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By Nora Inwang
In light of the ongoing legal dispute between General Hydrocarbons Limited (GHL) and First Bank of Nigeria (FBN), GHL has issued a press release on February 8, 2025, to clarify its position, particularly in response to FBN’s claim that the company took out a loan.
The management of General Hydrocarbons Limited stated, “Is GHL’s liability to First Bank a loan? The simple answer is NO. It is not a conventional commercial loan; rather, it is a project finance arrangement.” Here’s a breakdown of the situation:
GHL is the licensed operator and awardee of OML 120. FBN approached GHL to finance the exploration, development, and production of OML 120, with a profit-sharing arrangement of 50:50, while GHL would pay FBN the cost of financing.
The FBN 50% share was specifically allocated to help reduce FBN’s non-performing loan of $600 million, which had been discounted from $718 million by the Asset Management Corporation of Nigeria (AMCON), in a bid to address FBN’s solvency issues.
As part of this agreement, GHL guaranteed FBN’s liability to AMCON through a Tripartite Agreement between GHL, FBN, and AMCON.
This agreement resulted in FBN returning to profitability, moving from a loss of N302 billion to a profit of N151 billion for the fiscal year ending 2021.
However, GHL claims that despite this success, FBN has failed to fulfill its obligations under the Tripartite Agreement. Specifically, FBN has not fully financed or made the required payments for the optimal exploration and development of OML 120, as initially agreed. This failure has led to a loss of $47 million due to day rates and downtime, contributing to the current legal impasse.
GHL disputes FBN’s claim of a $225 million loan, arguing that the amount is not due, as it remains covered by a moratorium. This moratorium is in place because the project has not yet achieved commercial production. Therefore, GHL considers FBN’s claim to be premature.
GHL has initiated arbitration to resolve the matter, which is currently ongoing. In response, FBN has sought temporary Mareva injunctions, some of which have been vacated, and others are still pending in the Federal High Court in Port Harcourt, Rivers State. These injunctions are based on unsubstantiated allegations of asset dissipation.
GHL firmly denies any asset dissipation. All payments made by First Bank were directed to third-party entities after FBN conducted due diligence and verification. These third parties are reputable, global companies with strict compliance standards.
GHL is now pursuing a claim of over $1 billion in various courts, while FBN is maintaining its claim of a $225 million debt, which it alleges GHL has not complied with according to the terms of the agreements.
GHL remains committed to fighting for justice and compensation while keeping the door open for mediation and resolution. The company strongly rejects FBN’s claims and stands firm in its position that the agreements in place have not been honored by First Bank.
