How Addax Petroleum Pullout Frustrated P & ID Deal And Eventual $9bn Judgement Against Nigeria

Amidst recriminations between the federal government and the Irish-owned Process and Industrial Developments (P&ID) Limited over the $9.6 billion judgment debt awarded in favour of the company against Nigeria, fresh facts have emerged that it was the withdrawal of Addax Petroleum Development Nigeria Limited from the controversial gas to power project that stalled the deal and fuelled the arbitration.

The federal government, however, took further steps yesterday to find a way out of the logjam as Vice President Yemi Osinbajo led a team to meet with a British lawyer believed to have represented Nigeria in the UK enforcement suit to review the matter.

As the legal team met at the Presidential Villa, Abuja, demonstrators marched on the embassies of the United Kingdom and Republic of Ireland in the Federal Capital Territory (FCT) to protest the judgment of a London Court that upheld the $9.6 billion arbitral award to P&ID.

Meanwhile, the federal government’s allegation that the deal was fraudulent was yesterday got endorsement from a former Attorney General of the Federation and Minister of Justice, Mr. Michael Aondoakaa, who urged the government to file corruption charges against P&ID and promoters of the Gas Supply and Processing Agreement (GSPA).

THISDAY gathered that when the administration of former president, Chief Olusegun Obasanjo, proposed the idea of constructing a wet gas processing plant to supply gas to the gas-fired power stations across the country, the initial plan was to build the gas facilities in Badagry area of Lagos State.

However, due to the large volume of gas being flared by Addax Petroleum in the company’s Oil Mining Lease (OML) 123 in Adanga area of Cross River State, the project was shifted to Calabar, Cross River State, to utilise the flared gas.
Addax Petroleum is the operator of the Adanga offshore asset under a Production Sharing Contract (PSC) arrangement with the Nigerian National Petroleum Corporation (NNPC).
THISDAY gathered that the key players in the P&ID deal included the late Minister of Petroleum Resources, Dr. Rilwanu Lukman, who as the Honorary Advisor on Energy and Strategic Matters to the late President Umaru Musa Yar’Adua, ensured that the deal received the attention of the late president.

Others were the then Minister of State (Gas), Chief Emmanuel Odusina; Mr. Mohammed Kuchazi, a member of the committee set up by Lukman to facilitate the project; Dr. M.M. Ibrahim, the shortest serving Group Managing Director of NNPC; the late Mr. Shehu Ladan; the then Permanent Secretary, Ministry of Petroleum Resources, Goni Sheikh; a former Group Executive Director in charge of Gas and Power at the NNPC, Dr. David Ige; and a former Commissioner of Energy and Mineral Resources under the administration of Mr. Babatunde Fashola in Lagos State, Mr. Taofeek Tijani, who was the Technical Adviser to Lukman.

It was learnt that as the discussions between the federal government team and P&ID team reached advanced stage, Addax Petroleum was invited to one of the meetings held in 2009 between the government and the Irish-owned firm, shortly before the contract was signed in January 2010.

Addax Petroleum was said to have agreed to supply 100 million standard cubic feet of gas per day (MMSCF/d), which the Chinese-owned energy giant was flaring from its OML 123.
P&ID was said to have received allocation of land from the Cross State Government at Adiabo in Odukpani Local Government Area of the state.

However, a 24-inch, 107-kilometre pipeline network had to be built to take gas from Addax’s OML 123 in Adanga to Calabar, where P&ID was billed to build the gas processing facility.
The gas pipeline, it was learnt, was also to supply gas from the Addax’s offshore platform to the 561-megawatt capacity Calabar Power Station being built then under the National Integrated Power Project (NIPP) by the Niger Delta Power Holding Company (NDPHC) Limited at Ikot Nyong, near Calabar.
An indigenous company has since successfully executed the construction and installation of the Adanga-Calabar Gas Transmission Pipeline and Metering Station for the NDPHC Limited to facilitate gas supply to the Calabar Power Station.
But before the completion of the Adanga-Calabar pipeline contract, Addax Petroleum was said to have told the other stakeholders in 2011 that it would not be able to provide the required wet gas for Phase 1 of the P&ID project because it would also require a certain volume of lean gas for reinjection into OML 123.
THISDAY gathered that this development effectively breached the agreement between the federal government and P&ID on gas supply to the Irish-owned firm.

It was learnt that even when the other stakeholders had proffered alternative solutions, Addax Petroleum withdrew totally from the P&ID deal in June 2012.
When contacted yesterday, the oil company promised to respond but did not do so as at press time.
It was, however, gathered that NNPC’s lack of commitment to fund the project made Addax, which was the PSC contractor to the corporation, to pull out.

A source told THISDAY that NNPC was simply unable to fund the project because it had no cash even as he added that Nigeria’s woe was compounded by a conspiracy among the oil majors to withhold investment in domestic gas to power project in order to leave Nigeria perpetually at their mercy.

Some of the key players contacted by THISDAY at the weekend declined to comment on the failed gas project.
“I have paid my dues; I have served this country meritoriously. In advanced countries, people like us are given an award for trying to save their country from environmental pollution. But the people there now appear not to understand the issues. I have nothing to say in the newspapers. Let the EFCC invite me. When they invite me officially, I will have something to say,” one of them told THISDAY.

“The country is in a deep mess right now with the $9.6 billion award and I don’t want to put the country in a deeper trouble by saying anything now,” another key member of the government team told THISDAY off the record.
THISDAY gathered that after an unsuccessful attempt by P&ID to secure the personal intervention of the then Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, in August 2012, it formally terminated the GSPA and went to the arbitration tribunal.
It was also gathered that when the Niger Delta Power Holding Company Limited waited for gas supplies from Addax’s OML 123 to fire the Calabar Power Station to no avail, the company approached two wholly-owned subsidiaries of Seven Energy International Limited – Seven Energy Finance Limited and Accugas Limited, which commenced the full supply of gas to the 561-megawatt capacity Calabar Power Plant from the company’s nearby gas facilities.

When contacted by THISDAY on Saturday to explain why his company pulled out of the gas contract deal, Addax Petroleum’s spokesman, Mr. Yinka Adeyemi, said he was in Canada and promised to respond on Sunday through his colleague.

But on Sunday, a spokeswoman of the company, Leticia Arigbodi, requested to be given up to yesterday to provide official response.
According to her, the company needed more time to provide the official response because the key actors who represented the company in the negotiations had since left the establishment.
However, as at press time yesterday, the company could not provide any response.

Osinbajo, Malami, Emefiele Strategise on Way Forward

A team of the federal government led by Vice-President Yemi Osinbajo met yesterday in the State House to review the judgment debt.
The meeting, which was meant to take a common position on the matter, was held behind closed doors in the vice-president’s office and attended by some Nigerian lawyers along with a British legal practitioner who represented Nigeria in the case.

The federal government, which had initially threatened to appeal the judgment also later said it was open to negotiations with P&ID with a view to forestalling implementation of the judgment.
It was learnt last night that President Muhammadu Buhari had asked Osinbajo to meet with the Economic Management Team (EMT), and come up with a viable decision on a productive step to take on the matter.

But a source, who was in the meeting, said it was a consultative forum aimed at deciding on the next move of the federal government.
Ahead of the meeting yesterday, the Attorney General of the Federation, (AGF) and Minister of Justice, Abubakar Malami, met with the Chief of Staff, Malam Abba Kyari.
Thereafter, both of them proceeded to the president’s office.
Present at the meeting aside Malami were the Minister of Finance, Budget and National planning, Mrs. Zainab Ahmed, Minister of Information, Alhaji Lai Mohammed, the Minister of State for Petroleum, Timipre Silva, Minister of State for Niger Delta Affairs, Mr. Festus Keyamo, Group Managing Director of the Nigeria National Petroleum Corporation (NNPC), Malam Melee Kyari, acting Chairman of the Economic and Financial Crimes Commission (EFCC), Mr. Ibrahim Magu, and the Governor of Central Bank of Nigeria, (CBN), Mr. Godwin Emefiele.

Protesters Storm UK, Irish High Commissions

A coalition of civil society groups yesterday occupied both the Irish and the United Kingdom High Commissions in Abuja to protest against the $9.6 billion judgment awarded against Nigeria in favour of P&ID.
The coalition said the judgment was capable of impoverishing Nigerians.
The coalition had last Friday announced its plans to occupy British and Irish High Commissions in Abuja for one week, beginning from yesterday in protest against the judgment.

It vowed to continue the protest until the judgment is reversed.
The protesters were armed with various placards with inscriptions such as “$9.6bn judgment is a fraud,” “No to illegal takeover of our national assets,” “Nigeria rejects fraudulent judgment from British judge,” among others.
The President of the Coalition, Etuk Williams, said Nigeria could not be colonised and enslaved for the second time through the judgment.

According to him, the $9.6 billion is equivalent to N3.5 trillion when converted, adding that the amount would take 20 per cent of Nigeria’s foreign reserves.
Williams stated: “We have come to say that we will not submit to slavery. We believe in justice; $9.6bn in UK is a fraud.

“That judgment will inflict pain on over 200 million Nigerian people and we cannot take that. We are ready to occupy this place for another one week. We will continue to occupy British and Irish embassies until justice is done. This judgment must be reversed.”
William urged the parties to review the contract and negotiate the payment awarded against Nigeria.

Aondoakaa: File Corruption Charges against P&ID

Meanwhile, Aondoakaa, who superintended over the Ministry of Justice when the GSPA was sealed, has urged the federal government to file corruption charges against the promoters of P & ID.
The former minister, while fielding questions when he appeared on Sunrise Daily, a breakfast programme on Channels Television, alleged that the contract was illegal because it did not get the approval of the Federal Executive Council (FEC).

According to him, “everyone involved must face the law, including the foreigners,” adding that “you cannot do this in the United States.”
Aondoakaa said the contract contravened the Infrastructural Regulatory Commission Act and Public Procurement Act.
According to him, part of the contract has to do with Bakassi, which was part of Cameroon by 2009.

“I wonder whether they expected Nigeria to enter into a contract on behalf of another sovereign nation.
“This happened in secrecy. I contacted the DG (Director General) of the Infrastructural Regulatory Commission and he was also shocked. Everything that is coming to us now is shocking. Ignorance of law is no excuse. If you are a foreign country coming to Nigeria, you ought to know the law. You ought to know if the contract was appropriated in the budget,” the former AGF stated.

Citing Section 5 of the 1999 Constitution as well as Sections 2 and 3 of the Infrastructural Regulatory Commission Act, he said even the president had no power to unilaterally approve contracts without FEC’s approval.

“The president doesn’t have the power to give even anticipatory approval,” he added.
Aondoakaa, who was the AGF and justice minister from 2007 to 2010, advised the federal government not to negotiate with P&ID.
“If you are alluding to fraud, you cannot negotiate at the same time with them,” he added.

Nigeria Risks Another $2.3bn Fine in France

Meanwhile, amid the raging controversy over the P&ID &9.6 billion arbitral award, there are indications that Nigeria could incur another $2.3 billion fine in arbitration in France as a result of controversies surrounding the Mambilla power project in Taraba State.

The $5.8 billion Mambilla hydropower facility is being stalled over unresolved legal and funding crisis involving the Nigerian government and a local content partner, Sunrise Power and Transmission Company Limited (SPTCL).

In documents seen on Monday by an online newspaper, The Cable, SPTCL is making the following claims for being excluded from the final contract: Wasted expenditures: $100 million+; loss of profit as content partner: $565 million; loss of the commission due by SINOHYDRO to SUNRISE: $855 million; loss of profit that would have been made through the resettlement contract: $525 million; and loss of reputation: $25 million+

Like the P&ID controversy where the Attorney-General of the Federation and Minister of Justice (AGF), Abubakar Malami, was alleged not to have made efforts to negotiate while the legal proceedings were ongoing, the 3,050-megawatt power project also suffered a similar fate.

The Chief Executive Officer of SPTCL, Leno Adesanya, told The Cable that the company was sidelined in the project by the Ministry of Power in a series of petitions to President Muhammadu Buhari, Vice President Yemi Osinbajo, Malami and former Minister of Power, Babatunde Fashola.

SPTCL, which claimed to have been awarded the build, operate and transfer (BOT) contract in 2003, said some “vested interests” in government had, in 2017, signed another contract with three Chinese companies, Sinohhydro Corporation of China, China Ghezouba Group Corporation of China and China Geo-Engineering Group Corporation, to form a joint venture for the execution of the project.

The local content partner had accused senior member of the Buhari government of taking the unilateral decision to remove the company from the contract. The company also accused Fashola of reneging on his promise to support the project.

As a result, SPTCL dragged the federal government and its Chinese partners before the International Chamber of Commerce (ICC) in Paris, France, over an alleged breach of contract.
Adesanya claimed the company had spent millions of dollars with financial and legal consultants to raise about $6 billion for the execution of the project, yet the company has suffered a lot over the years “through improper administrative interruptions and interventions.”

The China Exim Bank, which is expected to provide 85 per cent of the joint funding with the federal government for the Mambilla project, insisted on compliance with due process and terms of the November 2017 engineering, procurement and construction (EPC) contract signed with the partners before releasing funds.
On July 24, 2017, Malami wrote a letter to Osinbajo, the then acting president, recommending that SPTCL be accommodated as a local partner in the project.

“Sunrise Power and Transmission Company Limited should be engaged as Local Content Partner on the Mambilla Project as a means of accommodating its prior contractual interests on the project,” Malami wrote.
A few weeks later on August 17, 2017, Malami backtracked, saying he issued the previous opinion on the project based on the limited materials provided at the time.

He said there was no requisite Federal Executive Council (FEC) approval for the project.
But Malami’s claim was challenged in another letter by Gbolahan Elias, a Senior Advocate of Nigeria (SAN), who said there was no statute as at 2003 when the contract was awarded to SPTCL requiring the consent of the FEC before a letter of award could be validly issued.

In a petition written to Buhari on November 18, 2018, Adesanya asked the president to save the project, conceived in 1982, from further controversy.
“Mr. President can save the project from being enmeshed in another controversy as it occurred during the government of President Yar’Adua where a presidential adviser allegedly took millions of dollars in bribes, and eventually led to the removal of the official and the termination of the $1.46b civil works contract,” the petition read.

“In the light of the recent irreversible arbitration ruling delivered against the FGN in the UK and the United States for Nigeria to pay at least $9 billion in damages to Process and Industrial Development Company in the UK (the “P&ID) for breach of contract, our lawyer, Mr. Femi Falana (SAN), held discussions with Your Excellency in July 2018 to explore avenues for an amicable resolutions against the FGN,” it added.
However, Fashola, in a statement issued in January, accused Adesanya of trying to destabilise the Mambilla project.

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