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Author Name: Ifeanyi Izeze
Number of articles: 174

Before the current Petroleum Minister, Mrs Diezani Allison Madueke is allowed to go, she and her... (0) Comment



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Contract Scam: Why Is Agip Bigger Than Nigerian Govt?
Author: Ifeanyi Izeze | May 02, 2015



Before the current Petroleum Minister, Mrs Diezani Allison Madueke is allowed to go, she and her NNPC/NAPIMS should tell Nigeria why Nigerian Agip Oil Company (NAOC) should disregard directives from the nation's apex oil concern and the major partner in the NNPC/NAOC/Conoco Philips joint venture in the controversial award of contracts for the maintenance of OB/OB, Kwale and Ebocha gas plants and ever since no punitive or even legal action was taken against the Italian transnational not even a warning note.

Is it not suspicious that the minister folded her hands and pretended to be helpless while the Nigerian Agip Oil Company (NAOC), a subsidiary of the Italian energy giant, ENI, conducted its operations with flagrant disregard not only to several Court orders but also to laid-down statutes that govern activities in Nigeria's oil and gas sector? What does this say about the seriousness of the NNPC in ensuring proper things are done especially as pertains the monitoring and checkmating the activities of the transnationals like Agip that glaring manipulates every sense of decency and ethics in obeying the guiding legislations in the sector?

Going by various correspondence between Agip, General Electric International Operation Nigeria (GEION), Nigerian Petroleum Investment Management Services (NAPIMS) and Arco, the Board of NNPC awarded a five-year contract (2006 -2011) to Nuovo Pignone (now GE) together with Arco Petrochemical Engineering Company Plc, a wholly-owned Nigerian company as the local Technical Partner, for the maintenance of the OB/OB, Kwale, Ebocha gas plants.

The Nigerian Agip allegedly changed the contract terms and awarded the same contract to General Electric through its Nigerian subsidiary- GEION. Arco which was used as a local technical partner in the original arrangement was reduced from being a partner to a sub-contractor. It should have been clear to NNPC and the Nigerian Content Board that this and similar improprieties by NAOC and GE against local firms were outright schemes to frustrate the local content law which sets to encourage and strengthen serious and credible Nigerian service companies in the oil and gas sector.

This same spirit if impunity was what vexed a Federal High Court sitting in Port Harcourt last week to ordered the Managing Directors of Agip and Plantgeria Company Limited, Mr. Insula Massimo and Mr. P. L. Carrodano respectively to appear before the court on Monday, April 27, to tell the court why they should not be committed to prison for disobeying the order of the court. Not only were the chief executives officers alleged to have disobeyed the order of injunction by the court, they also allegedly avoided service of the court order.

The court had in an order of injunction made on 3rd February, 2015 restrained Agip and/or its agents from awarding or taking any step to award to any company or individual, except Arco pending the determination of all issues as contained in: Suit NO.FHC/PH/CS/02/2015 filed by Arco on the dispute.

As declared, “And the Court having ruled this third day of February 2015; It is ordered as follows:

The defendants by themselves or by their agents, workers, servants or howsoever be and are hereby restrained from awarding or taking any step or steps to award to any person, company or firm except to the plaintiff company, any contract whether designated as interim, stop-gap, 4+1 years, or howsoever described, for the maintenance of Gas Turbines and Rotating Equipment at first Defendant's OB/OB, Ebocha and Kwale gas plants, pending the hearing and determination of the motion on notice for order of interlocutory injunction.”

Meanwhile, Agip despite the subsisting court injunction went ahead to award the contract to Plantgeria Nigeria Limited to maintain the gas plants and equipment, which were the subject matter of the suit by Arco. As a result of the award which in gross disobedience to the court order staff of Plantgeria moved into the premises of the gas plants on March 13 for the purposes of taking inventory and ultimately taking over the services of the gas plants and ejecting Arco from the plant. Carrying on with its impunity, this same Agip had single-handedly awarded a covert month-on-month Purchase Order on this same job to its global alliance partner- General Electric and has been paying $425, 980.58 (Four Hundred and Twenty-Five Thousand, Nine Hundred and Eighty Fifty Five Cents) for every two days and this has been running since February 26th 2013 in a secret or rather classified contract signed by Giovani Salvin, General Manager District for NAOC and Harry Webster, Regional Business Leader- Sub Sahara Africa, for GE International Operations Nigeria (GEION) on 26th February 2013.

Extracts from the template of the running illegal contract reads: “Now Therefore, in consideration of the mutual covenants and agreements hereafter provided", it is agreed as follows:

“Terms of Contract- Agreed terms of reference as per Revision No. 1 Contract No. 4500008870 for one additional year extension."

“Duration of Contract: From 04/02/2013- 05/02/2013, for a total of two days"

“Commercial Conditions: Daily Rate of USD 212, 990.29.”

So for every two days, Agip pays GE USD425, 980.58 (Four Hundred and Twenty Five Thousand, Nine Hundred and Eighty Dollars and Fifty Eight cents). The scheme was to criminally keep the fee below USD500, 000.00 (Five Hundred Thousand US Dollars) by splitting it into daily rates so as to beat the ceiling set by the guiding rules of the Joint Venture with NNPC which requires all contracts from USD500, 000.0 and above to be submitted to NAPIMS for vetting and approval.

You see the fraud of an American firm conniving with its Italian partner in Nigeria. The Purchase Order arrangement between Agip and GE which is not backed by the Law of this Land, has led so far to the payment of over US$250 million (Two Hundred and Fifty Million United States Dollars) or about N50 billion (Fifty Billion Naira) to the global alliance without recourse to joint venture appropriation and approval.

Meanwhile the contract the Italians have refused to sign with the Nigerian firm, Arco, stands at about $40 million per annum for the same job. So what cost is Agip talking about? Is this not an outright provocation of Nigerians especially when the issue is not about technical competence of the Nigerian firm?

It is very painful that there is so much deceit by NAOC in this matter which ordinarily would have been resolved long ago. For instance, Agip's representative at a meeting convened by the Department of Petroleum Resources (DPR) on Thursday 24th August 2014, told the gathering that “no letter of offer for a Stop-gap or interim contract had been issued to Plantgeria, the company NAOC claimed was the winner of the bid for the ‘4+1' replacement contract.

Meanwhile, Plantgeria Company Limited in its advertorial published in The Guardian newspaper of Monday 25th August, 2014 said it had received a letter of “Interim Agreement” from NAOC. It is ridiculous that Plantgeria in its newspaper advertorial also cited the “fairness or transparency of the selection process” that picked it as the bid winner.

What transparency and fairness does the company mean? Can Plantgeria tell Nigerians the actual position of its bid in terms of cost effectiveness and technical capability if that is the argument they want push? The truth is that these Italians in Agip carry on as if they are above the Nigerian law for only one reason- the influence of Gen Danjuma in the Jonathan government.

Truth be told, Plantgeria Nigeria Limited is an Italian company with Gen T. Y. Danjuma and his younger brother as Nigerian partners. The ‘closeness' of the Taraba-born General to the government of President Jonathan and the Petroleum minister Diezani Allison Madueke is an open secret to oil industry players and watchers of the sector and it shows the level of rot in our oil sector where a few bulls are just running rampage dirtying everything about decency in what goes on in the sector. Plantgeria came last in terms of technical qualification in the bid for the job and in terms of cost-effectiveness, the company came fourth.

If the selection was truly based on saving cost, what happened to the first, second and third other more cost-effective bidders before Plantgeria? Truth is bitter but anyhow, it must be said. Bringing in Plantgeria Nigeria Limited as a local content replacement of Arco in the maintenance service contract of the OB/OB, Ebocha and Kwale Gas Plants was a mischievous gambit by Agip to obfuscate issues in the dispute and cause more confusion so that the Italian transnational and its American globalisation ally can continue to defraud the NNPC in the joint venture under the guise of GEION being the technical partner in the Plantgeria contract.

In essence, since Plantgeria has zero technical capacity to handle any gas turbine repairs or servicing job, but because of its Italian connection in the global alliance with General Electric, Agip invariable wants to bring in Plantgeria as a local content cover to continue servicing its anti-Nigerian content bond with General Electric in their global alliance. How can we as a country allow these foreign operators covertly drain the nation of such huge amount of money with impunity? Are these companies above the Laws of this Land?



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