The Attorney General of the Federation (AGF) and Minister of Justice, Mr Abubakar Malami, yesterday disclosed that the federal government has finally resolved the long-standing contractual dispute over the Ajaokuta Steel in Kogi.
The dispute which had been at the International Court of Arbitration, Paris, since 2008, was finally resolved last month, according to the AGF.
The Senior Advocate of Nigeria (SAN), further disclosed that the federal government was also able to secure a 91 per cent reduction in the claim originally slammed by the foreign firm, Global Steel Group, adding that Nigeria instead of paying the sum of $5.258 billion would now pay $496 million.
The minister, in a statement by his Special Assistant on Media and Public Relations, Dr. Umar Gwandu, explained that the mediation proceedings was supervised by the International Chamber of Commerce’s (ICC) Alternative Dispute Resolution (ADR) framework led by Mr. Phillip Howell-Richardson.
He explained: “The settlement agreement came into effect on August 19, 2022. Nigeria succeeded in reducing the claim in mediation brought by the international firm of King and Spalding, legal representatives of the Global group, by 91 per cent.
“A claim for over $10 billion was threatened in arbitration before the International Chamber of Commerce, International Court of Arbitration, Paris, in respect of five major contracts of 2004-2007 – covering steel, iron ore, and rail.”
He traced the seeds of the disputes to five contracts entered into by the 1999 -2007 administration of President Olusegun Obasanjo, that gave complete dominance over the Nigerian steel space to the Global Steel Group.
Malami added that in 2008 a new administration proceeded to terminate these contracts contrary to legal advice supplied by the Federal Ministry of Justice, which cited the termination cost in the form of damages.
The statement noted that had the government of that day not terminated the Ajaokuta Share Purchase Agreement on April 1, 2008, and waited for just 55 days to terminate, it would have terminated lawfully and the government would have collected more than $26 million from Global Steel.
“This was because the firm appeared unable to pay the first tranche for the Ajaokuta shares before the first anniversary of the agreement (May 25, 2008). This failure would have given Nigeria a right to over $26 million as liquidated damages under cl.12 of the Ajaokuta Share Purchase Agreement.
“Global steel, in consequence, took the FGN to the International Chamber of Commerce, International Court of Arbitration, Paris, commencing arbitration in 2008. Although the Federal Government negotiated a settlement in May 2013, the previous administration failed to implement its settlement agreement,” the statement read in part.
It added that, “In May 2020, Global threatened a resumption of the arbitration and announced an anticipated claim in damages of over $10-14 billion against the Nigerian State in respect of the affected 5 contracts.
“The administration of President Muhammadu Buhari, however, took decisive steps to resist this claim, rather than pass it on to a future administration with ballooning interest.”
According to him, the FGN engaged PwCNigeria to do a comprehensive review to ensure taxpayers are protected, and that Dr Tunde Ogowewo, a barrister and senior academic at King’s College London), represented the FGN and advised the government throughout the process.
Malami further said, “FGN Counsel’s Report on Case Reference 15539/VRO/AGF/ZF/TO/AZR/SPN)_ – of over 1,000 pages provided a guide on how to avoid such contractual disputes and, where they occur, how to reach cost-effective savings for the benefit of the Nigerian taxpayer.”
He therefore, reiterated the commitment of the President Muhammadu Buhari-led federal government of standing firm to continue to make assiduous efforts in protecting the public interest and ensuring that Nigeria is not denuded of its resources through whatever means.