- P&ID to Seize $9b in Nigeria’s External Reserves
A British court has finally granted an Irish firm, Process and Industrial Developments Ltd (P&ID), request to seize $9 billion of Nigeria’s external reserves as an equivalent amount of a failed gas deal signed under Nigeria’s former President Goodluck Jonathan in 2010.
Justice Butcher, British Commercial Court, granted P&ID request on Friday.
Going by Nigeria’s current external reserves of $44.43 billion as of 16th, August 2019, the $9 billion is equivalent to 20.27 of the country’s total foreign reserves.
Therefore, if the court order is successfully implemented, it won’t just chase the already sceptical investors further away, it would also hurt the entire economic outlook for the rest of the year as the Central Bank of Nigeria’s ability to intervene in the foreign exchange section of the economy will be greatly affected. The only strategy employed by the apex bank in stabilizing and sustaining the Nigerian Naira and economic activities.
In March, VR Capital Group, a hedge fund company with the knowledge of the situation, acquired 25 percent stake in P&ID and immediately started pulling power in the U.S and the U.K to compel Nigeria to settle based on the $6.6 billion granted P&ID in January 2017 or forfeit her oversea assets.
Fast forward to 2019, the total amount has risen to $9 billion due to a daily interest rate of $1 million.
In the past, Paulson & Co., Elliott Management, Pershing Square Capital Management and other asset management companies have taken stakes in embattled companies that most investors won’t near and used their position like VR Capital Group to hire world-class lawyers and lobbyists to influence things in their favour.
This time, Nigeria is on the receiving end and if not carefully managed, it will hurt the Nigerian economy as long term investors will start pulling back henceforth.
The company’s lawyer Andrew Stafford said: “P&ID is committed to vigorously enforcing its rights, and we intend to begin the process of seizing Nigerian assets in order to satisfy this award as soon as possible.”
“We are pleased that the Court has rejected Nigeria’s objections both to the arbitration process and to the amount of the award, and that it will grant permission to P&ID to begin enforcement of the award in the United Kingdom.”
Poor leadership and gross mismanagement have led Nigeria to the current situation where foreign fund managers are now positioned to profit from a failed deal that could have been easily resolved two decades ago.
