Questions: Taming Nigeria’s unending contractual blunders
Báy??dé Ak??m?láfé, P. Eng., PMP?
Technical Project Management | Power Engineering | Engineering Design | Energy Systems | SDG #7 Advocate | Sustainable Development | PhD student
Last week, The Nigerian government settled a long-standing dispute with Global Steel Holding by agreeing to pay $496 million. Global Steel's lawsuit stems from the cancellation of a 2007 contract to update Nigeria's dormant steel mills among other obligations.
Sunrise Power was awarded and paid $200 million for breach of contract in a similar case. The Nigerian government signed a BOT contract with Sunrise Power in 2003 for the Mambilla Power Project. The civil work of the same power plant was awarded to a consortium of Chinese companies.
Nigeria is currently battling to overturn a landmark $11 Billion arbitration awarded to a little-known Process and Industrial Development (P&ID). This pricey dilemma is from an agreement negotiated with P&ID in which the government agreed to supply gas to a facility proposed by P&ID. The case is set to go to trial in 2023.
In a country with one of the lowest electricity generation per capital globally, where University workers have been on strike for over 6 months, where social infrastructure is heavily deficient, where over 45% of the population living below the poverty line, the money lost to poor contract management is significant, mindboggling and can make a significant social difference.
Questions
·???????How and why does Nigeria keep falling into these contractual problems? Lack of continuity in government? A weak civil service? Corruption? Poor human capacity/experience?
·???????Who is accountable and responsible? What is the consequence of their actions and inactions? The minister (amongst other stakeholders) that signed Mambilla to Sunrise Power is still alive…..
·???????How can the reoccurrence of these expensive solecisms be prevented?
Electrical and Utilities Engineer | 10+ Years of Expertise in Energy & Power Generation | Expert in Project Management & Innovative Solutions
2 年These questions are to be addressed . I agree with you points
Managing Director, Zaxpec Energy Ltd
2 年Walai, I'm short of thought on this short but encumbaring piece. All but none is an exception to these failures. From the people to signed, negotiated, approved, these contract. Government must learn to work with the private sector and stop seeing them as rivals to the common growth of this nation. A PPP in many of the social infrastructure will get us somewhere, otherwise, the perception that when it comes from Government, it should be free, will have to be redressed.
I solve legal problems, guide startups to spot value and avoid risk, advise on financing, support market entry, and structure deals for companies investing in oil & gas, agriculture, IP, tech, and startups in Nigeria.
2 年Thank you for your thoughts Báy??dé Ak??m?láfé, P. Eng., PMP? Contracts Are Stories… Many years ago, contracts were sealed with a firm handshake. Nowadays contracts are always in writing. Interestingly, contracts are not different from novels in the sense that they tell a story about the agreement that the Buyers and Sellers of a product or service have arrived at having started their negotiation from the initial negotiating points.?A good story has a beginning, middle and an end. A good business lawyer would know how to manage risk, what material to look out for in each part of the document and how to negotiate for the exclusion of some items and the inclusion of others...
Electrical Engineer|Instrumentation Engineer|Automation|Operation
2 年This ugly trend has been a major issue of concern. When major stakeholders in a deal have little knowledge of what they are putting there pen to, you can definitely not do away with this kind of problem. To me, change in government should not be a problem if the system we operate have clear separation of statutory responsibility. Only politicians change with government, a strong and competent civil system always remain.
Electricity Lawyer | Sustainable Energy Expert | Policy and Regulatory Expert | Data-driven Energy Lawyer | Infusing Law and Data to chart Sustainable Energy Transition Pathways for Businesses and Economies
2 年Thank you Báy??dé Ak??m?láfé, P. Eng., PMP?. Your questions capture a lot of the issues with our contract management processes. There is also a general lax attitude towards adhering to contractual obligations. This same attitude permeates into the governance structure of the country. Contracts ought to be upheld on a best endeavour basis beyond even the standard of reasonable endeavour which we fall far short. We do not lack enforcement mechanisms, we lack respect for the sanctity of contracts.