Last week, at the annual
Nigeria International Petroleum Summit (NIPS), Mele Kyari, the managing
director of the Nigerian National Petroleum Corporation (NNPC) made a startling
admission when he stated unequivocally that “electricity
is largely a luxury; it’s only for the elite” in
Nigeria. He went further saying, “we have to resolve the issue of electricity”
and “we have gas in
abundance, we must create infrastructure that will help create gas for power
generation. We
need power to create jobs and we must create prosperity, so that we can have
peace in our country.”
For Kyari, even as a senior Buhari official, his comments have the added
benefit of being true. The Buhari Administration declared 2020 to be the “Year of Gas.” By all reasonable accounts, Nigeria’s power generation
situation is dire, plagued by widespread power outages and persistent grid collapses. The BBC in an eye-opening documentary has captured
the enormity of the problem facing leaders in Abuja, noting that keeping the
lights on in Nigeria is a struggle, notwithstanding that it is one of Africa’s
largest energy producers. The Trump Administration, recognizing the severity of
problem, announced a $1 million gift to the Nigerian people that
will help to advance access to electricity for all Nigerians.
One of the surest ways to overcome power outages is to attract investors who
are willing to take a risk and invest in enterprises that have the promise of
delivering power projects. Those investors need to be reassured that their
investments are protected by the rule of law. During the NIPS, Boss Mustapha,
the Secretary of the Government, attempted to woo investors saying to
participants in the conference “that
their investments are secured in Nigeria and a high return on investment is always
guaranteed. It cannot get better anywhere.”
These are bold – but hollow – comments from the Buhari Government. The reality
is that Buhari’s Government has consistently, and openly, made life difficult
for former and current investors.
The clearest example of a project that could have immediately leveraged
Nigeria’s abundant gas supply, ended dirty and unnecessary flaring and helped
to electrify Nigeria is P&ID’s Gas Supply Processing facility – a project
that the Irish-founded company Process and Industrial Developments Limited
(P&ID) proposed to the Nigerian Ministry of Petroleum Resources in 2009. In
2010, the parties signed a contract which provided that the government would
deliver natural gas – a byproduct of oil drilling that would otherwise have
been burned off, or “flared” – to P&ID for a period of 20 years, and
P&ID would process the gas so that it could be used by power plants to
generate electricity for Nigerians at no cost.
The project failed, however, because Nigeria abandoned its commitment to the rule of law, flouted its contractual obligations and turned its back on these foreign investors. P&ID tried for several years to make the project work but ultimately had to take Nigeria to arbitration to secure compensation. After numerous delays caused by Nigeria, the arbitration tribunal ruled in P&ID’s favor in 2015. Most concerning is that Nigeria simply refused to pay P&ID what it was owed following the Quantum hearing in 2017 – even after the English Commercial Court upheld the arbitrators’ ruling in 2019. Instead, the Nigerian government is now trying to evade its legal obligations by inventing a series of wild allegations claiming that the deal was somehow a fraud.
Here are the facts Buhari and AG Malami conveniently ignore about P&ID:
- The project would have brought about a significant reduction in blackouts.
- P&ID would have provided processed gas free of charge to Nigeria, to help power its electrical grid.
- The volumes were significant: enough refined gas to generate 2,000 megawatts of electricity for the national grid.
- Gas flaring would have been dramatically reduced, preventing the environmental damage that currently takes place on a massive, unabated scale.
Investors need a
predictable regulatory environment, a government that upholds its contracts and
above all else, abides by the rule of law. Serious observers are now
questioning the Buhari Administration’s commitment to these fundamentals.
The pro-investor rhetoric may continue, but the
anti-investor reality is what will continue to be a problem for the Buhari
Administration – not to mention the fiscal crisis engulfing the government – as
it seeks foreign investors to invest in the power generation sector and to
eliminate gas flaring.
Future investors do not need a crystal ball to understand the dangers of
investing in Nigeria: they need only see how Nigeria has turned against
P&ID.
Conveniently, AG Malami’s wild allegations of fraud date back precisely to when
Nigeria lost in court and P&ID was given the ability to enforce its legal
rights. Since that date, in August 2019, the Buhari Administration has left out
no trick in the authoritarian playbook: arbitrary detentions; forced
confessions; witness coercion; sham charges; show trials; muzzling media; the
list goes on.
The list includes, of course, the willful misrepresentation of the ongoing
legal processes in London. For example, a recent opinion editorial from AG Malami
himself implied that the English Commercial Court had endorsed Malami’s fraud
claims. He states the judge noted that the evidence was “seismic.” In fact,
Malami has deliberately and provocatively quoted the Judge wholly out of
context, by omitting the words “if
true” from the sentence. The English Judge, in reality, gave no
indication of either his support or opposition to the claims of AG Malami.
Misrepresenting and misquoting Judges is not a good look for Malami’s
reputation as a supposed officer of the law. What other legal conventions is he
disregarding?
In the very same op-ed, Malami claims that as a result of their “investigation,”
they uncovered that a government official was handed “a bag of cash to help secure the deal” by
Michael Quinn. Some news outlets quickly wrote as if this
claim were an incontrovertible fact. Yet, Malami’s own witness statement to the
English Court makes it clear this statement was made “following a revocable
plea bargain” in favour of the accused former official. In other words, the
evidence is from a witness whose future freedom depends on the whim of
Nigeria’s attorney general. This entire claim is a fairy-tale, and the
circumstances under which it was procured should be viewed with extreme
scepticism.
This is especially true because the investigating body, the Economic Financial
Crimes Commission (EFCC) report, on which the AG’s witness statement is based,
is widely seen as a tool to persecute political adversaries and opponents of
the Buhari administration.
For example, Grace Taiga, an ailing, Christian senior citizen and former public
servant, who witnessed the signing of the Gas Supply and Processing Agreement
was held under deteriorating conditions and was denied both adequate medical
care and adequate access to legal representation during her detainment under
EFCC custody. Only after international condemnation did AG Malami
provide her access to a prison hospital for urgent medical care.
Foreign investment and the rule of law: Those are two crucial elements to
improving an economy and indeed a society. It bodes ill for Nigerians that the
Buhari Administration is doing all it can to undermine these fundamental
pillars.