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Adewale Sanyaolu with agency reports
The Federal Government has moved for a stay of execution over a British Court judgment which gave nod to Process and Industrial Development Limited (P&ID) to seize Nigerian assets worth $9 billion over a Gas Sales Purchase Agreement (GSPA) deal.
A statement by the Solicitor General of the Federation and Permanent Secretary, Dayo Apata, said Nigeria will appeal the judgment.
The dispute that led to Arbitration between Federal Government of Nigeria (FGN) and Process and Industrial Development Ltd arose from a 20 year GSPA entered in 2010 between FGN (through the Ministry of Petroleum Resources) and P & ID in respect of an accelerated gas development project in Nigeria’s OMLs 67 and 123. According to Akpata, P&ID never began the construction of the project facility but it alleged it incurred about $40 million in preliminary expenses.
‘‘P & ID’s claim in the arbitration proceedings was mainly for loss of profit for the entire twenty-year term of the GSPA, initially claiming the sum of $1.9 Billion and later increasing its claim to $5.9 Billion.
The Arbitral Tribunal on 31st January 2017 rendered its Final Award against the Ministry of Petroleum Resources in the sum of $6.597 billion together with pre-award interest at the rate of 7 per cent per annum effective from 20th March 2013 and post-award interest at the same rate till date of payment.
The Solicitor General explained that, in granting the huge arbitration award against Nigeria, the tribunal decided the following; that the project would operate at 93 per cent uptime during the twenty-year of the GSPA despite the well-known risks of operating such a project in the Niger-Delta.
‘‘That the average price of Natural Gas Liquids (the main revenue earner for P&ID assuming the GSPA had been implemented), should be based on an average oil price in excess of $100 per barrel over the twenty-year life of the project; to apply a discount rate to P&ID’s supposed lost profits of 2.65 per cent, the same interest rate paid on United States treasury notes thereby adjudging P&ID, a start-up company that never commenced any physical work on the project but planned to operate in the midst of the Niger-Delta crisis, using a novel and unproven technology, a virtually “risk free” investment’’.
