Sufuyan Ojeifo
14 October 2008
Abuja — The Senate Committee on Gas Resources was yesterday told how Chevron Nigeria Limited allegedly inflated the Escravos Gas-to-Liquid (EGTL) project from $1.7 billion to $5.9 billion without due process.
The Nigeria National Petroleum Corporation (NNPC) said it did not give Chevron the approval to increase the contract sum.
But the Acting Managing Director of Chevron, Mr. Olasupo Shadiya, said the company wrote NNPC on the upward review of the contract sum but that the NNPC did not formally give its approval.
The exchanges occurred at the public hearing organised by the Committee, under the Chairmanship of Senator Osita Izunaso, which opened an investigation into how the agreement was reviewed to a reimbursable contract sum of $5.9 billion.
Chevron and NNPC in collaboration with Sasol, a South African company, were to build a 34,000 bdp plant, using a similar improved technology to the Qatar Oryx GTL.
But the Qatar project was constructed at the cost of $1 billion, a development that got the Senate committee worried.
NNPC's Executive Director (in charge of Exploration), Mr. Chris Ogienwonyi, who represented the GMD of the Corporation, Abubakar Yar'Adua, told the committee that the increment was not in the interest of the NNPC.
He said that in all, only $2.72 billion was approved by the NNPC owing to the tension in the Niger Delta region where the project is sited.
Ogienwonyi told the committee that the delay in the project on account of the tension in the region had necessitated a shift from February 2009, which is the initial completion date, to December 2010.
But under questioning by the committee, he said the NNPC audit panel, which reviewed the contract, had discovered that Chevron unilaterally reviewed upward the contract sum without recourse to due process.
According to him, the contract was twice reviewed without the approval of the NNPC, which is a junior partner in the Joint Venture Agreement on the construction of the EGTL plant.
Shadiya, however, insisted the company wrote NNPC on the upward review of the contract sum.
According to him, "We requested for these approvals but we did not receive any approval from the NNPC; we still have the letters we wrote to the NNPC but we did not get any response from them."
He told the committee that the increment was necessitated by the the volatile situation in the Niger Delta, the depreciating value of the dollar, the need to beef up more security, training of the staff and construction of fence as well as designs at the site.
Former GMD of NNPC, Dr. Jackson Gaius Obasaki, who also appeared before the committee said that even though the project was in the interest of the country, he was not disposed to the sum of the contract and therefore, he would not have approved it.
According to him, "I would not have approved the contract at $2.7 billion when I was the GMD of the NNPC; in fact nobody would have brought it to me.
"When I was there, we did not approve any contract of such, because the logic is common; a contractor wants to collect all your monies for doing a job for you, while you, on the other side, try to make him do the job for even free; therefore, nobody would agree to award this type of contract on a total reimbursable basis.
"The danger is that the contract could run into $11 billion at the end of the day; and I don't believe that even Chevron themselves would have accepted to give such an open cheque to a contractor if they were the owners of the contract."
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I believe it is time Nigeria will start rethinking their relationships with these foreign oil companies. They are in Nigeria to steal Nigeria Blind. They could not do that in USA, why do we let these criminals insult us in our country.
Blaming Chevron is cheap, but why don’t we question NNPC for failing to respond to the mails Chevron wrote to them notifying them of the increase in the project’s cost? Where were their (NNPC or NAPIMS) representatives on the project team? Don’t they get regular reports on the progress of the project? Isn’t this the price we are paying for the ineptitude of the officials that are supposed to monitor and protect our national interest on these project teams? Isn’t it also indicative of the bureaucracy and red tapism for which NNPC and other government agencies are notorious for? The NNPC officials, but serving and retired, are trying to score a cheap one with Nigerians at the public hearing instead of burying their heads in shame for failing to have the interest of Nigerians protected. They are the ones to be held responsible!
The politicians are always quick to make comparisons with similar projects at other parts of the world where ideal conditions exist and cry murder. They will impress us better if they channel their energies into finding solutions to the restiveness in the Niger Delta instead where most of the projects are located. We would not be paying so much for these projects if the environment is conducive for the execution of the projects.
I believe it is time Nigeria will start rethinking their relationships with these foreign oil companies. They are in Nigeria to steal Nigeria Blind. They could not do that in USA, why do we let these criminals insult us in our country.