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Why Does the Federal Government Owe Billions to a Multinational Company?
See full details of 2019 constituency projects of federal lawmakers in Akwa Ibom state
26 August 2019
P&ID Fallout: How Much Does Nigeria Owe Foreign Engineering Company?
27 August 2019
by Davis Udeogu
Fallout as Nigeria Fails to Complete Lucrative Gas Supply and Production Arrangement with Foreign Company
In 2010, Nigeria, under late President Umaru Musa Yar’adua, entered into what was conceived as a 20-year agreement with an engineering and product management company, Process and Industrial Developments Limited (P&ID)
It was intended that P&ID would build a modern gas processing plant to refine natural gas, which Nigeria would receive free of charge to generate an estimated additional 2,000 megawatts of power for the national grid. (Note that Nigerian currently generates on average 4,000 megawatts of power, well below potential)
P&ID would have benefited from this by selling the by-products of this refinement (propane, ethane, butane), for what was projected to be profits in billions of dollars.
The Nigerian Government (then under President Goodluck Jonathan) however, (though depressingly expectedly) failed to hold up its end of the agreement, which included installation of pipelines and related infrastructure as well as arrangement with relevant agencies, and the project fell apart before any work had even begun.
Thus both eliminating a new source of much needed power to the country and any future profit for the multinational company P&ID for the period of 20 years.
Following months of fruitless negotiation with the government, P&ID initiated formal arbitration proceedings and took the matter to a tribunal formed in London, under the requirements of the Nigerian Arbitration and Conciliation Act in 2012. By January 2017, the tribunal ruled in favour of P&ID stating that Nigeria owed the firm billions in damages.
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[…] to seize an estimated $9 billion in assets from Federal Government over an aborted gas project. You may also like: Why Does the Federal Government Owe Billions to a Multinational Company? In 2015, P&ID was awarded a sum of $6.6 billion by a London tribunal during an arbitration […]
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