Reps probe Nigeria, IOCs joint venture projects since 1990

The House of Representatives, on Thursday, unveiled plans to investigate the structure and accountability of the Joint Venture (JV) businesses between Nigeria and International Oil Companies (IOCs) between 1990 to date.

To this end, the House resolved to set up an Ad-hoc Committee to investigate all Joint Venture (JV) operations and Production Sharing Contracts (PSCs) in the Oil and Gas sector since 1990 with a view to ascertaining whether or not the capital expenditure, operations, financials and related frameworks are within the ambit of law and Production Sharing Contracts (PSC) of the Nigerian National Petroleum Corporation (NNPC) from 1990 till date.

The resolution was passed sequel to the adoption of a motion jointly sponsored by Hon. Sergius Ose Ogun, Hon Benjamin Kalu, Hon Sada Soli Jibiya, Hon Ado Sani Kiri, Hon Isiaka Ibrahim and Hon Mark Gbillah.

In his lead debate, Hon Jibiya observed that section88 (1 & 2) of the 1999 Constitution empower the National Assembly to conduct investigations into the activities of any authority executing or administering laws made by the National Assembly.

“The House also notes that Escravos Gas-to-Liquid (EGTL) Project is a Joint Venture (JV) undertaking by the Nigerian National Petroleum Corporation (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.

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“The House further notes that 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 $10 billion.

“The House is concerned 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.

“The House is also concerned that 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 principles involved.

“The House is worried 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%), and Total (12.5%) 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 House is also worried that 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.

“The House is disturbed 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 account.”

The Ad-hoc Committee is to report back to the House within eight weeks for further legislative action.

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