How Foreign Companies Rip $1.9 Billion In Violation of Nigerian Content Law

How Foreign Companies Rip $1.9 Billion In Violation of Nigerian Content Law

Egina Probe: How Foreign Companies Rip $1.9 Billion In Violation of Nigerian Content Law – Engr. Simbi Wabote

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By, Uchechukwu Ugboaja

The Executive Secretary of the Nigerian Content Development Monitoring Board (NCDMB), Engr. Simbi Wabote have admited that fully fledged foreign owned companies have benefitted from contracts in the ongoing Total Egina Deep Sea Project up to the tune of $1.9 Billion which is a clear contravention of the Nigerian Content Act of 2010.

He made this revelation while appearing before the Senate Ad-Hoc Committee on Investigation in the $16 Billion Total Egina Deep Sea Project which have been marred by several variations which are yet to be finally cleared by the Senate.

In his words, “We have several companies that have run foul of this act and have handled contracts worth about $1.9 billion and we have discovered that this companies are 98% foreign owned which is in contravention of the Local Content Act 2010 which prescribes at least a 51% Nigerian ownership.”

How Foreign Companies Rip $1.9 Billion In Violation of Nigerian Content Law

The Executive Secretary also stated that why this situation persists is due to the lack of capacity by Nigerian owned companies to procure or manufacture mainly the steel equipment required to handle the project.

He further said that what the NCDMB does in such a situation where foreign owned companies bid for these contracts is to grant them a waiver in lieu of a Capacity Development Initiative (CDI) which falls under what he described as Propriety Technology.

“If a certain required raw material does not exist in the country a company will request for a CDI to carry-on with the project, and as for the Egina Project there is no existing steel companies in the country so we depend on these foreign companies to provide the steel,” he said.

He also added that when Nigerian Content started 90% of our local contractors were briefcase contractors without any known or established background in the field they represent, with most of them having unverifiable addresses outside the country.

When the Chairman of the Ad-Hoc Committee Senator Adeola Solomon asked the E.S if any due diligence has been carried out since the inception of the Egina Project as the NCDMB is the statutory body established by law to ensure compliance of the Nigerian Content Law.

The Bayelsa state born Engr. responded by saying that the NCDMB only has the powers to monitor the performance of the Act and not to enforce it but he added that if the NCDMB goes full hog with implementing the laws we will stop oil & gas business in Nigeria. He cautioned that local content is not a sprint but a marathon because in the local content attainment the board can proudly say it has achieved 50% of its target in the Total Egina Project but we can still do more with the support of the legislature in the overall NCDMB target.

“We have the law but it is being taken advantage of in several areas which means we must review it for better compliance, Local Content Act is about domiciliation and domestication so I can say that on the Egina Project the strategy of domiciliation has been achieved.

“We have always been carrying out what we call compliance review and in the process discovered many infractions as most companies have been defaulting especially as expatriate quota applications granted have been flagrantly violated, however I believe that with the new Executive Order signed by Mr. President it will drastically reduce such incidences in the future.”

He therefore suggested the need to amend the Local Content Act to enforce sanctions for breaches without any long drawn litigation process adding that he will forward the various infractions to the committee as a guide in possible amendment of the law.

The Senate committee however requested to have a copy of the waivers granted by the board and documented infractions made so far on the Egina Project so as to guide the Senate in the proposed amendment to the current act which has so far proven to bear too many lacunas exploited by foreign companies.

Senator Albert Bassey made a startling revelation when he pointed out that a certain company whose website indicates its interest in laundry services, ticketing, transport, education and supply of stationeries also benefitted from a subcontract in the Egina Deep Sea Project up to the tune of $70 million and wondered actually if a proper due diligence was done by the NCDMB and other government agencies involved in the transaction.

The Senate Ad Hoc Committee also made another ground breaking revelation during the course of this Egina investigations, as H.E Senator Godswill Akpabio asked the GGM NAPIMS, Mr. Roland Ewubare about what happens to the gas component of the Egina Project as too much emphasis was placed on oil.

The GGM’s response was quite elucidating as he revealed that an un-utilised $400million proceed from sale of gas in a similar earlier project, the Bonga Deep Sea Oil Project exists in an excrow account.

The committee Chairman Sen. Adeola further requested to know from Mr. Roland Ebuware, the fate of gas fallout of the 200,000 barrel per day Egina Oil project as so far only the crude oil aspect is in public domain.

The GGM stated that offshore gas are mostly covered by what he called the PSC services agreement as the gas belongs to Nigeria 100%, but that there is no particular agreement between Nigeria and Total for the gas component and because the gas belongs to Nigeria there is no incentive for the developer to develop the gas component noting that gas is very expensive to develop than oil.

According to him, “What we need now is a global type of philosophical concept on what we actually want to derive from gas even beyond the Egina Project because money from gas PSC can fund our budget deficit.”

Mr. Ebuware said no agreement is in place on what to do with the proceed of the gas from the project which is to be piped to Nigerian Liquefied Natural Gas (NLNG) company other than putting it in an escrow account adding that a similar ongoing project, the Bonga Deep Sea Oil Project already have $400million in an Escrow account waiting for a detail agreement on sharing formula between the Nigerian Government and the International Oil Companies (IOCs).

He regretted that since no agreement is in place for such sharing the fund is just lying idle just as it is expected that similar proceeds from Egina will also lie idle until an agreement on the sharing formula is arrived at adding that the Senate can come in through legislation or other instruments to ensure that such huge funds are utilized for developmental purposes.

Senator Godswill Akpabio( PDP, Akwa Ibom North West) who is the vice chairman of the Committee expressed the collective shock of all members of the committee that such huge funds have remained un-utilized for developmental purposes due to lack of agreement stressing that in an era of serious budget deficits year in year out, such funds should have come handy in North East Development Commission, or the Second Niger Bridge as planned by the Federal Government.

Senator Adeola reiterated the need for a holistic amendment of the Local Content Act of 2010 in light of the various discoveries of the committee if the Act is to achieve its aim of allowing Nigeria to benefit from the Oil and Gas industry and prevent leakages of our foreign currency adding that such amendment will also include broadening the law to include manufacturing, ICT and construction industries.

How Foreign Companies Rip $1.9 Billion In Violation of Nigerian Content Law



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