Nigeria Escapes $11bn Payment Obligation Over Failed Gas Project

Nigeria's government is celebrating a significant legal victory following a UK court ruling that absolves it of a multibillion-dollar payment previously awarded to a private company over a failed gas project.

In 2017, an arbitration tribunal ordered Nigeria to pay $6.6 billion, plus interest, in damages to the British Virgin Islands-based engineering firm, Process and Industrial Developments Limited (P&ID).

The compensation claim arose from lost profits due to the collapse of a 20-year agreement with Nigerian authorities in 2010 to construct a gas processing facility.

The total sum, including accrued interest, had risen to over $11 billion, nearly half of Nigeria's federal budget for the year. Upholding the tribunal's $11 billion payout would have placed a heavy burden on Nigeria's already struggling economy, which grapples with significant debt, high inflation, and a cost-of-living crisis.

The dispute originated from mutual accusations of defaulting on obligations and resulted in a protracted legal battle. Nigeria's government contended that P&ID had used bribes to influence the contract award, while P&ID denied this allegation.

In Monday's judgment, Judge Robin Knowles set aside the tribunal's earlier ruling, concluding that the gas deal had been "obtained by fraud" and was "procured ... contrary to public policy."

He also remarked that the case had revealed the lengths some individuals would go to for monetary gain, motivated by greed and corruption, without regard for the harm inflicted on others.

Nigeria's Attorney General Lateef Fagbemi emphasized that the P&ID agreement had not followed due process and was tainted by fraud. He noted that there had been substantial pressure to reach a settlement before the court's ruling but praised the president's commitment to combat corruption.

President Bola Tinubu welcomed the judgment, considering it a "landmark victory" not only for Nigeria but for the exploited continents and the developing world as a whole, which has long been subjected to unjust economic malpractice and exploitation.