UM Petroleum may drag Leadway to court over bond

Petroleum Minister, Mrs. Madueke

The management of UM Petroleum Limited, an oil firm, has threatened to drag an insurance company to court for failure to meet up with its obligation on an Advance Payment Bond (APB), it issued on behalf of a sub-contractor, allegedly involving an outstanding sum of N3,202,771.06 in default.

The insurance company, Leadway Assurance Company Limited, is said to have issued an Advance Payment Bond to a sub-contractor, Control System International Company (CSIC), which allegedly defaulted by not completing its aspects of the works in the sub-contract.

According to a letter dated April 19, 2013, made available to DigitalSENSE Business News endorsed by Stanley Onyenze Esq. of B. Chinedu Moore & Associates from Ezedinachi Chambers on behalf of the UM Petroleum Limited, stated that Leadway Assurance Company Limited, is to pay the outstanding sum of N4,202,771.06 or face court action.

Onyenze explained that UM Petroleum Limited had engaged Control Systems International Company (CSIC) as a sub-contractor to execute some jobs for them in 2010 of a total value of the sum of N38,800,690.10.

The letter also alleged that "Some specified aspects of the jobs for which the sub-contractor was paid in advance, included those covered with an Advanced Payment Bond to the tune of N6,805,023.06 issued by Leadway Assurance Company Limited.

As said by the lawyer, UM Petroleum Limited's letter dated 10, 18 and 28 November 2011, respectively duly notified Leadway Assurance Company of the default by the sub-contractor in executing the job covered by the APB No. AP/11/00021/LA for N6,805023.06.

The legal practitioner further stated that for the sake of clarity and emphasis, by their letters dated March 8, 2012 and April 3, 2012 respectively, UM Petroleum Limited had furnished the insurance company with detailed breakdown of the jobs covered by the said APB, "the contract value of those jobs, the value of the works, done and values of the work NOT done by the sub-contractor [Control Systems International]."

The lawyers noted that all efforts by its clients to reconcile the alleged position on the issue have proved abortive on the part of Leadway Assurance Company Limited.

"It is our humble opinion that our client's demand for the payment of the sum of N4,202,771.06 being the value of the jobs covered by the Bond, but which were not properly executed or executed at all by the sub-contractor is proper and lawful and that you were duly notified," the lawyers said.

Stressing, "If the payment is not received within the ultimatum period, we shall proceed to file a claim of the same amount with the attendant damages at the Lagos High Court against your company."

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