- GHL: “We Are Not Owing First Bank, We Entered A Profit-Sharing Deal with the Bank”
By Abiola Olawale
Following an alleged indebtedness to First Bank of Nigeria (FBN) Plc by General Hydrocarbons Limited (GHL), the later has firmly deflated the claims, providing telling and key insights into the deal between GHL and FBN Holdings Plc.
The management of GHL asserted that the company does not owe any funds to FBN Holdings, debunking claims of the sum of $225 million cited in the FBN claims.
While elucidating its position, GHL provided apt, suasive and weighty information regarding various agreements, MoU entered into with FBN Holdings PLC, highlighting that a standing moratorium, which it claims has not been vitiated or impaired, and is currently in effect, validates its point of view that a sharing formula of 50%, 50% deal is still in force.
The GHL explained that this moratorium is tied to what it described as the anticipated commencement of commercial oil production.
In a statement signed by GHL’s Director of Strategy and Operations, Abdelmuizz Bello, the Oil company emphasized that it was not indebted to FBN Holdings and had acted within the confines of legally binding agreements.
According to Bello, GHL entered into a Subrogation or substitution Agreement with FBN on May 29, 2021. Under this subsisting agreement terms, GHL maintains that FBN Holdings was to fund GHL’s exploration and development of OML 120 in exchange for a 50% share of profits from oil proceeds over a period of eight years.
This subsisting profit-sharing arrangement, GHL maintains, was appropriately designed to help FBN settle its non-performing loans (NPLs) and stabilize the bank’s financial standing in order to keep the premier financial organization well afloat. The Oil company also clarified that FBN’s claims of indebtedness stemmed from unrelated NPLs extended to Atlantic Energy, a company operating separate oil fields under Strategic Alliance Agreements.
The statement reads in part: “The allegations of a diversion of the monies advanced to GHL are therefore befuddling and without merit, as payments were made by FBN directly to service providers after vetting and approval by its credit and risk teams.
“At the end of the day, FBN became a conflicted lender,and risk manager, and operator at the same time, when it got involved in vetting, approving, and paying all invoices. At the same time, FBN also approved and later appointed a CFO for GHL, taking full responsibility for all financial disbursements.
“In its quest to stay afloat, FBN sold the loan at $600 million as an Eligible Banking Asset (EBA), with comfort from GHL. The bank then collected the cash from the Asset Management Corporation of Nigeria (AMCON), using it to rebuild itself without meeting GHL’s needs.
“It is important to also mention that the oil block is over 75 kilometres offshore Nigeria, with a Floating Production Storage and Offloading (FPSO) that requires transportation and logistics support with over 250 personnel on the FPSO and the associated submersible rig. This has involved heavy logistics planning with over 500 helicopter sorties, engagement of platform supply vessels, security vessels, mooring vessels, etc., which were provided daily over the course of the last 40 months. All these expenditures, including food, were vetted, approved and paid directly by FBN’s credit and risk teams.
“In view of the approval process for the funds put in place by FBN, and the payment made directly to contractors and service providers, the allegation of diversion contained in some publications is therefore wicked, malicious, false, injurious and libellous.”
Bello continued: ““The loan is only due when there are profits to be shared 50:50 from commercial oil production. Clearly, there is need for much more money, which FBN has refused to provide.
“Instead of performing its role as a lender, who was saved from the abyss, FBN is trying to bully and force GHL out of the transaction and take over the oil bloc, using its directors and other proxies with this clearly induced crisis.”
The New Diplomat reports that the heated situation stemmed from revelation that Femi Otedola, chairman of First Bank is facing serious battle with shareholders being led by legendary and distinguished investment mogul, Oba Otudeko.
These shareholders are calling for an EGM to oust Otedola whom they say hasn’t done well to manage growing crisis hitting the FBN Plc.
It would be recalled that the Federal High Court in Lagos had issued an order restraining First Bank from taking any steps to enforce any security, receivables, instruments, or finance documents or assets of General Hydrocarbons Limited (GHL).
The directive was issued following reports of GHL’s formal decision to approach the court, prompted by First Bank’s purported failure to uphold and maintain its obligations under a financial agreement as determined in a binding and subsisting MoU between the two feuding parties.
It was gathered that this deal pertained to the funding necessary for the exploration and development of Oil Mining Lease (OML) 120. The GHL contended that First Bank had not honoured the commitments outlined in their original binding contract, leading to significant concerns regarding the future of the oil project.
As a result, GHL initiated contempt proceedings against FBN and its directors, including Femi Otedola, the Chairman of FBN Holdings.
