GHL issues further clarification on dispute with FBN

It appears there is no end in sight to the disagreement between General Hydrocarbons Limited (GHL) and First Bank of Nigeria (FBN) over the Oil Mining Lease (OML) 120. GHL insisted that it never took a loan from First Bank, saying what it had with the bank was a project finance relationship. Daily Trust reports […]

It appears there is no end in sight to the disagreement between General Hydrocarbons Limited (GHL) and First Bank of Nigeria (FBN) over the Oil Mining Lease (OML) 120.

GHL insisted that it never took a loan from First Bank, saying what it had with the bank was a project finance relationship.

Daily Trust reports the two institutions have locked horns over the OML 120 with several cases instituted in court.

GHL in a statement, claimed that First Bank failed to meet its commitment under the tripartite agreement to fully finance and make the payments required for the optimal exploration and development of OML 120.

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GHL disclosed that it has now gone for arbitration which is ongoing.

It added that the first of the series of Exparte (temporary) Mareva orders against GHL had been vacated and the case is being heard on its merit.

Giving further clarification on the matter, GHL asked if its liability to First Bank was a loan?

It said, “The simple answer is NO, as it is not a normal commercial loan: it is a project finance relationship. Here is how:

“GHL is the awardee and licensed operator of OML 120. FBN approached GHL to finance the exploration, development and production of OML 120 and share profit 50:50, while paying FBN cost of finance.

“The FBN 50 per cent share is dedicated to paying down its non-performing loan of $600 million, discounted from $718 million from the Asset Management Corporation of Nigeria (AMCON) Eligible Bank Asset in order to resolve FBN’s solvency issues.

“In doing that, GHL guaranteed FBN’s liability to AMCON, through a tripartite agreement between GHL, FBN and AMCON. The result of the tripartite agreement was that FBN became immediately profitable and moved from a loss of N302 billion to a profit of N151 billion for 2021 Fiscal Year End (FYE).”

Speaking further, the oil firm alleged that FBN’s decision to fulfill its obligations on the project has resulted in losses in day rates and downtimes of $47 million, saying this is responsible for the current stalemate.

“Meanwhile, the FBN’s claim of a $225 million loan is not due as it is still covered by moratorium, given that the project has not achieved commercial production. So, at best FBN’s claim is premature,” GHL added.

“We will continue to pursue all available legal avenues to recover unserviced debts from debtors, ensuring that those who have defaulted on their obligations are held accountable.

“We wish to seize this medium to assure all our valued stakeholders that First Bank remains strong, stable and fully committed to resolving this issue in line with the provisions of the law,” FBN said in one of its statements.