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How FG’s delays pushed interest on $1.9bn oil deal to $9bn throat cutting debt

Whereas the Federal Government Friday disclosed that steps are underway to halt the enforcement of a judgment of the United Kingdom, Business & Property Courts (the Commercial Court) awarding a cumulative sum of $9bn award against Nigeria and in favour of UK firm, Process and Industrial Developments Limited, analysts have shown that government’s poor attention to the deal from onset created delays in decision making.

The Solicitor-General of the Federation, Mr Dayo Apata, who doubles as the Permanent Secretary, Federal Ministry of Justice, explained in a statement that “The claim started at $1.9bn but P&ID later increased its claim to $5.9bn. After the tribunal ruled that Nigeria had breached the contract, Nigeria successfully applied to have that award set aside by the Federal High Court in Lagos.”

He said the arbitral tribunal ignored the decision of the Federal High Court and on January 31, 2017 delivered its final award against Nigeria through the Ministry of Petroleum Resources in the sum of $6.597bn together with pre-award interest at the rate of seven per cent per annum effective from March 20, 2013 and post-award interest at the same rate till date of payment.

“This interest has increased the size of the award to a sum in excess of $9bn,” Apata said.

According to Apata, who was among privileged lawyers recently awarded the rank of Senior Advocate of Nigeria (SAN), “The government’s expert had concluded that the damages “were clearly unreasonable and manifestly excessive and exorbitant”, “went far beyond any legitimate protection of the commercial interests of P&ID”; were “completely wrong and obviously unjustifiable”; and overcompensated “P&ID on a, frankly, gargantuan scale, and impose[d] a punitive award on Nigeria”.

Continuing, he said “It was on these grounds and others, that the Federal Republic took all available steps to resist enforcement before the courts of the United Kingdom.

“Other efforts are being taken in the courts of the United States of America to protect Nigeria interests.”

However, industry experts are divided if the government can present superior arguments that will cause the setting aside of the latest ruling in the UK court.