Economy

Nigeria May Lose N7.5 Trillion To Contract Disputes And Damages

Federal Government has been battling various court litigations over contract disputes and damage claims which could cost the government about N7.5 trillion

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In the last two years, the Federal Government has been battling various court litigations over contract disputes and damage claims which could cost the government about N7.5 trillion. 

Investors King learnt that several local and foreign companies have filed lawsuits against the Nigerian government over breach of contracts that were signed as far back as 2006.

Just last week, the Federal Government agreed to pay a foreign company engaged to revamp the dilapidated Ajaokuta Steel mill $496 million over a breach of signed contract agreement.

In June 2021, Sunrise Power Transmission Company of Nigeria Limited also filed a fresh against the Federal Government at the International Court of Arbitration, Paris, seeking $400 million over breach of contract concerning a 3,050MW plant in Mambilla in Taraba State. This was in addition to the $2.354bn earlier filled by the same company. 

Similarly in December 2021, Matreach Logistics Limited listed the Nigerian Ports Authority and the Attorney-General of the Federation and Minister of Justice in a suit it filed against Shell Production Development Company (SPDC). 

Matreach Logistics Limited argued that it was one of the Stevedoring service providers recommended by the Federal Ministry of Transport in 2012 for appointment to carry out dock labour operations within Bonga on/offshore terminal operated by SPDC.

It said the SDPC refused it access to the Bonga onshore/offshore terminal, a thing the firm claimed amounted to frustration and breach of contract.

It will cost Nigerians very dearly if the country lost all or some of these cases. Nigeria is already using 90 percent of its revenue to service debt. Paying about N7.5 trillion as damages for contract disputes will further worsen the country’s financial situation. 

According to Olu Daramola, a Senior Advocate of Nigeria at Afe Babalola’s Chamber, he disclosed that most cases against the government are due to negligence and poor handling leading to judgment against the government. Some of these cases are poorly defended. 

Meanwhile, another Senior Advocate of Nigeria, Ifedayo Adedipe advised the Federal Government to settle out of court. 

He said, “If the issue is a breach, they should settle out of court; it’s cheaper and faster.

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