A Week in Nigeria: 7 December

Highlights from Reuters coverage of Nigeria over the last seven days

The re-arrest of activist Omoyele Sowore by security agents, hours after he was released, took place in a courtroom in the capital Abuja

In this week’s round-up: Nigerian activist re-arrested in courtroom scuffle hours after his release, lawmakers pass 2020 budget, government files fraud claim to fight $10bn P&ID arbitration penalty, and pirates kidnap 19 crew members from oil tanker.

  • Lawmakers passed a record 10.59 trillion naira ($35 billion) budget for 2020, paving the way for a likely return to the international debt market next year as the country struggles to shake off the impact of a recession. The budget assumes a deficit of 1.52% of the estimated gross domestic product — representing around 2.18 trillion naira — to be financed through foreign and domestic borrowing. In 2019, the debt office said it did not tap the international debt market because of time constraints before the end of its budget cycle. The West African country held its last Eurobond sale in 2018, its sixth outing, where it raised $2.86 billion. Nigeria emerged from a 2016 recession the following year but has struggled to boost growth. Ratings agency Moody’s downgraded the country’s outlook to negative from stable on Wednesday, citing an increased risk to government revenue. The budget assumes crude production of 2.18 million barrels a day and an oil price of $57 per barrel. Nigeria is Africa’s top oil producer. The spending plan, which includes a value-added tax increase from 5% to 7.5%, is up from the 8.83 trillion-naira budget for 2019 and tops the previous record spending plan, the 9.12 trillion-naira budget for 2018. Buhari last week asked parliament to approve a request for $23 billion in foreign borrowing for infrastructure projects. It was not immediately clear if that sum was included in the budget passed by lawmakers. The budget was passed by the Senate, parliament’s upper house, followed by the lower house a few hours later. Lawmakers increased the budget from the 10.33 trillion-naira spending plan that Buhari presented them in October. Their revised plan must be approved by Buhari before he signs the budget into law. But, given that both houses of parliament are headed by loyalists from the president’s party, the budget is unlikely to undergo further changes. The speed with which lawmakers passed the spending plan was among the various observations made by social media users.
  • Lawyers for the Nigerian government on filed “new and substantive” allegations of fraud with a British court in its ongoing fight against an arbitration award now worth more than $9 billion, a spokesman for the attorney general said. The government has been fighting efforts by the firm, Process & Industrial Developments (P&ID), to enforce the award for a failed gas project, and now is also seeking to overturn the underlying award, the spokesman said. As the window to appeal the arbitration award expired, one of the only ways to overturn the award itself is to prove fraud or corruption in the foundation of the contract, legal experts told Reuters. Attorney General Abubakar Malami and other government officials have repeatedly said that an investigation this year by the country’s anti-graft unit had uncovered proof of fraud. “The challenge argues that the (contract) was procured on the basis of fraud and corruption, while the subsequent arbitral process was riddled with irregularities and deliberately concealed from the rest of the government,” Malami’s spokesman said in an emailed statement. The attorney general’s office calculates the total to be roughly $9.7 billion. Details on the evidence uncovered were not available as the spokesman said that court filings and documents are sealed until they are referred to in open court. “Nigeria’s new filings with the English Court is an act of desperation to try to undo the Court’s sound conclusion that P&ID’s $10 billion award is enforceable,” P&ID said, adding that the award is now worth $10 billion due to interest accrued. The 2010 deal called for P&ID, which was set up solely for the project, to build a gas processing plant, and for the government to supply it with gas. It collapsed without any construction taking place, though P&ID said it spent $40 million on a design and feasibility study. P&ID initiated arbitration in 2012, and in 2017, a UK tribunal awarded P&ID $6.6 billion, plus interest, based on what it could have earned over two decades.

Nigeria bureau chief for Reuters. Ghanaian family, British accent. Ex-BBC, before that newspapers.