First Bank of Nigeria Limited (FirstBank) has alleged that General Hydrocarbons Limited (GHL) breached the loan agreement by diverting oil sales proceeds meant to repay the $225 million loan it collected.
The bank which addressed its ongoing legal and commercial dispute with GHL outlined its reasons for obtaining a court order to freeze GHL’s accounts and initiating legal action to protect its interests.
The conflict has drawn significant public attention to the credit facilities provided by FirstBank to GHL for the development of Oil Mining Lease (OML) assets.
FirstBank emphasised that it had fulfilled its obligations under the agreements, which included robust security arrangements, while GHL allegedly failed to adhere to the stipulated terms.
“FirstBank has diligently performed its obligations under the robust loan agreements executed with General Hydrocarbons Limited. These agreements clearly define the responsibilities of both parties and include comprehensive security arrangements,” the statement read.
FirstBank revealed that it proposed appointing an independent operator to oversee the financed assets and ensure transparency, but the suggestion was rejected by GHL.
“Upon realising breaches on the part of GHL, including the diversion of proceeds from crude oil off-takes, FirstBank requested the appointment of a mutually acceptable independent operator to enhance transparency and protect stakeholder interests. Unfortunately, GHL refused this reasonable and fair request,” the bank stated.
According to FirstBank, GHL escalated the conflict by demanding additional funding without fulfilling prior obligations.
“Rather than address legitimate concerns raised by FirstBank, GHL rejected the request for transparency and insisted on further disbursements. GHL refused to execute terms stipulated by the bank for additional funding, opting instead to initiate arbitral proceedings,” the bank alleged.
FirstBank also criticised a media campaign it described as misleading and aimed at pressuring the bank to compromise its principles.
“We are constrained to issue clarifications to counter false narratives propagated in certain media outlets. These narratives are misleading and fail to capture the true nature of the dispute. FirstBank remains committed to transparency and fairness and will not succumb to media blackmail,” the statement read.
FirstBank clarified its legal stance, noting that its claim at the Federal High Court is distinct from the arbitration initiated by GHL.
“FirstBank is the only party that filed a substantive claim against GHL at the Federal High Court. Our claim pertains to subsequent credit facilities governed by offer letters and finance documents that require disputes to be resolved in Nigerian courts,” the bank explained.
The dispute escalated further after GHL requested an additional $53 million loan to continue its OML 120 project. FirstBank declined, citing concerns over GHL’s handling of previous loans. GHL subsequently secured a Mareva injunction to temporarily freeze its $225 million assets, while FirstBank filed a substantive court claim to recover diverted funds and address breaches of the loan agreements.
FirstBank described its legal actions as essential to preserving assets, recovering funds, and safeguarding its interests in the face of GHL’s alleged contractual violations.
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