General Hydrocarbons Limited (GHL) has strongly refuted allegations of indebtedness to First Bank of Nigeria (FBN) Plc, including claims of a $225 million debt.
The company insists it is not in arrears to the bank, let alone to the extent claimed, and has pointed to existing agreements and a Federal High Court ruling in its favour as evidence of its innocence.
In a statement clarifying the matter, GHL explained that a moratorium on the loan remains in place, pending the commencement of commercial oil production.
It also took issue with reports that a court in Lagos had frozen its accounts and restricted banks from releasing funds due to the alleged debt, branding such claims as “misleading and malicious.”
- Can Olukoyede Renew Our Faith in the EFCC?
- Why Thisday’s Nduka Obaigbena is blackmailing me – Otedola
The controversy was sparked by media reports, including social media posts on January 10 and 11, 2024, which referenced a supposed Federal High Court ruling freezing GHL’s accounts over outstanding debts to First Bank.
The reports stated that the court had ordered the freezing of GHL’s accounts following claims of a $225,802,379.79 debt owed to First Bank by the company, which is owned by Mr Nduka Obaigbena, the Chairman of THISDAY/ARISE Media Group.
However, GHL’s Director of Strategy and Operations, Abdelmuizz Bello, dismissed the reports as false, clarifying that the claims made by FBN were untrue and misleading.
He pointed out that the company had entered into a legally binding Subrogation Agreement with First Bank on May 29, 2021, under which the bank agreed to fund GHL’s exploration, production, and development of OML 120 in exchange for a 50% share of the oil proceeds over an 8-year period.
Bello explained that the agreement stipulated that the 50% share from the proceeds would be used to settle FBN’s non-performing loans of approximately $718 million, which had been discounted to $600 million to address the bank’s solvency issues.
He went on to explain that these non-performing loans stemmed from FBN’s lending to Atlantic Energy, with which GHL had no direct involvement.
“The FBN non-performing loan arose from FBN’s unsecured and reckless lending to Atlantic Energy under separate Strategic Alliance arrangements, in which GHL had no nexus to or connection with,” said Bello.
“The agreements made it clear that the Non-Performing Loan had nothing to do with GHL beyond the fact that 50% of profits from OML 120 due to FBN under the Subrogation Agreement will be used by FBN to settle the hole created in its books by the Non-Performing Loan.”
Bello also referenced the positive financial outcomes FBN experienced after entering into the agreement with GHL. Prior to the agreement, the bank’s market capitalisation was N256.6 billion, but after the deal, it tripled to over N900 billion by November 2024. He said that GHL had trusted First Bank’s integrity when signing the agreement, only to see the bank fail to fulfil its financial obligations to fund OML 120.
Despite disbursing $185 million, GHL noted that the manner of disbursement was problematic. Payments were often delayed by up to 70 days instead of the agreed 5-day window, which caused inefficiencies, additional costs, and operational disruptions. This delay resulted in losses amounting to over $147 million, including an arbitration award to one of the service providers.
Bello also refuted FBN’s claims of fund diversion, stating that all payments to contractors and service providers had been approved and verified by the bank’s credit and risk teams. “The allegations of a diversion of the monies advanced to GHL are therefore befuddling and without merit,” he said.
GHL further claimed that First Bank had failed to meet its commitments, causing severe delays in the development of OML 120. The company stated that while the loan of $185 million was not due for repayment, as it was still within the moratorium period, FBN had nonetheless attempted to take control of the oil block.
“As per the terms of the agreement, the loan is only due when there are profits to be shared 50:50 from commercial oil production. FBN has failed to provide the necessary funding and instead is trying to force GHL out of the transaction,” Bello said.
Following FBN’s failure to meet its financial obligations, GHL sought legal recourse and approached the Federal High Court, which granted the company an injunction on December 12, 2024. This injunction barred FBN from obstructing GHL’s ability to secure further funding for the operation of OML 120.
Despite this ruling, FBN reportedly sought to obtain an interim Mareva injunction from another judge to freeze GHL’s accounts. GHL condemned this move as an abuse of the court process and expressed confidence that justice would eventually prevail.
Bello concluded by reaffirming GHL’s commitment to securing alternative financing for the development of OML 120, should FBN remain unwilling to honour its obligations.