25 January 2010

Nigeria: U.S.$43 Million Contract - Tupni May Face Prosecution

Abuja — Chairman, House of Representatives Committee on Public Procurement, Honourable Yusuf Tuggar yesterday disclosed that some top personnel of TOTAL Nigeria Upstream Nigeria Limited may face prosecution over their alleged involvement in the handling of the $43 million project in which an indigenous oil service firm, TILONE Nigeria Limited was said to have been short-changed in the award of the contract.

In the course of sorting the bids for the contract for the provision of Remotely Operated Vehicles (ROVs), TUPNI allegedly inflated the bid of Tilone Nigeria by about $10.975m to make it higher than the bid of Oceaneering Limited, the foreign firm and only competitor on the job. This action automatically disqualified Tilone which claimed it originally won the bid and paved way for the award of the contract to the foreign firm even against the advise of the board of the Nigeria National Petroleum Corporation.

Tuggar said that though some of the TUPNI personnel who were directly in charge of the Akpo Field Development project have reportedly fled the country in the wake of the scam, the long arm of the law will catch up with them if the investigations by anti-corruption agencies prove the allegations to be true.

"I think the former Executive Director (names withheld) ran away. But once he is found culpable, it is left for the Federal Government to begin extradition proceedings to bring him to face the fully weight of the law. We only recommended that the relevant anti-graft agencies investigate the allegations because it is a very serious one. It they are indicted, they will definitely be prosecuted. However, based on available evidence, we have recommended that the contract to Oceanering be revoked and given to the winner of the bid which is TILONE at the prevailing rate," he said.

It could be recalled that the House of Representatives Committee on Public Procurement indicted Total Upstream Nigeria Limited (TUPNI) over the award of the contract. The Committee in the report of its investigations into the mattersaid TUPNI's actions were in contravention of the Public Procurement Act and local content policy in the oil and gas industry in Nigeria.

Consequently, the House Committee demanded the immediate demobilisation of Oceaneering International from the project and directed Total Upstream Nigeria to comply immediately with the directive of the board of the Nigeria National Petroleum Corporation (NNPC) by awarding the same contract to Tilone Nigeria Limited at the current commercial rates and pay compensation to Tilone for the latter's undue financial exposure during the period it was denied the contract.

The report among other things, also recommended that the position of the Nigeria National petroleum Corporation (NNPC) and its subsidiary, National Petroleum Investments and Management Services (NAPIMS) in the supervision of the activities of the multinational oil firms be strengthened to enable them play their assigned roles and ensure strict compliance to due process, rule of law and the local content initiative of the Federal Government by all operators in the oil sector in Nigeria.

According to the report, "the Committee found evidence to show that the management of Total Nigeria Upstream (TUPNI) deliberately and wilfully and against best business practices, disregarded the rules and regulations governing the award of contract" for the project.

The Akpo Field Development Project on the Oil Mining Lease No. 130 (OML130)is a Production Sharing Contract(PSC) venture between the Federal Government of Nigeria (as represented by the NNPC) and Total Upstream Nigeria Limited (TUPNI).

The investigation revealed that TUPNI organised the call for tender marked: APO/CO4/05 for the provision of Remotely Operated Vehicles (ROVs) services to the Akpo Field Development Project out of which Messrs Tilone Nigeria Limited, Oceaneering International AG and SUB-SEA 7 indicated interest and were subsequently pre-qualified. SUB-SEA later opted out of the commercial bidding process and on the 13th day of June 2006, a competitive bid exercise was conducted between Oceaneering International and Tilone Nigeria Limited with the latter emerging the winner.

However, based on a controversial process of "normalising" the bid process, TUPNI recommended to the NNPC to award the contract to Oceaneering International as the "lowest bidder". Tilone alleged that before the completion of the tendering process, TUPNI in the course of its own independent evaluation "fraudulently added" or "normalised" the bid of Tilone by adding hereto various sums totalling $10.975m (Ten Million, Nine Hundred and Seventy five Thousand US Dollars) in order to make its (Tilone's) submission appear higher than its competitor in the bid.

Also, without waiting for the response from the NNPC, TUPNI went ahead and awarded the contract to Oceaneering International and in the process pre-empted the NNPC Board decision of April 25, 2007 instructing them to award the said contract to Tilone.

This prompted a protest by Tilone and resulted in series of letters to the NNPC, urging it as the regulatory agency monitoring the activities of the oil firms to ensure compliance with the rules and regulations guiding the industry.

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