Greenville LNG Chairman Eddy Van Den Broeke has clarified allegations of breach of a gas supply contract with BUA cement company.
The DAILY POST learned this in an exclusive conversation with Eddy van den Broeke on Thursday in response to a report alleging that BUA plans to file a multimillion-dollar lawsuit against Greenville for breach of contract.
According to Mr. Van den Broecke, the prevailing situations in the country, such as collapsing road infrastructure, dumping of upstream gas infrastructure, lack of access to foreign exchange etc, have forced the company to engage its clients in the practice of revising contractually permissible prices.
He stated that out of 45 clients sharing the same contractual provision, only BUA Cement had agreed to the contractual process.
He also rejected the allegation of alleged breach of contract, saying that a price revision was permissible under the contract, given the commercial and financial conditions prevailing in Nigeria.
Mr Eddy Van Den Broeke explained that the contractual agreement between his company and the BUA gave room for price adjustment based on the agreed contractual provisions.
He also urged Nigerians to ignore the allegation that the company had a history of reneging on contractual agreements and involvement in the Panama Paper scandal.
He asserted that he was never involved in the Panama Papers scandal because he conducts business within legitimate means and with honesty.
He said Greenville LNG hopes to settle the dispute with BUA at a meeting scheduled for December 5th, 2022.
He says, “It is not a breach of contract because we are not only continuing to supply gas to the BUA plant in Sokoto but also because we are discussing in good faith the changing commercial and economic conditions affecting both companies.”
“We have a clause in the contract that gives scope to adjust prices at the expense of the prevailing conditions in the country. In this case, we just activated that clause. We cannot explain how it is possible that social media has grossly abused the current conditions and the terms of our contract which have not been reflected at all “.
“Without a contractually permissible price adjustment, we would then supply BUA at unrealistic prices for the remainder of the contract and bankrupt us. Of course every entrepreneur wants to contain and reduce their costs. In fact, a business works to survive.”
Grenfell has been hit hard by damaged road infrastructure after the unprecedented rainy and flood season: this is a fact known to all Nigerians who have been similarly affected. Thus, there is an increase in turn time to move the truck from south to north. For a 5-day supply, we now take 10 days. This means that to provide the same service we have to deploy double number of trucks on the roads. Also, the unavailability of the basic financial market for foreign exchange for the import of spare parts for the maintenance of trucks and equipment for the production of LNG, for the import of consumables not produced in Nigeria and other raw materials sold in foreign currency is the determining factor. Factors that have led to an increase in gas supply costs.
“It is completely illogical for foreign investors to be given bad press and thrown in the mud, after the government’s policy of attracting foreign capital to Nigeria; how do you want more foreign investors if anyone can publish anything in the papers? Freedom of speech is sacred, but Laws must be respected.”
I can’t interfere myself; The government is responsible for implementing the policy. I cannot participate in the decision of the President or the Central Bank of Nigeria regarding foreign exchange. Of course, we have a clause in the contract that says we can adjust prices in such circumstances. It is up to the private business partners to get them to stay in business. If you do not have access to US dollars, what do you do? Produce our parts here, do our banking in Europe in naira: but no, you can’t! So, if you don’t understand this in the works, something is wrong. This means that you want to benefit exclusively from your political support. This happens in Russia with oligarchs, and you see the consequences: the same should not happen in Nigeria! “
“Moreover, I have to tell you that 100 percent of our other customers agreed to the price adjustment except for BUA.”
Every industry has this problem, regardless of whether the industry is in the energy sector or not, it’s the same. What I’ve read in the press about what BUA wants us to do until the end of the decade in 2026 is continue to supply at a flat rate: that means, very soon, we’ll be supplying in Sokoto for free. Good pressure on BUA, but according to my business principles, it just doesn’t work that way.”
“BUA should embrace us, not criticize us. In the past 10 months we have received 20 percent of our feedstock capacity, but we have handed over 50 percent to BUA without changing the rate.
“We are the first LNG for the domestic market in Nigeria; this is the first trucking of LNG in the country. This means that we have lowered the prices for logistics across the country. Six months from now, LNG will be available across the country until All truck drivers can get LNG from us. In the transportation sector, we will have hubs all over the country. There are CNG stations in the south, but they cannot come to the north because of the cost of transportation. We reduce energy costs in the north and revive dying industries there: Is this why the press calls us scammers?
“We want a contractual situation where both partners act reasonably; given the situation last year, there have been cost increases in all of our investments: most of the equipment comes from China; transportation by sea freight to Nigeria has increased by more than 300 percent, and the price of equipment has gone up.” By 20-30 percent.Here we have a big problem.Truck pipelines: We are completely dependent on the condition of the roads, so in the rainy period, the road from Rumuji to Warri is completely flooded and is no longer available for heavy loads by truck.Although Setraco Returned it now, except it will take some time.So you have to understand that the time from 5 days to Sokoto is now 10 days.So if the buyer doesn’t understand that, what do you do?After that, Cement raised the price from N40,000 to N80 000 per ton long before we asked for any price adjustment.Not only BUA, everyone.This price of N80,000 does not even include the delivery price to customers which has also increased astronomically due to the collapsing road infrastructure.
Moreover, we cannot have US dollars but we need US dollar coins; The only thing we need to do is to access foreign currencies from the parallel market. So, what do we have to do, supply BUA for two years and die? The question is, both parties must be reasonable. And again, this is not a breach of the contract because we continue to supply. ” If the dispute continues, we will jointly appoint an expert who must assess the situation and make a decision. This is what the contract says. “
Earlier, some media reported that BUA is looking to file a 50 billion naira lawsuit against Greenville LNG for allegedly breaching a contract to supply gas and arbitrarily increasing prices despite the contractual agreement on oil-related pricing for any price change. Media reports on contractual provisions are inaccurate, erroneous, and misleading.
The campaign of offensive slander against Grenfell did not take into account Grenfell’s massive investments in Nigeria as a leading company that firmly laid a solid foundation for Nigeria’s development in the oil and gas sector. Greenville’s business objective, though crippling economic hardship, is to provide gas, rescue dying businesses across the country, and assist in the country’s economic development. This stated business objective is the main reason why Greenville refuses to intervene or increase BUA Cement prices since the contract is depreciated or invoke any provision therein whose application was necessary due to the changing economic dynamics of the country. These obvious factors cannot be entirely suppressed by the political pressure that is now being imposed on the company by BUA Cement. This is not good for business nor a good relationship with the company.
We Always Honor Contracts – Greenville LNG clears the air on allegations of breach of contract