Process and Industrial Developments Limited (P&ID) is an engineering and project management company founded and led by Michael Quinn and Brendan Cahill who had over 30 years’ experience of project management and execution in Nigeria.
P&ID conceived and planned a project that would deliver much-needed power generation to millions of Nigerians, and create profitable by-products for sale on the international market. Under an agreement with Nigeria, P&ID would build a state-of-the-art gas processing plant to refine natural gas (“wet gas”) into “lean gas” that Nigeria would receive free of charge to power its national electric grid. The lucrative natural gas liquid by-products (propane, ethane, butane) of this processing would be sold by P&ID on the international market, with expected profits in the billions of dollars.
In 2010, P&ID entered into a 20-year agreement with the federal government of Nigeria to execute this project.
Under the agreement, the Nigerian government was to ensure that all necessary pipelines and related infrastructure were installed and that arrangements were made with agencies and third parties to deliver gas for P&ID to process. However, the Nigerian government failed to meet its commitments, causing the project to flounder. This meant Nigeria would lose the opportunity of a new power supply, and P&ID would lose 20 years’ worth of profits.
P&ID attempted on multiple occasions to find a solution, and yet Nigeria refused to come to the table. Arbitration commenced in 2012 before a tribunal in London. Although during the arbitration Nigeria claimed to be interested in reaching an amicable settlement with P&ID, in fact Nigeria never made a serious offer and it became clear that Nigeria was attending settlement discussions only to delay the proceedings.
In July 2015, the tribunal in London unanimously concluded that Nigeria was liable for the government having repudiated the agreement with P&ID. In January 2017, the tribunal ordered the Nigerian government to pay P&ID $6.6 billion in damages, plus interest that is accruing daily at a rate of over $1.2 million and now stands at $2.8 billion. However, because the Buhari administration refuses to pay, P&ID has brought court proceedings, in both the U.K. and the U.S., to enforce the award. If P&ID is successful, they can enforce the award against Nigeria by seizing its commercial assets.
In addition to the significance of the debt owed, the P&ID project represents a massive lost opportunity for Nigeria. The P&ID project would have generated an additional 2,000 megawatts of power for the national grid. Nigeria lacks sufficient electricity to power a modern economy and support its rapidly expanding population – the major increase in low-cost electricity supply brought by the P&ID project could have been transformative for millions of Nigerians. At present, the World Bank estimates that only 59% of the country have access to reliable supply of electricity.
“P&ID was eager to deliver this promising project in the hope of bringing electricity to millions and helping Nigeria reach its full potential. Unfortunately, the government did not uphold its side of the contract, so the project failed. Having been unable to find a willing partner in government to resolve the matter forced us to seek remediation for the repudiation of our contract, which has resulted in an arbitration award against Nigeria,” said Brendan Cahill, co-founder of P&ID.
The economic cost to Nigeria of fighting and losing this case is substantial. Nigeria, which emerged from recession in 2017, approved a three-year plan in 2016 to borrow more from abroad. The government wants 40% of its loans to come from offshore to lower borrowing costs and help to fund its record-high budgets. In addition, the Buhari administration continues to incur costs in fighting this battle in the UK and US courts, and due to its failure to comply with court procedures, has been forced to pay some costs of P&ID’s counsel.
The re-elected Buhari administration must come to terms with the award and decide whether to continue with delaying tactics to postpone the inevitable, or if the new government has the courage to atone for its previous mistakes and reach a settlement that will allow the country to move forward.