How Buhari’s Leadership Could Cost Nigeria $11bn?

How Buhari’s Leadership Could Cost Nigeria $11bn? thumbnail

The Leadership of President Muhammadu Buhari has been blamed for the legal defeat of the country in a case with an offshore company, Process & Industrial Developments Limited (P&ID). The company that won a record-breaking arbitration award against Nigeria linked the country’s defeat to the institutional incompetence” within Buhari’s government.

What caused the dispute between P&ID and Nigeria’s govt?

The dispute began when the firm signed a major gas-processing agreement with the ministry of petroleum resources in 2010. The agreement reportedly collapsed because Nigeria failed to keep her part of the contract. Under the contract, Nigeria was to supply natural gas (“wet gas”) at no cost to P&ID’s facility, while P&ID was to construct and operate the facility, process the gas to remove natural gas liquids and return lean gas to Nigeria at no cost.

After the collapse, a London arbitration tribunal ruled that the Nigerian government owed the company $6.6bn – plus interest now totalling some $4bn – for breach of contract. In reaction to the judgement, Nigeria applied for an extension of time and relief from sanctions. The extension was granted by a judge of the Business and Property Courts of England and Wales, in September 2020, Ross Cranston. Subsequently, the case was returned to arbitration and the trial was scheduled for trial in the United Kingdom in January 2023.

The January 23 Trial between P&ID and Nigeria’s govt

In the 2023 trial, Nigeria wants Justice Robin Knowles to overturn the previous court’s decision. It claims that P&ID secured both the original contract and the arbitration victory by dishonest means, which include: lying and bribing Nigerian officials and lawyers.

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Meanwhile, P&ID has blamed Nigeria’s government for its defeat in arbitration. Its advocate  Lord Wolfson of Tredegar said Nigeria repeated the mess it made at implementing the contract, at the arbitration. He upheld that “there was no bribery, no perjury and no collusion.”

How Buhari’s Leadership Messed Nigeria’s chance at arbritration

Lord Wolfson explained last week that President Buhari and the Attorney General of the Federation (AGF) Abubakar Malami depended on a miniature, unskilled Nigerian firm called Upstream Commercial Advisory to provide an important report during the arbitration.  He faulted the Buhari-led administration for not engaging an established accountancy firm, such as KPMG in the case.

P&ID’s advocate who revealed that the decision was allegedly made to save money, noted that the decision caused Nigeria to lose the award. Lord Wolfson also noted that Nigeria could not get a good firm to convince the court that the award should be lesser than the billions sought by P&ID. The award, which has been accruing interest since 2013, is now worth $11 billion.

Buhari was also accused of failing on several occasions to respond to urgent requests for instruction from the republic’s lawyers during the arbitration. Lord Wolfson noted that this further compounded the problems faced by Nigeria’s legal team. He further called Nigeria’s legal strategy “a kafkaesque system of buck-passing”.

What would happen if Nigeria loses the case?

Nigeria would be asked to pay P&ID close to a third of its foreign reserves if it loses this case. This financial burden could deal a heavy blow to Africa’s biggest economy. 

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