[TRIBUNE] – Last week, a United Kingdom commercial court ruled in favor of a claim by engineering firm Process and Industrial Developments Ltd. (P & ID), which claims more than $ 9 billion to the Nigerian government for not realizing a previous agreement on a gas project that has never been realized. The decision follows a 2017 arbitration award and turns it into a court order, which could allow P & ID to seize Nigeria’s international trading assets.

P & ID’s claim is based on a contract signed in 2010 with the Government of Nigeria for the construction and operation of a gas processing plant to refine natural gas, which Nigeria would receive for free to power its national grid. “Says the company’s website. As part of this agreement, the Nigerian government should have provided the infrastructure and pipelines needed to supply gas to the plant. P & ID would build it for free, then exploit it and commercialize the production for a period of 20 years.

The company says it would have made a profit of US $ 6.6 billion during this period, an incredible number all the more fantastic that it claims that the 7% annual interest it would take on this capital would now amount to US $ 2.4 billion at US $ 1.2 million per day, pushing the amount to a perfectly balanced total of US $ 9 billion. The situation as a whole is extremely confusing.

After all, P & ID, a company created specifically for this project, claims to be entitled to all of what it would have earned over a 20-year work period, even though this period would not be over until a decade later. . In addition, it charges interest on the capital it would have if the project had occurred over the next decade.

In addition, she chose to pursue the case in a British court, and has another legal trial in a US court, while the contract was signed in Nigeria, under Nigerian law, and should be prosecuted before a Nigerian court, as the Nigerian legal team has stated on several occasions.

Nigeria is asking to appeal the decision, but P & ID is wasting no time trying to seize Nigerian assets abroad, and it could very well be done, at least in part.

In addition, P & ID has never even begun construction of this power station which, according to it, would have benefited as many thousands of Nigerians. The company would have spent US $ 40 million on preparatory work, although it is impossible to attest to this work.

Even looking only at the amount spent, the work done and the compensation sought, the numbers just seem absurd. USD 9 billion equals 20% of Nigeria’s foreign exchange reserves, it would be unthinkable for a nation-state to pay so much capital to an unknown small firm that has invested only a small fraction of that amount in the country and did not make any of the expenses incurred. In addition, it is puzzling that a British court even considers such a decision.

However, this issue represents an important and uplifting story for African governments around the world. Few things matter more in the fight to attract investment and create a business environment conducive to economic growth than to honor the obligations of signed contracts.

Investors need to know that their investments are safe and that they will be protected by law in case the other parties fail to meet their obligations, as seems to have happened with the Nigerian government. This is by no means the first time such a situation occurs.

Last March, an international court sentenced the Democratic Republic of Congo to pay $ 617 million to the South African company DIG Oil Ltd for failing to honor two oil contracts. This is an unacceptable and unjustifiable loss of capital for the people of the DRC.

Especially if we take into account that the loss is incurred because the leaders of the country did not respect a contract that could have brought considerable wealth to the country for many years, both in royalties and taxes, and help develop its petroleum industry.

The Senegalese government, chaired by President Macky Sall, has been clever in avoiding this kind of litigation when faced with the issue of the Timis Corporation and its ownership of an area including the Turtle field, which would contain more than 15 billion cubic feet of discovered gas resources. If President Macky Sall had decided to terminate a valid license contract, Timis Corporation would have gone to arbitration and probably obtained a favorable ruling against Senegal.

In the process, the gas fields would not have been developed and would have generated no return for Senegal and its citizens. At times, leaders face difficult choices and it takes courage to find solutions while respecting the sanctity of contracts.

Despite criticism from civil society groups, Equatorial Guinea has honored contracts with US oil companies, which many analysts say are unfavorable. This principle has kept the oil industry of Equatorial Guinea stable and US companies continue to invest in new projects such as the EGLNG backfill project with Noble, Atlas Oranto, Glencore Marathon and the state.

African leaders and African countries can no longer afford such mistakes. If, on the one hand, the contracts must be respected, protected and respected, the persons responsible for evaluating and signing these contracts must make the feasibility of the project the main reason for any decision. What is the purpose of signing contracts for fantastic projects where there is neither the capital nor the conditions to carry them out? Our economies also live off their reputation. No investor wants to work in a system where contracts are not honored and their investments are not protected.

Although P & ID’s US $ 9 billion compensation claim seems absurd, companies that see the contracts they sign with African governments, or any government that does not respect them, must have the right to claim compensation. in the same way that African leaders must be responsible for the status of the contracts they sign and must ensure that such situations are not repeated.

Enough money has been wasted in lawsuits that could be used to improve the lives of Africans. This applies to the oil and gas industry and any other industry.-

NJ Ayuk is the CEO of Centurion Law Group, Executive Chairman of the African Chamber of Energy, and author of the upcoming book “Billions at Play: The Future of Energy and Business in Africa”.