…says best option is to negotiate with P&ID
The Attorney-General of the Federation, Abubakar Malami (SAN), on Sunday disclosed that no official assigned in the past by the Federal Government in signing, review and handling of the legal terms for the Process and Industrial Developments Limited ( P&ID) contract will be excluded from invitation and probe by security agencies.
This follows the award of $9.6billion judgement by a court based in the United Kingdom for assets of Nigeria to be seized over the fraudulent gas to power contract which the Attorney General of the Federation ( AGF) Abubakar Malami said the best option for the Federal Government is to negotiate with P&ID.
Concerning the ongoing probe into the matter, Malami who spoke at a press conference in Abuja on Sunday described the investigation as intensive and extensive. He said there was no limitation on who can be invited for questioning by the relevant security agencies.
Those to be probed according to him include those who were involved in drafting and signing of the agreement, conduct, trial and “other personalities of interest.”
In defence of the Federal Government, Malami said the administration of President Muhammadu Buhari decided to negotiate with P&ID because, at the inception of the present administration , there was already an award and the timeline for government to appeal had elapsed.
He said since the previous government of the Peoples Democratic Party did not appeal , the option left for the administration as of the time was to negotiate , despite its reservations about the contract .
He added that the previous administration and the lawyers it hired should be blamed for the court case instituted on the matter in a Nigerian court , which was struck out due to lack of diligent prosecution .
“Even if, indeed , any case was struck out , it was out at a time when lawyers engaged by the previous administration were in charge , ” he said .
HISTORY OF P&ID AGREEMENT
The agreement was signed in 2010 by late Petroleum Minister Dr Rilwan Lukman and Irish Michael Quinn of P&ID . It is the basis of the humongous $9.6 billion award against Nigeria, following arbitration and lawsuit in London. That award according to reports is worth more than Nigeria expects in development assistance from Germany to fix Nigeria’s troubled electricity sector, ironically one infrastructural problem Mr Quinn had set his “persuasive case” on during his 2008 meeting with late Mr Yar’Adua.
At the time the agreement was signed, Nigeria’s operational capacity for electricity delivery was below 2,500 Mega Watts ( MW).But millions of standard cubic feet of gas bring flared in open air by oil companies during production could be captured to run power plants to produce thousands of megawatts of electricity.
A resource for electricity is not just wasting, gas flaring devastates livelihoods of local populations in the Niger Delta and causes tons of carbon to be emitted into the atmosphere, thereby contributing to climate change.
A gas-to-power initiative, like one proposed by Mr Quinn, was always going to be attractive especially because it was sold to officials as one not to be paid for.
In Nigeria’s law, gas flared belongs to the Nigerian government and the petroleum minister is empowered to take it for some purpose; commercialization or power generation, for instance. The parties, ministry of petroleum resources and P&ID, set the agreement on the basis of this provision.
The company was to build gas processing facilities around Calabar, Cross River State, and the government was to supply wet gas up to 400 million standard cubic feet per day. The agreement defined wet gas as “associated gas removed, during oil production, having a propane content of not less than 3.5 mol per cent and a butane content of not less than 1.8 mol content, compressed and delivered via pipeline to the site.”
In turn, the company “shall operate and maintain the GPFs (gas processing facilities) on a professional basis to ensure a regular supply of Lean Gas (approximately 340 MMSCuFD) for power generation.” Lean gas, defined as “pipeline quality gas having a composition of not less than 95 mol per cent of methane and ethane,” was what the government was to take after supplying wet gas for processing by the company.
The commercial side of the agreement was based on the plan that the company would sell in the international market byproducts such as propane, butane, and condensate separated from the wet gas to be supplied by the government free of charge. The other by-product, lean gas, would be supplied to the government free of charge to produce electricity.
The parties set a 20-year duration but the facilities were to be in two phases. In the first phase set for the last quarter of 2011, 150 million standard cubic feet of wet gas was to be processed per day. The remaining 250 million standard cubic feet of gas would be for the second phase planned for the third quarter of 2012.
The responsibilities for the government included ensuring “that all necessary pipelines and associated infrastructure are installed and all requisite arrangements with agencies/ or a third party are in place to ensure supply and delivery of wet gas …so as to facilitate timely implementation of gas processing…”
Also, the government was to “assist P&ID, and where necessary intercede with relevant government agencies, to obtain all requisite licenses, permits and approvals required for the fast-track implementation of the project.
These responsibilities were to be relied upon by the company during the arbitration many years later in London. The arbitration tribunal held that Nigeria’s failure on its responsibilities and subsequent repudiation of the agreement informed the company’s inability to construct the processing facilities.
But in the minority verdict, Bayo Ojo, a former justice minister who was nominated by Nigeria to be on the arbitration panel, put the award against Nigeria at $250 million. He said not building the facilities by the company was also a factor in Nigeria’s failure to supply the wet gas.
P&ID was registered in British Virgin Island in 2006 and later that year, Mr Quinn registered another company with the same name in Nigeria without a parent-subsidiary arrangement. But the firm that signed the agreement was the P&ID of BVII.
Nigeria was later going to state, during the arbitration, that the agreement was void as the P&ID BVI was not registered in Nigeria and by the country’s law could not conduct business in Nigeria.
However, a former Chief Justice of Nigeria, Alfa Belgore, was contracted by P&ID to provide a legal argument against his country.
Associated gas produced during oil production only belongs to the government when flared and let loose in the atmosphere. But instead of that, oil companies can capture and use the associated gas produced from their facilities for utility power or reinject into the earth crust.
Despite resting on these conditions, the P&ID agreement was signed without certainties about gas supply.
Although Addax, the operator of OML 123 where gas was expected for the first phase of the project, was co-opted into the discussions leading to the agreement, there was no definitive commitment to make available the wet gas in terms of content and quantity required by P&ID.
According to Mr Quinn, Addax representatives at that meeting stated that the company, with headquarters in Switzerland, wanted to use the remaining 68 million feet for utility power and reinjection.