General Hydrocarbons Limited (GHL) has reiterated that the claims made by First Bank of Nigeria (FBN) Plc that it owes the bank $225 million are misleading and without merit.
The oil company clarified that its obligation to First Bank is not a standard commercial loan but a project finance relationship, which it has fully honoured while First Bank had allegedly failed to fulfil its part of the agreement.
In response to allegations that certain company assets are being dissipated by its shareholders, GHL stated that all payments made by the bank are directed to third parties after due diligence and verification by FBN.
GHL also disclosed that it is pursuing a claim of over $1 billion in various courts, while FBN is asserting a $225 million debt that it has not complied with according to the agreements.
The company emphasised that it remains open to mediation and resolution of the dispute but that it will continue to seek justice and damages.
Part of the statement reads: “GHL is the awardee and licensed operator of OML 120. FBN approached GHL to finance the exploration, development, and production of OML 120 and to share profits 50:50, while GHL would pay FBN the cost of financing.
“The 50 per cent share for FBN is intended to pay down its non-performing loan of $600 million (discounted from $718 million from AMCON’s Eligible Bank Asset) to resolve FBN’s solvency issues.
“GHL guaranteed FBN’s liability to AMCON through a Tripartite Agreement involving GHL, FBN, and AMCON in this arrangement.
“Due to this Tripartite Agreement, FBN became immediately profitable, recovering from a loss of N302 billion to a profit of N151 billion for the 2021 fiscal year.
“However, FBN has failed to meet its commitments under the Tripartite Agreement by not fully financing and making the requisite payments for the optimal exploration and development of OML 120, leading to losses in day rates and downtimes of $47 million. This has contributed to the current impasse, as FBN has not made the necessary payments for drilling and exploration activities.
“Essentially, FBN did not fulfil its conditions precedent to profitability by failing to finance OML 120 as agreed, leaving its financial statements vulnerable to scrutiny.
“Moreover, FBN’s claim of a $225 million loan is not yet due, as it remains covered by a moratorium until the project achieves commercial production.
Therefore, FBN’s claim is, at best, premature.
“GHL has initiated arbitration, which is currently underway, while FBN has filed a series of Ex parte (temporary) Mareva measures in court. The first of these measures has been vacated, and the case is now being heard on its merits, while the second temporary Mareva is pending at the Federal High Court in Port-Harcourt, Rivers State. These actions are supported by unfounded and unproven allegations of asset dissipation.
“Did GHL dissipate any assets? The answer is no, as all payments were made directly by First Bank to third parties after thorough diligence and verification by FBN. The third parties are mainly global, world-class, reputable companies with strict compliance regimes”.
