Industry players highlight relevance of contract sanctity
Contract
By Olamilekan FAWAS
Industry players in the oil and gas sub sector on Thursday highlighted the relevance of contract sanctity describing it as one of the important ways of retaining investments in the country.
According to them, for investments to continue in the country, sanctity of contracts must be respected because it’s a way to keep long term commercial operations.
The Manager, Corporate Planning, Nigeria Liquified Natural Gas (NLNG), Yakie Ogan, at the 2019 Association of Energy Correspondents of Nigeria (NAEC) Conference and Awards in Lagos said, sanctity of contract is what has kept in existence the company and that shows how important it is to investors.
He noted that contract sanctity is what determine investment from international investors because, when there is a breach of contract, guarantees would be evoked and if they are not met, investors loose confident in the environment.
In his remarks during the technical session, the Head Legal, Department of petroleum Resources, Joseph Tolorunse, noted how sanctity of contract stimulate investments in the commercial operations of the industry, however, most of such contracts don’t have provisions for conflict resolutions,which always end up in court, adding that it is the major reason why the country’s judicial system is a vital stakeholder in resolving such issues.
The regulator advanced that even though it’s not in the Department’s purview, but often times, most of the conflicts it settles bothers round contract settlement, adding that “we only try to delve into it to enhance investment flow.”
He further maintained that, it is very important for all parties of a contract to make provisions for conflict resolutions in case of conflict to avoid landing in court as a result.
The DPR Legal Head advised the judicial system of the country to always try not to be impartial when handling cases regarding contract issues because it projects the integrity of the country to international investors.
The Managing Director Aiteo Eastern Exploration and Production Company Limited,Victor Okoronkwo observed that sometimes giving what happens as per policy and and regulations in the country,
It becomes actually difficult for some contract parties especially the weaker party to uphold and comply to the terms of because in some cases, it means extra cost of operations.
He noted that this situation often are sometime unavoidable because of the economic situation in the country and environment of operations,”every commercial contract is created to have an economic value and they are based on projections, which are initially assumptions, so it take time to change and to do that your economic expectations are threatened, especially when is the weaker party of the contract, so when conditions in the country don’t support the viability of operations, investors move their investments into more stable environment to meet up contract terms.”
On his part, the General Manager, Commercial Oando Energy Resources, Akinbambo Ibidapo-Obe stated that parties in a contract must understand the basis of operations especially on commercial level in other to avoid the feeling of being cheated after the contract commences.
“When drafting contracts, parties should be on the same level playing ground to avoid one party feeling the others are getting more value than the other,” he added.
