Abdul-Rahman Abubakar
26 June 2008
Abuja — The $2.9 billion (about N351 billion) contract awarded during the administration of former President Olusegun Obasanjo for the construction of Escravos Gas To Liquid (EGTL) Project was inflated by $2billion, chairman of the Senate Committee on Gas, Senator Osita Izunaso (PDP, Imo) said yesterday.
The contract was awarded to Chevron Oil Company by the Nigeria National Petroleum Corporation (NNPC). It was awarded when Mr. Jackson Gaius-Obaseki was NNPC's group managing director in 1999-2003. The Senate promptly ordered an investigation into the contract.
According to Izunaso, "A similar project in Qatar has a total estimated cost of about $592 million (about N69.2 billion) while that of Escravos by NNPC was put at $2,902 million (about N351 billion) against the backdrop of weakened dollar, inflation, metals price escalation and specific escalators associated with work in Nigeria to the tune of 305 percent in less than a year, a figure which has been disputed."
The senator said NNPC's former GMD failed to properly highlight the implication of the project to former President Obasanjo, saying "Obaseki recommended that NNPC leverage on the EGTL lump sum price of $675 million cost estimate of $900 million as a benchmark to ensure that the overall cost of $1,100 million was not exceeded, but later approved $1,050 million as total cost estimate."
He further stated that on assumption of duty as the corporation's GMD, Engr. Funsho Kupolokun reviewed the cost estimate, "which now resulted in huge escalation in contract value."
Senator Izunaso allged complacency on the side of NNPC in the contract award adding that, "NNPC may have compromised its integrity by putting up the project for Mr. President's approval and subsequently approving contracts on the project without technical information for the Nigerian government and her citizens." The senator therefore lamented the delay in executing the project which was conceptualized in 1998, saying, "Preliminary investigations on it suggested that the project may cost as much as $7 billion and the cost may still be rising."
The EGTL project is meant to convert over 300 million cubic feet of natural gas per day to Gas To Liquid (GTL), diesel and GTL naphtha. The plant will also process about 150 million cubic feet of gas per day and produce LPG for sale in international markets as well as gas for domestic uses.
In his ruling, Deputy Senate President Ike Ekwer-emadu, who presided over yesterday's plenary session, urged the Senate Committee on Gas not leave any stone unturned to expose the real implication of the project.
Senate therefore resolved to mandate its Committee on Gas to conduct a public inquiry and thorough investigation into the activities of the NNPC and Chevron on the EGTL Project and report back within four weeks.
Mr. Obaseki and his successor, Engr. Kupolokun as well as current officials of the NNPC are expected to be summoned to explain the controversy surrounding the gas project.
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