The previously undisclosed ruling is the latest twist in an 11-year dispute over concessions in the central African nation, which is estimated to have around six per cent of the continent’s oil reserves.
Thursday 07, March 2019
(Bloomberg) --An international court ordered the Democratic Republic of Congo (DRC) to pay South Africa’s DIG Oil $617 million for failing to honour two oil contracts, weeks before outgoing President Joseph Kabila finally approved one of the deals.
Kabila’s belated assent to one of the contested contracts suggests the state may be seeking ways to avoid paying the penalty.
The Paris-based International Court of Arbitration said that DRC failed to execute its obligations by withholding presidential approval of production-sharing agreements signed in December 2007 and January 2008, according to a 7 November ruling.
DIG Oil sealed the first contract for three blocks in central Congo and was part of a consortium of companies that secured the latter for a single permit in the east of the country.
After Kabila did not provide the necessary approval for both agreements, it sought to terminate both accords and win damages, rather than have them enforced. One of the contracts was re-allocated to new investors more than eight years ago.
Andrea Brown, the Executive Director of DIG Oil and the Oil Ministry Chief of Staff Emmanuel Kayumba declined to comment on the ICA’s decision.
DIG Oil filed its case at the ICA in October 2016, after Kabila transferred the eastern permit in mid-2010 to companies belonging to Israeli businessman Dan Gertler and hadn’t yet certified its contract for the other three licences.
The ICA agreed with DIG Oil that Congo unilaterally violated in an untimely and illicit manner the first deal by reattributing the block and failed to deliver presidential approval for the other within a reasonable time.
The court ruled that Congo must pay DIG Oil almost $598 million in compensation and about $19 million to cover its spending on the permits. The oil ministry authorised the company to carry out certain works on both licence areas, despite the lack of Kabila’s official approval, according to the ruling.
DIG Oil’s calculations of future economic losses were based on a report prepared at its request by Deloitte and weren’t contested by Congo, according to the decision.