$9.6 bn Judgement debt: Nigeria has bad case, options limited – Zuri, prof of petroleum law

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By Levinus Nwabughiogu

Shehu Abdullahi Zuri, a professor of petroleum law and policy, is Pro-Chancellor of University of Petroleum Resources, Effurum. Zuri speaks on Nigeria’s bid to stop the judgement of a British arbitration tribunal which makes Nigeria liable to pay $6.9billion to a firm in the United Kingdom for breach of contract arising from a gas project. 

There are fears that Nigeria could lose $9.6billion dollars in a gas project. What do you think, as an expert, is the implication of that for the economy?

It is very disappointing. I have to admit that because it shouldn’t have been so. We have a pool of competent international lawyers within and outside the country. Against that background, the transaction should have been handled better, knowing the far-reaching implications. But now that we are here, there are very few options available to the country because the decision was not entered within Nigeria’s jurisdiction. It is a foreign issue as it is. We had ample time and opportunity to defend that case but for the typical Nigerian attitude, we couldn’t do that just like we handled the Bakassi case. So, this judgement is reminiscent of what transpired during Bakassi. The only difference is that Bakkassi case was tinctured with so much international politics and we could see that Nigeria was disadvantaged during the period because we were under a military regime which was considered an aberration. The attitude of that government has created a reputation that Nigeria would have to contend with.

So what are implications for the economy?

Here we are again with this judgement and the threat, well-informed threat anyway, on the strength of the decision of the court. The solicitors representing the other side will go ahead and attach Nigeria’s assets worth 9-point something billion dollars. Now, it has calamitous consequences on the country. One, it will portray Nigeria as being dishonest in international commerce and, therefore, investors will be wary of doing business with Nigeria. Secondly, Moody, the international trade agency, I am sure, will look at the judgement on Nigeria and possibly degrade the creditworthiness of Nigeria in terms of doing business. That can cause panic and capital flight from the Nigerian economy particularly now that the economy relies heavily on direct foreign investments. Thirdly, the implication for the country will be, as a result of the packaged actions being considered by the lawyers who obtained the judgement against Nigeria, certainly, it will affect the stability of Naira in the currency basket.

Nigeria says it will appeal the judgement. Do you see us making any headway out of the logjam?

Yes, Nigeria could appeal but, you see, court processes are not governed by the principle of automatism. What I mean here is that you can appeal but the chances of upturning a judgement on appeal hang on the balance of probability. But, yes, it is an option available to Nigeria but whether Nigeria will succeed or not is a hard call for anybody to predict. I believe that in the hall that we are at the moment, the best option available to Nigeria is to negotiate through an out-of-court settlement although judgement has already been entered. Nigeria can apply for the stay of execution of that judgement. Now, we don’t know whether the system of the country (UK) will convince the court that gave the judgement that granting an order for stay of execution is fair in the circumstance of the case because, a situation where you have this kind of case and you have not taken it seriously for whatever reason leaves so much to be desired; any serious court will view an application for order of stay of execution as an opportunity to delay justice. So, if the application for stay of execution is to create the enabling environment for the country to negotiate out-of-court, I think it is a good one. But the handling of the case could have been better by our government.

The Buhari administration has ordered a probe. Is that welcome development?

Well, given the circumstances of the case, it is ideal so that Nigerians will be able to know the facts of the case; after all, the case was built around an international transaction. Given our antecedents, particularly in government, I believe Nigerians deserve to know what actually happened and who is to blame. Now, it is not enough to make a diagnosis of what has transpired. What are the hard lessons for this country to learn, that is if we are ever ready to learn?

Now talking about Effurun, what are some of your activities as a Council?

Obviously, whoever has visited my university will walk away disappointed and, I think, I have to say it before someone says it because the university has not been mentored the way it should have been. So the far-reaching implication of this was recording a stunted growth as an institution which is pathetic, to say the least. This is the first specialised university in Nigeria, the first in West Africa and the fifth or sixth in the world. So, it should have been a flagship in terms of championing professional courses in the areas of petroleum engineering, policy and economics. Unfortunately, that has not been the case. That is not to say that before my resumption, the university had not commenced and that is not to say that there were no courses in the area of maritime engineering, oil and gas engineering. There were courses. But what I am saying, in essence, is that the university should have been better than it is. So, we went to work immediately we were inaugurated as a council, we picked up the pieces and we defined a different mileage on which we were going to confront the challenges of the university. We have rejigged the system and the dividends are very obvious. We have changed the narrative about the university because development has resumed. We are not relenting, we are not daunted by the challenges that we met and with a redefined vigour we are making tremendous progress.

In specific terms, what are those things?

When we resumed, we met a university that had not been able to access critical intervention funding from stakeholders in the management of the Nigerian university system, particularly TETfund. As we speak, the first release that we got from TETfund as of 2017, the structures that we embarked upon have reached the roofing stage and I think this is huge milestone as against where we were coming from. Additionally, it was under my Council that post-graduate programmes of the university were approved and we have since advertised and we will soon induct the first PG students. Besides, we have changed the psyche on the part of everybody in the university, to be specific the psyche of rewarding hard work and exceptional brilliance. It was not too long ago that the university co-hosted the first national workshop on bio-mass in collaboration with the University of Abuja; it was the first of its own kind. We are playing a leading role in redefining the energy mix in the country we have a company that we set up in the university called Energy Solutions and we have secured strategic partnership with similar institutions like the University of Brunel in the UK in organizing the national workshop on biomass as an alternative energy mix for the country and it is also another milestone and we have won awards. The university is developing a modular refinery. We would like to key into the Federal Government resolve to licence modular refineries to augment our aggregate petroleum production and local refining capacity. And I believe that, as a university of petroleum resources, we are making huge strides. We would have been in the woods before now but I think we have retraced our steps to where we should be and we are executing religiously the statutory mandate of the university.

Do you think the output will help production particularly in the area of petroleum?

Do you mean the modular refineries? Those of us who are specialists in this area own up to the inconvenient reality about a modular refinery in the production mix of the Nigerian National Petroleum Corporation. They are not large scale producing entities, so what they bring to the total production, which is about 1.8million to 2.1million barrels per day, is not much but I think the wisdom behind it was probably to curb oil bunkering in the producing basin of the Niger Delta and, perhaps, it will give a latitude for the participation of local companies in the business of oil refining in the country.

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How have you carried the people and the community along?

I think I am very lucky because I am coming from a university background. I am not a politician, I succeeded a politician as Pro-Chancellor of the university but I am not a politician as yet. When I resumed the first thing I did was to reconnect with major stakeholders within the location of the university. The university is in the heart of Urhobo land and you have paramount rulers of Urhobo Kingdom like the Ohworode of Olomu Kingdom, the Ovie of Effurun, the chief of Okpe who was a major general in the Nigerian army; so the first thing I did was to make a clarion call that they should get involved in the renewed vigour to change the narrative of that university in terms of development drive, in terms of negotiating and wooing critical high impact infrastructures to the university and I was warmly received by the monarchs. I also went as far as visiting the palace of the Olu of Warri. I think the relationship between the university and the host community has never been better than it is now.

Are you getting help from some government institutions and agencies?

Some of them have remained insensitive and indifferent to the plight of my university. For instance, I have visited the CBN Governor twice, pleaded on behalf of the university almost a year ago but as we speak CBN has not done anything. Recently they commissioned a multi-complex for Ahmadu Bello University Zaria, well we are not competing with ABU but we should also be recognised as a university. As a pioneer specialised university, there was no reason CBN should be foot-dragging on our request for special intervention. PTDF that had given a commitment at the take-off of the university to the tune of N500million, they have not turned in N50million as we speak. And as we speak, there is no project that was funded by PTDF in the Federal University of Petroleum Resources Effurun and that is a paradox.

As an expert in the petroleum resources, what’s your take on the state of Nigerian refineries, subsidy and queues?

Well, I am not a cabinet minister. Let me lay that background first. In 2015, I presented a paper on fuel subsidy. I don’t believe in turn around maintenance and my reason is obvious. We have been there for too long, we need to recognise the fact that the technology we have today in our refineries is the technology of the late 70s, oil technology has moved on. So if you said you are building policy around turn around maintenance, you are only playing catch-up.

Then what should we do?

Just like I said during my presentation in 2015, the only option left for this country is to build new refineries, bring on stream new generation of refineries and we would have solved the lingering problem of petroleum scarcity in the country. The problem government appears to be having is how to synchronize between public sector funding and private sector funding of new generation refineries in the country and we need to go back to the licensing regime. I do know that towards the end of the 1990s, there were some entrepreneurs, industrialists in the country who were given licences to set up private refineries and they failed. I believe what went wrong with the licencing exercise was that people with adequate resources and serious commitment to invest in new refineries were not the people who were licenced, probably they did not indicate interest to invest in the downstream sector. And I think, as it is now, even if the government decides to build refineries, it has competition in its hands because Dangote refinery is coming on stream and the average period that you need to build a refinery is three years. So, assuming Ibe Kachikwu, when he announced that the government had already taken a policy decision to establish new refineries, we should have been commissioning those refineries. But I think for some reasons, the policy was lost in government bureaucracy. Be that as it may, now that the right entrepreneur Dangote has been licenced and he is someone with the commitment and the financial muscle to invest in the downstream sector, he will make all the difference that was needed to restore stability, the equilibrium between local consumption and local refining capacity.

In the meantime, what do we do with subsidy? Is it a scam or …?

The problem Nigerians have is, they don’t know what subsidy is, it is a multilayer, multi-complex activity. Let me give you an example. Apart from Nigeria, if you check the major oil producers across the world, none of them talks about subsidy; it does not exist because when you achieve that critical balance between local consumption, local production, upstream and refining downstream, you don’t talk about subsidy.

So have we wasted and still wasting so much money because the subsidy is still in existence?

I said it in my paper in 2015 that unless Nigeria is able to bring on stream new generation of refineries, we should forget about lifting subsidy, it will not work.

Vanguard

Source:

https://www.vanguardngr.com/2019/09/9-6-bn-judgement-debt-nigeria-has-bad-case-options-limited-zuri-prof-of-petroleum-law/

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