Nigeria fights $9.6bn bill over failed gas project

Lawyers for the West African nation have appealed against the “eye-watering” penalty

Nigerian President Muhammadu Buhari has vowed to continue a crackdown against corrupt officials. AFP

Nigeria’s government appealed to a London court on Tuesday for more time to try to overturn a $9.6 billion award over a failed power project.

An arbitration court awarded a company $6.6bn in 2017 after the African government failed to deliver on a promise to build a gas pipeline for the 20-year contract that had been signed seven years earlier.

The “eye-watering” penalty has since grown to nearly $10bn with interest – amounting to a quarter of the foreign reserves of Africa’s largest economy, and more than its income from oil last year.

The Nigerian government has missed a deadline to appeal against the ruling but is seeking an extension during a two-day hearing this week after claiming that the deal with Process and Industrial Developments Ltd (P&ID) was riven with corruption.

The project was designed to provide gas to generate power for millions of people but never got off the ground. The government claims that the deal relied on bribes to government officials and their family members dating back to 2009 and that evidence of a “highly orchestrated scam” had only just come to light.

The case has raised questions about the role of arbitration to resolve business contract disputes in a faster, cheaper and more discreet way than going to civil courts. The arbitration process in London has been used by DP World, the world’s largest port operator, to pursue a claim against the Government of Djibouti over its seizure of the container terminal at Doraleh.

The dispute over the gas-pipeline contract only came to light after P&ID went to the High Court in London to enforce the ruling.

Nigeria wants another hearing for the judge to decide whether there was misconduct that could overturn the contract. Its lawyers applied to the US courts in March seeking documents from ten banks to try to prove corruption allegations.

It claims that it has uncovered two payments to the daughter of a Nigerian official totalling about $10,000, including one just 11 days before the deal was signed. The official, Grace Taiga, was the chief lawyer for the Petroleum Ministry at the time.

Nigeria's anti-graft agency charged Ms Taiga last year with accepting bribes and failing to follow protocol related to the contract. She has pleaded not guilty and awaits trial.

“This case is an affront to decency - on any view, this is obviously an eye-watering amount of money,” said Mark Howard, the lawyer for Nigeria.

Mr Howard said the decision to include an arbitration element to the original deal contract was part of the fraud.

P&ID, a British Virgin Islands-registered firm, denies wrongdoing and says that Nigeria has run out of time to appeal against the arbitration decision. It says the Nigerian government invented the fraud allegations to avoid paying its legitimate penalty.

“Nigeria’s conspiracy theory against P&ID, hatched almost a decade after the gas-supply agreement was signed, relies on speculation and conjecture with no basis in fact,” a spokesperson for P&ID said.