House of Representatives yesterday resolved to probe all the Joint Venture businesses and Production Sharing Contracts (PSCs) of the Nigerian National Petroleum Company (NNPC) from 1990.
It decided to set up an ad-hoc committee to undertake the probe and report to the House within eight weeks and report back to the House for further legislative actions.
The committee is expected to ascertain whether or not the capital expenditure, operations and other related issues are within the ambit of the law..
This followed the adoption of a motion by Sergius Ogun and five others on the need to investigate the NNPC joint ventures and PSCs from 1990 to date.
The House noted that the that Escravos Gas-to-Liquid (EGTL) Project is a Joint Venture (JV) undertaking by the NNPC and Chevron Nigeria Limited for the construction of a 34,000 barrels per day (BPD) of gas-to-liquids (GTL) plant at Escravos, Delta State.
According to the House, a total of $1.294 billion was earmarked for the EGTL project in 2001 and “by the time the contract was awarded in 2005, the final approved cost rose to $2.941 billion, which was further increased to $8.6 billion as at 31st December 2011, and upon completion in 2014, the total project cost was over $10billion.”
The parliament expressed concern that the ETGL and its JV projects are executed at such huge costs when similar projects in other jurisdictions like Qatar, which have the same capacity, technology, Engineering Procurement and Construction (EPC) Contractors and even operators cost less than $1.5 billion.
“Although EGTL projects are basically governed by the Heads of Agreement (HOA), Carry Agreement (CA) and the Venture Agreement (VA) in line with various legal regimes such as Companies and Allied Matters Act (CAMA), Petroleum Profit Tax Act (PPTA), Companies Income Tax Act (CITA) in principle, there is a breach of the principle involved.”
The House expressed worry that the Bonga field (OML 118), which is owned by the NNPC but contracted to SNEPCO (55%), ExxonMobil (20 per cent), Agip exploration (12.5 percent), and Total (12.5 percent) under the Production Sharing Contract (PSC) now seems to be far from being a PSC arrangement as it runs foul to the relevant financial operational laws.
“The Offshore Gas Gathering System (OGGS) which was designed to gather gas from various upstream projects in the Niger Delta region under a PSC and JV arrangement with companies such as SNEPCO, SPDC, NLNG has now become mired in some operational misunderstandings.”
It noted that it is disturbing that “in the brewing misunderstanding, SPDC and SNEPCO allegedly went into certain gas sales and sharing arrangements without the prior knowledge and/or consent of the federal government via the NNPC, which has resulted in certain shortfalls in revenue into the federation accounts.”
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