Why Government Should Cancel$260m Usan Oilfield Project- NCF

Yemisi Izuora/Ijeoma Agudosi
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The development of Usan oil field is facing development challenge as the $260 million contract was awarded by ExxonMobil’s Esso Exploration and Production Nigeria Limited,has been challenged for not following due process.

The award of the contract is said to have been done without any open competitive bidding which violates Section 16(1) (c) and (d) of the Public Procurement Act (PPA) of 2007 and is punishable under Section 58 (c) of the PPA.

Raising the issue to contest the procedural misconduct the Nigerian Content Front (NCF) has therefore called on the Minister of State for Petroleum, Ibe Kachikwu to cancel the project.

The NCF has also reiterated its earlier threat to drag Esso and the National Petroleum Investment Management Services (NAPIMS), a subsidiary of the NNPC to the Economic and Financial Crimes Commission (EFCC) over the said contract, which was allegedly awarded without tendering process.

In a press statement by the groups President-General, High Chief Ebikabowei Ezoukumor and the Secretary, Mr. Young Tari, the group commended Kachikwu and President Muhammadu Buhari for their anti-corruption efforts.

The group however noted that NAPIMS admitted that in October 2014, Esso being also the Operator of both Erha/Erha North fields (in Oil Mining Lease (OML) 133) and Usan Field (in OML 138) wrote a letter to NAPIMS requesting for engagement of a subsea intervention vessel (Maersk Nomad) operated by GMT Energy on Erha North field on a single-source basis.

The group cited NNPC’s recent clarification that the then NAPIMS management reviewed Esso’s request and approved for two years firm plus one year optional extension.

The Bayelsa-based group wanted to know if it is a transparent procurement process for Esso to write to NAPIMS nominating a singular contractor and seeking approval from NAPIMS for a sole sourced contract of millions of US Dollars to be awarded to this company without tendering.

“Does Esso’s internal procurement process permit such an action that is everything but fair and transparent? What was the criteria used by Esso to GMT Energy Services Limited to NAPIMS to provide the Subsea Intervention vessel Service? Is it their track record or experience in rendering such services or are there other self-serving motives?,” the group queried.

On the claim by Esso that Maersk Nomad was contracted at a lower cost than the re-negotiated rate for the BE802 Vessel, which ESSO posits that a saving of $1.2 million will be realiSed over a two year period with Maersk Nomad vessel, the group argued that ESSO never contacted the bona fide contractor handling the project to re-negotiate the contract for the one year extension of January, 2016 – January, 2017 contracting period.

According to the group, the last negotiation that was done with the contractor was for the contracting period ending January, 2016.

On the claim by NAPIMS that the contract for Subsea Intervention Vessel single-sourced to GMT (Maersk Nomad) was not approved by NNPC, the Bayelsa-based group argued that “if the contract was not approved by NNPC, but the former NAPIMS Management went ahead communicating their approval to Esso to award the contract to GMT Energy Resources Limited, it behoves on the new NAPIMS management to address the illegality by communicating to Esso  withdrawing its approval and not perpetuating illegality by condoning the illegal actions of the former management. You cannot build upon a foundation of illegality.”

“How about the issue of the three NAPIMS memos to Esso conveying this approval that was said that have the same reference number, (NAP/PSC/MM/07.01), but dated 13th October, 2014, 10th February, 2015 and 16th April, 2015 respectively? This indicates that all three memos did not go through a secretariat or document register in NAPIMS and confirms that someone in NAPIMS just sat on his desk and typed and signed these memos that were sent to Esso (Exxonmobil),” the group added.

The group also stated that it is instructive to note that NNPC in its defence did not refute this allegation, but rather claimed that it was an action by the last NAPIMS management.

“What has the corporation done about this fraudulent act?,” the group said.

The NNPC had also stated that in January 2016, the Group General Manager in charge of NAPIMS had called for a meeting with ESSO in his office where NAPIMS made it clear that if ESSO unilaterally cancels the contract, ESSO will solely bear all incidental costs and cost of the replacement service, and such costs will be non-recoverable.
The Bayelsa-based group said it looks to all discerning Nigerians that NAPIMS took a very weak position in this matter.

“Should a regulatory public institution like NAPIMS representing the interest of the Nigerian State not have the authority and boldness to insist that its position be followed by Esso (Exxonmobil)? Should NNPC not investigate this incidence and deal with anyone implicated in this infamous contract award saga of $260m by NAPIMS and Esso (Exxonmobil) without the approval of the NNPC? ,” the group added.

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