Judicial Notice On Ajaokuta – Kaduna – Kano Section Of The Trans Nigeria Gas Pipeline, Lot 2 of Phase 1 Project

The attention of the Federal Executive Council of Nigeria and the general public is drawn to the unlawful attempt by NNPC to put itself above the law and disregard and overreach pending proceedings at the Federal High Court Abuja Division, which were commenced by NNPC against the CSOIL Consortium and inter alia Macready Oil and Gas Company (“Macready”) and Miles Energy Services Limited (“Miles Energy”). 

In 2016 Miles Energy and Macready together with China Shipbuilding and Offshore International Limited (“China Shipbuilding”) , CNPC Huayu Petro-Chemical Engineering Company Limited, CNPC Julong Steel Pipes Company Limited, Morpol Engineering Services Limited, CNPC Chuanqing Drilling Engineering Company Limited and Crestech Engineering Limited formed a consortium to bid for Phase 1 Lot 2 of the Ajaokuta-Kaduna-Kano (AKK) Section of the Trans Nigeria Gas Pipeline under the name “CSOIL Consortium”. The consortium was formed pursuant to a consortium agreement dated 15 April 2016 among all 8 members of the CSOIL Consortium, with China Shipbuilding as lead sponsor and Macready and Miles Energy as co-sponsors. On the same 15 April 2016 the CSOIL Consortium submitted a bid for the AKK Lot 2 of the project.

The CSOIL Consortium was shortlisted and an “Invitation to Tender” (ITT) was sent to the Consortium. As typical of a tender process of this kind, Clause 2.3 of the ITT required the consortium to designate and appoint a representative to act as “a single point of contact” for the tender process, the purpose of which was to issue and receive correspondence on behalf of the Consortium members and only during the tender stage (as opposed to the contract negotiation and execution stage). In particular, the purpose of the “single point of contact” was neither to negotiate and execute contracts on behalf of and to the exclusion of individual members of the Consortium nor to exclude or reconstitute the consortium membership. In compliance with the requirement of the ITT, each member of the CSOIL Consortium individually donated powers of attorney to Mr. Dapo Oguntayo (China Shipbuilding’s sole representative) to act as the single point of contact, for the tender process only. 

Following a rigorous selection process, the CSOIL Consortium won the bid and by a letter of commitment dated April 27, 2017 was awarded the contract for the engineering, procurement, construction and commissioning (“EPCC”) of AKK Gas Pipeline Lot 2 (Abuja – Kaduna). According to the ITT, the next stage of the process is the negotiation and execution of the EPC contract between NNPC and CSOIL Consortium.

On 13 December 2017 the Federal Executive Council approved the award of AKK Lot 2 EPCC to the CSOIL Consortium.

For reasons best known to NNPC and Dapo Oguntayo and contrary to the consortium agreement a copy of which NNPC had:

NNPC and Mr Dapo Oguntayo, representing China Shipbuilding, sought to exclude other consortium members from the negotiation and finalization of the EPCC contract and even unilaterally introduced new members after the bid had been won. 

NNPC stopped copying CSOIL Consortium members in its emails to the CSOIL Consortium and dealt exclusively with China Shipbuilding. 

On 14 February 2018, NNPC issued a letter of contract award in respect of the AKK Lot 2 EPCC contract to China Shipbuilding rather than to the CSOIL Consortium.

NNPC issued an EPCC contract naming itself and China Building as sole parties. Only China Shipbuilding is listed at page 146 as signatory, not as agent, but for itself!

Macready and Miles Energy’s unlawful exclusion and Mr Oguntayo’s abuse of the limited power of attorney given to him were brought to the attention of NNPC by virtue of Macready and Miles Energy’s letters dated 12 May 2017, 19 July 2017, 14 February 2018, 26 February 2018, and 16 March 2018, but to their dismay and surprise NNPC continued to deal exclusively with Mr. Oguntayo and China Shipbuilding.

As a result, on 23 March 2018 our firm issued a pre-action notice to NNPC on behalf of Macready and Miles Energy giving NNPC notice of their intention to issue court proceedings and seek declaratory and injunctive reliefs. By a reply dated 23 April 2018 to us, NNPC denied excluding Macready and Miles Energy from the CSOIL Consortium.

On 21 May 2018, when Mr Kamoru Oladimeji (Miles Energy’s managing director) was travelling abroad he was arrested at the Lagos international airport, detained and taken to Abuja by the Directorate of State Security (DSS). He was interrogated by the DSS, which alleged that Macready and Miles Energy were refusing to be excluded from the AKK Lot 2 EPCC contract. On 23 May 2018, we wrote a letter to NNPC complaining about the unlawful arrest and detention of Kamoru Oladimeji which showed the frightening extent to which the state coercive powers were being abused in settlement of a commercial dispute orchestrated by NNPC between the members of the CSOIL Consortium. We also pointed out that any contract or renunciation of rights signed or done by Miles Energy would be invalid as having been procured by illegitimate coercion and pressure.

On 2 August 2018, NNPC issued proceedings at the Federal High Court Abuja Division (Suit No FHC/ABJ/CS/826/2018) seeking inter alia declarations that no valid contract exists between NNPC and the CSOIL Consortium regarding AKK Lot 2, alternatively that any existing contract has been validly terminated by NNPC as a result of breach by the CSOIL Consortium. NNPC also sought injunctions against the CSOIL Consortium and its individual members. These proceedings remain pending and unresolved.

AKK Lot 2 EPCC contract has not been executed as a result of a series of breaches by China Shipbuilding and its Nigerian representative, Dapo Oguntayo, with the support and active connivance of the NNPC Project Execution Team. Accordingly, any difficulties and delay allegedly experienced by NNPC in the execution of the AKK Lot 2 EPCC contract with the CSOIL Consortium are entirely self-induced and self-inflicted. 

We understand that NNPC is seeking the approval of the Federal Executive Council to breach its contract with the CSOIL Consortium and re-award the AKK Lot 2 EPCC contract to third parties with knowledge that it has no right to do so and that its court case seeking the right to terminate has not been decided. By seeking Federal Executive Council’s approval to cancel the CSOIL Consortium contract NNPC is showing its disdain for the rule of law and due process. The Federal Executive Council is not a court of law and cannot resolve commercial disputes between NNPC and its contractors. The Federal Executive Council should not entertain NNPC’s request. To do otherwise would give the wrong impression that the FGN is above the law and its own courts, which will further damage investor confidence in Nigeria and its adherence to the rule of law. The least the Federal Executive Council should do is to ask NNPC to await the resolution of proceedings which it has issued. The Federal Executive Council should neither authorize NNPC’s lawlessness and attempted self-help nor allow it to profit from its own deliberate wrongdoing.

We give notice that any third party who bids for or accepts from NNPC the AKK Lot 2 EPCC contract prior to the resolution of Suit No FHC/ABJ/CS/826/2018 does so at its own risk. Not only would such third party be in contempt of the proceedings but also it would be liable for the tort of knowingly inducing a breach of the NNPC-CSOIL Consortium contract as well other economic torts and would be proceeded against and injuncted.

The AKK Lot 2 EPCC contract is transformational once in a lifetime opportunity for Macready and Miles Energy to build their portfolio of high-end infrastructure projects and help Nigeria to build local capacity. It is not simply a matter of money and China Shipbuilding is not a local Nigerian company. It is a Chinese entity.

FIDELIS ODITAH QC, SAN