London Court orders release of $200m guarantee to Nigeria from P&ID

The Central Bank of Nigeria says the development led to a rise in the nation’s foreign reserves.

 A London court has ordered the release of the $200 million guarantee placed as security by the Nigerian government in relation to the Process and Industrial Development (P&ID) $10 billion arbitral claim.

The Central Bank of Nigeria (CBN) made this known in a series of tweets on Tuesday.

The bank said the development led to a rise in the nation’s foreign reserves.

Nigeria’s Foreign Exchange Reserves was this morning boosted by over $200Million when the London Commercial Court ordered the release of the $200Million guarantee put in place as security in respect of the execution of the much discredited P&ID $10 Billion Arbitral Claim.

— Central Bank of Nigeria (@cenbank) September 29, 2020

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The CBN also disclosed that the court awarded £70,000 cost in favour of Nigeria in addition to an earlier award of £1.5 million.

“Nigeria’s foreign exchange reserves was this morning boosted by over $200 million when the London Commercial Court ordered the release of the $200 million guarantee put in place as security in respect of the execution of the much discredited P&ID $10 billion arbitral claim,” the CBN wrote.

“The court also awarded a £70,000 cost in favour of Nigeria in addition to an earlier award of £1.5 million.”

Background

Earlier in September, the Nigerian government secured a judgement of a British court to suspend an unfavourable ruling over the scandal.

A commercial court in the United Kingdom granted Nigeria’s appeal for a stay of execution of the award of $8.9 billion (about N3.2 trillion) in favour of P&ID, a controversial British firm that secured a gas contract in Nigeria.

The Royal Courts of Justice Strand, London, WC2A 2LL presided over by Justice Sir Ross Cranston said following a review of written submissions by the Nigerian government after the arbitral award, which contained “new evidence” concerning the matter in dispute, the court decided to grant “Nigeria’s applications for an extension of time and relief from sanctions.”

The P&ID conundrum became a full-blown saga last year when a U.K. judge ruled P&ID could enforce an arbitration tribunal’s 2017 ruling, now totaling $9.6 billion including interest, which found the country breached the agreement.

Nigeria’s chances of annulling the giant penalty laid on proving the 2010 gas supply arrangement was a sham designed to fail by P&ID and government officials.

An investigation by PREMIUM TIMES also revealed that the gas supply arrangement was designed to fail, partly because the company had neither the expertise nor had the government put in place necessary mechanisms for its success.

Reactions

Following the announcement of the award Tuesday, Nigeria’s Attorney-General of the Federation and Minister of Justice, Abubakar Malami, expressed appreciation over the development.

Mr Malami, in a statement by Umar Gwandu, his Special Assistant on Media and Public Relations, said he was glad over the victory “in addition to the multiple successes recorded so far by the ministry”.

“The recent judgment on the Nigeria’s cases against P&ID demonstrated an outcome of strong commitment and determination of the present administration through the office of the Attorney-General of the Federation and Minister of Justice to tackle fraud, corruption, non-compliance with the due process.

“Since the minister took over the coordination of the case, it has been a matter of success 

upon success,’’ he added.

According to him, “as a result of the determination of the Attorney-General, the following successes, relating to the matter, were recorded:

“Order for stay of execution of the arbitral award was granted, Nigeria recorded tremendous success challenging the order for cash deposit of $200m to bank guarantee.

“Success was equally recorded for having an order for the extension of time to challenge award and agreement, Nigeria was successful as the court award payment of legal cost of €1.5m in favour of the country.”

He noted that “other successes” include the court order for the release of bank guarantee in favour of Nigeria, award of payment of €70,000 to Nigeria as further legal cost relating to the issue “and Nigeria obtaining multiple positive rulings to obtain information from banks abroad which helped in establishing fraud.”