General Hydrocarbons refutes $225.8m debt claims, says moratorium is in place
By Innocent Raphael
General Hydrocarbons Limited (GHL) has refuted allegations that it owes First Bank of Nigeria (FBN) $225.8 million, emphasizing that a moratorium period remains in place until the company achieves commercial oil production.
This was outlined in a press statement signed by Abdelmuizz Bello, Director of Strategy & Operations at GHL, in response to recent media reports surrounding the dispute.
Some reports had alleged that a Federal High Court in Lagos had frozen GHL’s accounts over an outstanding debt to FBN and barred financial institutions from releasing funds to the company, owned by Prince Nduka Obaigbena who is the Chairman of THISDAY/ARISE Media Group.
GHL, however, provided a detailed breakdown of the situation, countering the claims and accusing FBN of failing to meet its financial obligations.
GHL gave the background to its agreement with FBN as follows:
- Subrogation Agreement: GHL entered a legally binding agreement with FBN on May 29, 2021, whereby FBN agreed to fund GHL’s exploration and production activities on OML 120 in exchange for a 50:50 profit-sharing arrangement from oil proceeds. This was aimed at helping FBN resolve its non-performing loans (NPLs), amounting to $718 million.
- Loan Resolution: The NPL arose from FBN’s dealings with Atlantic Energy, which had no connection to GHL. The agreement with GHL enabled FBN to avoid declaring significant losses, allowing it to report a profit of $377.5 million in 2021 and improve its market capitalization from N256.6 billion to over N900 billion by November 2024.
- FBN’s Non-Compliance: GHL accused FBN of failing to honor its financial commitments under the agreement, including delayed disbursements, which led to operational inefficiencies and losses of over $147 million.
Court injunctions and allegations of abuse
GHL disclosed that it had secured court orders against FBN on December 12, 2024, preventing the bank from obstructing GHL’s efforts to obtain alternative financing, enforcing any security, or appointing an operator for OML 120.
However, FBN allegedly sought a separate Mareva injunction during the court’s recess, freezing GHL’s accounts without disclosing the earlier judgment. GHL described this as an abuse of court process.
No Debt Due: GHL stated that the $185 million disbursed by FBN is still within the moratorium period and repayment is contingent on profits from commercial oil production.
Mismanagement by FBN: The company accused FBN of inefficiency and conflict of interest, as the bank handled contractor payments and even appointed a Chief Financial Officer for GHL.
Operational Impact: GHL highlighted the logistical challenges of operating OML 120, which involves a floating production storage and offloading vessel, personnel, and heavy logistics. All expenses were vetted and paid directly by FBN, countering allegations of fund diversion.
According to the statement, GHL is exploring options to find alternative lenders and partners, citing FBN’s alleged inability or unwillingness to fund the project.
The company emphasized its commitment to resolving the dispute through arbitration and expressed confidence that justice would ultimately prevail.
While the case is ongoing at the Federal High Court, Lagos, GHL has urged the public to disregard misleading reports and await the court’s resolution
