in Nigeria from Euromoney Magazine, and Best Banking Group and Best Retail Bank by World Finance Magazine.

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