Economy
UK Court Grants NNPC $100m Reprieve
By Modupe Gbadeyanka
A Supreme Court in the United Kingdom has granted a reprieve to Nigerian National Petroleum Corporation (NNPC) over a $100million Bank guarantee in a case involving the agency and a service company, IPCO (Nigeria) Limited.
IPCO had referred its claims to arbitration in Nigeria and obtained an Arbitral Award of $154 million in 2004, with annual interest running at 14 percent, leaving NNPC with no option than to promptly challenge the award at the Federal High Court in Lagos.
The reprieve was the latest in the protracted dispute arising from the contract between NNPC and IPCO for the construction of the Bonny Export Terminal (BET) Project in Port Harcourt, Nigeria.
Reacting to the judgment, NNPC Group Managing Director, Dr Maikanti Baru, said he was delighted on the new development, commending the efforts of the legal team that secured judgment in favour of the corporation.
He said no stone would be left unturned to extricate NNPC from encumbrances that may impede the Corporation’s access to hard earned funds which are much needed to execute developmental projects by the various tiers of government in the country.
The development is a significant decision in the history of the case as the English Supreme Court has not only discharged NNPC from the responsibility to sustain the additional security of $100million in favour of IPCO but it also further reiterated the finding of the English Commercial Court and the Court of Appeal that NNPC has a good prima facie case that IPCO procured the Arbitral Award by fraud.
Additionally, the decision of the Supreme Court has clarified conclusively the limits of an enforcing Court’s power to order security as a condition on the right to have a decision of a properly arguable challenge under the New York Convention 1958 and the English Arbitration Act 1996.
Since 2004, IPCO has repeatedly sought to enforce the award in England prior to the conclusion of NNPC’s challenge of the Arbitral Award in Nigeria.
It would be recalled that in 2008, during one of IPCO’s attempts to secure an order for the enforcement of the award in the UK, NNPC claimed it discovered evidence that IPCO had allegedly forged documents relating to the claims and the related arbitration in Nigeria, and as a result, the parties agreed in 2009 to adjourn the enforcement proceedings in England, in order to await the determination of the fraud allegations in Nigeria.
In 2012, IPCO again applied to the English Commercial Court to enforce the award despite the agreement on the adjournment of the enforcement action.
IPCO’s application was however, dismissed on March 14, 2014, holding inter alia that NNPC had made out a good prima facie case of fraud giving NNPC a realistic prospect of proving that the whole award should be set aside. IPCO however appealed to the UK Court of Appeal.
In 2015, the UK Court of Appeal decided that the delays in the Nigerian proceedings required the English Court to lift the adjournment and to decide whether to allow enforcement following a trial of the fraud allegations in the English Court.
Both the Commercial Court and, the Court of Appeal concluded that the fraud allegations against IPCO were made bona fide, that NNPC has a good prima facie case that IPCO practised a fraud on the Arbitral Tribunal, and that NNPC has a realistic prospect on that basis of proving that the whole award should be set aside.
However, the UK Court of Appeal ordered NNPC to provide an additional security of $100 million (NNPC having previously provided security of $80million) as a condition of being entitled to advance a defence that enforcement should be refused because the award had been procured by IPCO’s alleged fraud.
Subsequently, NNPC appealed to the UK Supreme Court to decide whether the English court, as an enforcing court, is empowered to require security for money payable under the award (or any part thereof) from a party resisting enforcement of such award as a condition for being entitled to advance a good and arguable defence that enforcement would be contrary to English public policy because the award was allegedly procured by fraud.
On March 1, 2017, the UK Supreme Court unanimously set aside the Court of Appeal’s Order, allowing NNPC to advance its defence in the English Commercial Court free of any such conditions.
By Dipo Olowookere
The bears quickly took control of the Nigerian Exchange (NGX) Limited on Wednesday, plunging the stock trading platform by 1.02 per cent after the Central Bank of Nigeria (CBN) left the benchmark interest rate at 26.50 per cent.
The bourse sank at midweek as BUA Cement led the losers’ chart, after closing lower by 10.00 per cent to N414.00. CAP lost 9.99 per cent to trade at N210.35, eTranzact shrank by 7.03 per cent to N17.20, International Breweries depreciated by 5.38 per cent to N12.30, and Deap Capital crashed by 4.92 per cent to N5.80.
On the flip side, Zichis led the gainers’ chart after it chalked up 9.99 per cent to sell for N32.04, ABC Transport rose by 9.99 per cent to N8.26, Japaul expanded by 9.95 per cent to N4.09, LivingTrust Mortgage Bank grew by 9.92 per cent to N4.21, and FTN Cocoa soared by 9.91 per cent to N10.76.
Business Post observed that despite the loss, investor sentiment remained bullish, as Customs Street finished yesterday with 42 price gainers and 24 price losers, indicating a positive market breadth index.
The insurance counter was the only riser at midweek, closing higher by 0.80 per cent due to bargain-hunting in the space.
However, profit-taking in the other sectors was responsible for the contraction recorded by the stock market on Wednesday.
The industrial goods segment lost 3.84 per cent, the consumer goods sector depreciated by 0.45 per cent, the banking index slumped by 0.31 per cent, and the energy industry dropped 0.10 per cent.
As a result, the All-Share Index (ASI) moderated by 2,573.05 points to 249,062.37 points from 251,635.42 points, and the market capitalisation depleted by N1.619 trillion to N159.661 trillion from N161.280 trillion.
A look at the activity chart showed that 600.2 million shares worth N32.7 billion exchanged hands in 58,958 deals on Wednesday compared with the 704.0 million shares valued at N32.2 billion transacted in 64,539 deals on Tuesday, implying a jump in the trading value by 1.55 per cent, and a shortfall in the trading volume and number of deals by 14.74 per cent, and 8.65 per cent, respectively.
Access Holdings led the activity chart with a turnover of 56.0 million units valued at N1.4 billion, Japaul transacted 49.9 million units worth N202.9 million, Zenith Bank traded 36.7 million units for N4.8 billion, Sterling Holdings sold 25.9 million units valued at N200.8 million, and Fidelity Bank exchanged 21.7 million units worth N499.6 million.
By Adedapo Adesanya
Oil prices fell about 6 per cent on Wednesday after US President Donald Trump said that negotiations with Iran were in the final stages.
Brent crude futures went down by $6.26 or 5.63 per cent to $105.02 a barrel, and the US West Texas Intermediate (WTI) crude futures decreased by $5.89 or 5.66 per cent to $98.26 per barrel.
Despite saying talks with Iran were in the final stages, Mr Trump warned of further attacks unless Iran agreed to a deal, making investors remain wary about the outcome of peace talks as disruption to Middle Eastern supply continued.
Iranian foreign ministry spokesperson, Mr Esmaeil Baghaei, said Iran was ready to develop protocols for safe shipping traffic in cooperation with other coastal states.
Iran and the US have been in a stalemate for weeks now as Tehran blockades the Strait of Hormuz and Washington blockades Iranian ports. Hormuz is one of the world’s most important trade routes for oil and gas supplies.
Three supertankers crossed the Strait of Hormuz on Wednesday, carrying oil bound for Asian markets, after waiting in the Gulf for more than two months with 6 million barrels of Middle East crude on board. The number of vessels crossing the strait remains well below the 130 or so ships that crossed daily before the war.
Analysts at Citi said that they expect Brent crude to rise to $120 a barrel in the near term, stating that oil markets are underpricing the risk of prolonged supply disruption, and Wood Mackenzie estimated that it could approach $200 if the Strait of Hormuz stays largely shut until the end of the year.
The CEO of the state oil company of the United Arab Emirates (UAE), Mr Sultan Al Jaber, said on Wednesday that it will take at least four months to get back to 80 per cent of pre-conflict flows.
Crude oil inventories in the US decreased by 7.9 million barrels during the week ending May 15, according to new data from the US Energy Information Administration (EIA) released yesterday. The EIA’s data release follows figures by the American Petroleum Institute (API) that were released a day earlier, which reported that crude oil inventories saw a draw of 9.1 million barrels in the period.
By Aduragbemi Omiyale
The planned listing of the Dangote Petroleum Refinery & Petrochemicals on the Nigerian Exchange (NGX) Limited is already attracting interest from South African investors and others.
The leadership of South Africa’s Government Employees Pension Fund (GEPF), alongside the Public Investment Corporation and Alterra Capital Partners, were recently at the Lagos-based facility.
The chairperson of GEPF, Mr Frans Baleni, said that the refinery stands as evidence that Africa can execute transformational infrastructure projects when backed by visionary leadership, long-term investment and strong technical expertise.
According to him, the significance of the project extends well beyond Nigeria’s borders, noting that it should reshape how Africa thinks about itself.
“The Dangote Refinery and Petrochemicals Complex is a powerful demonstration that, with visionary leadership and long-term capital, that perception no longer holds. This is the kind of African-led industrial scale that institutional investors on this continent should be backing,” he said.
Also speaking, the chief executive of PIC, Mr Patrick Dlamini, described the refinery as one of the most transformative industrial projects undertaken on the continent, saying it is reshaping global perceptions about Africa’s industrial capabilities and economic potential.
He said PIC, which manages about $230 billion in assets largely on behalf of South Africa’s Government Employees Pension Fund, is actively seeking long-term partnerships aligned with infrastructure development, industrialisation and economic transformation across Africa.
“There is real strategic alignment between Dangote’s industrial agenda and how we are positioning our portfolio, and we look forward to exploring meaningful avenues for collaboration,” he stated.
While receiving his visitors, the chief executive of Dangote Group, Mr Aliko Dangote, said the proposed listing is designed to democratise wealth creation and give Africans direct access to participate in the continent’s industrial transformation.
“We are opening the doors for investors to participate directly in Africa’s industrial future and the prosperity it will create,” Mr Dangote said, adding that the refinery project reflects the scale of untapped opportunities within Africa’s energy market, particularly as most countries on the continent remain dependent on imported refined petroleum products despite growing industrial demand and rising consumption.
The billionaire industrialist noted that demand for products such as polypropylene, aviation fuel and refined petroleum products has exceeded earlier projections, reinforcing the commercial viability of the refinery and shaping future expansion plans.
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