P&ID: Why flog a dead horse?
Good governance can be proverbially likened to the act of striking a lightning rod when it is still as hot as ever.
This simply means that the wisdom expected from persons exercising authority over a political entity is judged by the decisive nature of judgment that is adopted at the tipping points of our national life. This is exactly why there can be no successful government without a unique philosophy because philosophy connotes the love of wisdom. It is therefore expected that for an administration to be qualified to be rated as respecting the principles of good governance, it must be capable of exercising authority imbued with faultless wisdom.
This is the reason every government needs to have the services of professional technocrats who can stand their own at any point in time so they are able to proffer pragmatic panacea to enable the government meander through the mine's field of politics and all the intrigues that characterize the body politic and to successfully navigate the nation away from the previous or rather the tipping points that has the inherent potential to ruin the Country.
One of these tipping points that called for the best application of quality judgment came at the beginning of the current federal administration in 2015 when it was reported that her predecessor amongst other critically decisions transmitted, was this bad debt hanging on the corporate neck of Nigeria like a sword of Damocles which required the most immediate resolution by the incoming administration.
But it happens that the man at the helms of affairs’ was not rendered the best of judgment by the chief law officer of the administration apparently due to poor judgment and this clear case of poor judgment dominated by petty politics has some few years after has snow balled into a huge minefield of debt of $9billion default debt to a foreign entity which won an incredible arbitration following a collapsed contractual agreements.
As usual, Nigerian government had to wait until the head has been clinically cut off before deciding to take off a rash of fire brigade approaches to control the huge damage that this governmental miscalculation has brought on us. We shall conclude by looking at this ill wind that blows no one any good called fire brigade approach in Nigeria.
However, the story of how Nigeria sleep walked into an avoidable pitfall of debt of $9billion sounds like a very terrible narration of a bad dream which turned out not just as a nightmare but is a reality that Nigeria must live with.
Those who researched on the historicity of this controversy told us that the final award resulted from a dispute between P&ID and Nigeria that arose under a Gas Supply and Processing Agreement dated 11 January 2010 between the ministry of petroleum resources of Nigeria and P&ID.
According to P&ID, the agreement provided for P&ID to build facilities in Calabar to refine associated natural gas to be used in generating electricity.
P&ID claims that Nigeria was to supply it with fixed quantities of wet gas over a 20-year period. In return for supplying lean gas to the state, P&ID would be allowed to retain natural gas liquids separated during the refinement process and sell them for its own profit.
P&ID without any shreds of empirical evidence claims it invested about US$40 million in the project but that the facilities were never built and no wet gas was ever delivered.
P&ID alleged that Nigeria failed to meet its obligations to supply wet gas or complete construction of a pipeline that was necessary to transport the wet gas to the project site just as the company then said these failures led to the project’s collapse, costing it 20 years’ profits from the sale of natural gas liquids (NGLs).
The aforementioned defaults reportedly compelled this offshore company P&ID to file for arbitration in 2012 against the Nigerian petroleum ministry.
Legally speaking, we are told that in the original agreement there is a clause that provides for disputes to be resolved through ad-hoc arbitration under the Rules of the Nigerian Arbitration and Conciliation Act 2004 (ACA), with the ‘venue’ of the arbitration to be London or anywhere else agreed between the parties.
The three-member arbitration panel was chaired by The Right Honorable Lord Hoffmann, a retired British judge, with Bayo Ojo SAN representing Nigeria and Sir Anthony Evans QC representing P&ID. Chief Bayo Ojo is a former Federal minister of Justice and an accomplished practitioner of arbitration who is a well known patriot.
The trajectory of this episodal events reveal tha a series of hearings in London, took place in which the Tribunal issued a first part final award on 3 July 2014 determining that it had jurisdiction to determine its own jurisdiction under the English Arbitration Act 1996, which it held was the law of the seat of the arbitration.
This was because Nigeria’s petroleum ministry had not challenged whether the Tribunal had jurisdiction on the matter at all. On 17 July 2015, the Tribunal issued a second Part final award on liability concluding that the government’s failure to satisfy its contractual obligations was a breach of the agreement.
Belatedly in December 2015 under the watch of the current Federal Attorney General, the ministry applied to the Commercial Court in London to set aside the liability award, but the Court dismissed the application in February 2016, finding that it had been filed more than four months out of the statutory period for such an application and that the grounds of the action had no merit. This clearly is a manifestation of the age long vice of fire brigade approach which this current administration has mastered to the advantage of the corporate good of Nigeria.
Refusing to accept this, the ministry turned to the Federal High Court of Nigeria, asking it to set aside the liability award.
The Nigerian court duly obliged and in April 2016, it issued an order “setting aside and/or remitting for further consideration all or part” of the liability award on the grounds that the seat of arbitration is Nigeria and the reference to ‘venue’ in the arbitration clause is not definitive of seat.
However, this Nigerian backyard style of forcing the hands of the clocks angered the Honourable Lord Hoffmann who told the parties that the Federal High Court had no jurisdiction to annul the liability award and that the case would proceed to the ‘quantum phase’ – where the amount to be paid by the losing party is determined. Recall that the Nigerian minister of justice Abubakar Malami has continued to swim in the muddy waters of seeking to use the Nigerian court system to mitigate a damage that the ministry caused ab initio by not complying with the best global practices. The ministry of justice has unleashed the EFCC and the Federal High Court to go after some persons in Nigeria who are perceived to have illegally aided the foreign firm to win this unprecedented award in a London court. This is like crying after the head is cut off.
Why flog a dead horse? Recall that on 31 January 2017, the Tribunal issued the final award, granting P&ID damages in the sum of a staggering US$6.597 billion. It reportedly arrived at this staggeringly fraudulent amount by calculating the present value of the 20-year income it would have received for the sale of the NGLs, minus capital and operating expenditures it would have incurred in the course of building and running the facility.
Similarly, and to compound the problems for Nigeria, the award was to accumulate interest at the rate of 7 per cent per year, working out at US$1.265 million per day even as statisticians by some accurate calculations estimated that as at today, the total liability thus stands at approximately US $9billion as the penalty has been calculated from 2013.
Sadly, the Nigeria's current government that spent the first four years redistributing blames amongst her perceived political rivals in the Peoples Democratic party is not yet ready to govern but has resumed the second and final term of Muhammadu Buhari with another provocative round of blame game with specific reference to this huge indebtedness that it recklessly brought upon us because it was busy blaming the immediate past administration for everything bad under the Sun. The current Nigerian government has explained that at resumption of office in 2015 the only opinion it considered practicable regarding the controversial contract with the Projects and Industrial Development Company (P&ID) was to negotiate.
Speaking with journalists on Justice Minister Abubakar Malami said the leadership of the People’s Democratic Party , which signed the deal with the British firm, committed “fraud”. But it is clear that Nigeria is playing with fire by dancing around politics whilst the house is on fire. This is because Process and Industrial Developments Ltd (P&ID) has said that it would seize Nigeria’s assets in the United Kingdom, UK, to enforce the order of a British court against Nigeria.
Disclosing this, the firm’s representative, Mr. John Ehiguese, said that they have the possibility of seizing Nigerian naval vessels or oil cargoes. So why can't Nigeria once and for all terminate this national cancer of FIRE BRIGADE APPROACH?
Areola Aderounmu seems to provide a possible response to my poser. In a blog the writer Areola Aderounmu stated that "Fire Brigade approach is a common expression in Nigeria. Simply put it means that in Nigeria, people (especially when it comes to public services) always wait until the last minute before they take action on something that they should have done a long, long time ago. In the end, we always try to do things when it is almost late. We rally round, try a few urgent steps and we end up messing up the job".
Also, typically, the fire brigade or firemen will arrive when everything is already in ruins. Sometimes, families are trapped in the fire. This could result in death or serious burns. In Nigeria football, fire brigade approach is the norm. Our footballers are usually not well blended before each game or tournament. Some of them will arrive a few hours before crucial games. Fire brigade approach is used in virtually all spheres of the Nigeria life and the result is that things are done shabbily and results are unexpected outcomes. We usually express surprise or dismay at each outcome most especially when they are unfavorable.
However, this will shock well thinking persons to note as the writer stated that: "But it is amazing how Nigerians forget and move on with their lives. Our failures in certain areas or endeavors have not stopped us in any way from adopting the same fire brigade approach time and time over. Fire brigade approach is complex and intrinsic. It is like a web that has formed part of our evil entanglement in Nigeria."
"You can see it in governance, in sports, in music, in academic endeavors, in our dressing sometimes, in our jobs and other aspects of our lives. We cannot always be prepared for everything but when a larger percentage of our actions are incoherent, the results are bound to be negative".
It is pathetic that due to bad politics compounded by the evil of fire brigade APPROACH, the current government has led Nigeria into a minefield of a huge debt overhang which could have been resolved if this same government did not assume office with the mindset of political vendetta against the immediate past administration. This bad blood and huge miscalculation has cost us this very expensive outcome for which this government after meandering through the wrong process in the Nigerian court finally decided to dispatch a team of negotiators to meet in the United kingdom with this company which this same government has called unprintable names and had choreographed a court case in Abuja in which some persons appeared and pleaded guilty. Why do we engage in politics of deception? Nigeria Why?
*Emmanuel Onwubiko heads Human Rights Writers Association of Nigeria (HURIWA) and blogs @ www.emmanuelonwubiko.com ; [email protected] ; www.thenigerianinsidernews.com