P&ID: Foreign reserves gain $200m after court ruling — CBN

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…Malami, others express appreciation

By Joshua Elekwachi, Abuja

Central Bank of Nigeria (CBN) said on Tuesday its foreign reserves have grown by $200 million after a London court ordered the release of a guarantee put in place as security for a failed gas project.

The nation’s foreign exchange reserves had lost 15per cent of its value in the last year and has come under pressure as demand for hard currency soared after the coronavirus pandemic triggered a collapse in the price of oil, the country’s main export.

In November, the federal government deposited a bank guarantee of $200 million with a high court in London to secure a stay on asset seizures of up to $9 billion related to a failed gas project.

Process & Industrial Developments (P&ID), a firm based in the British Virgin Islands set up solely to build a gas processing plant in Nigeria, won a $6.6 billion arbitration award after the 2010 deal collapsed. The award has been accruing interest since 2013.

The federal government  successfully sought the right to appeal a ruling last year that would have converted the arbitration award to a judgment, which would make it easier for P&ID to seize its assets. It has said it would fight making any kind of payment to P&ID.

The CBN said the court awarded a 70,000-pound cost in favour of Nigeria in addition to an earlier award of 1.5 million pounds.

However, the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, SAN has expressed appreciation as the Commercial Court in London ordered that the $200 million used as a deposit by Nigeria in the P&ID case be returned to the federal government.

Malami, in a statement by Dr Umar Gwandu, the Special Assistant on Media and Public Relations to the Minister, said he is 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 $200million 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 €1.5 million in favour of the country.

Other successes include, the court order for the release of bank guarantee in favour of Nigeria, award of payment of €70,00 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.

Speaking from a different perspective, the 2019 Presidential candidate of Abundant Nigeria Renewal Party(ANRP) and businessman, Mr. Tope Fausa explained to Nigerian NewsDirect that, “The reason much to leverage on $200 million is that London court has nothing on a sovereign country like Nigeria especially in the size of our economy and velocity of flows and in and out of economy daily.

“The points is how long can CBN continue for example with the policy of banning some companies from foreign exchange, example like the betting company because they saw the kind of inflows those guys is making in the economy.

“The $200 million is a memorandum figure as far as I am concerned. We need to make provisions for the incumbarency in our reserves. It also shows that things are getting smaller by the day?”

The President, Association of Bureaux de Change Operators of Nigeria, Alhaji Aminu Gwadabe, explained to Nigerian NewsDirect that, “It is good news and a confidence booster on Nigeria’s integrity that will usher in foreign investors’ confidence and local currency rebounds.

“The naira has witnessed marginal appreciation of N3/$ as the BDCs  trading enter its third week.

“I am hopeful this will signal improves foreign currency liquidity in the market and enhance CBN arsenal to further defend the local currency.”

In addition, Eze Igweogboffia, said, “The released $200million security is expected to boost the nation’s foreign exchange reserves.”

Justice Ross Cranston had in a landmark judgment, on September 4, granted the Federal Government permission to challenge the final arbitral award delivered by a London arbitration tribunal in favour of P&ID and against Nigeria in January 2017.

A UK court had ordered the P&ID to pay £1.5million to Nigeria within 21 days.

The judge, in the judgment, agreed that there was prima facie case of fraud in the agreements leading to the award which should be inquired into.

The award which stood at $9.6billion as of 2019 has risen to $10billion.

The tribunal had held Nigeria liable for the alleged breach of a Gas Supply Processing Agreement it entered into with P&ID in 2010.