Controversy rocks $8.4 million Gas Project …Top Presidency, NNPC, NGC Officials named …NNPC says award process was transparent

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The award of an $8.4 million Alaoji Gas pipeline power plant project by the Nigeria Gas Company (NGC), a subsidiary of the Nigeria National Petroleum Corporation (NNPC), is currently ruffling feathers in the NGC, NNPC and the Presidency. There are strings of allegations trailing the firm that is handling the project, Nestoil Plc, including the criteria used in the award by the NGC management, and that the contract is patently flawed and inflated.

But one of the parties, NNPC, has insisted that due process was followed in the award of the multimillion dollar project. Spokesman, Levi Ajuonuma, in a statement made available to on Tuesday described those making the allegations as “disgruntled contractors”, adding “ the management of the corporation took all relevant measures in ensuring that transparency ensued all through the award process” learnt that this contract was re awarded after the initial deal failed after four years. The initial contract was awarded in 2006, to TABA Nigeria Limited under current minister of state for works, Chris Ogiemwonyin. He was NGC Chief Executive. learnt, Taba which is alleged not to have vast knowledge of gas projects won two contracts: Gas project to Alaoji and the Gas project to Papalanto, both cost $65 million. The failure of Taba to complete the initial project after collecting full payment, is also causing some worries in some quarters. learnt that President Goodluck Jonathan's Senior Special Assistant(Special Projects), Akachukwu Nwapkor, Chairman NESTOIL, Ernest Obijezi, and retiring NNPC's Executive Director (Power and Gas), V Mukoro (retires in December 2010), and Ogiemwonyin, are the principal actors in the controversial gas pipeline contract.

Aside from allegations that Nestoil was the only firm that bided, gathered that NNPC was hoodwinked by Mukoro to approve the award. It was learnt that while Nestoil wanted $18.5 million for the job, an in-house cost estimate by the NNPC put it at $7.5 million. At the end of negotiations, $8.4 million was approved. It is being alleged that Nestoil has never built any gas pipeline and that the $ 100 million project it is handling for Shell petroleum Development Company (SPDC), is for an oil pipeline.

NNPC however disagreed saying “ …after the bidding process, Nestoil emerged as the contractor with the requisite experience to handle the project more so when the same company handled the pipeline project for Shell Petroleum Development Company, in the same area”

It was learnt that the original project cost for Alaoji awarded to Taba was $30 million. This included detailed engineering, design, supply of line pipes, and metering stations. However the portion Nestoil is supposed to handle which covers two stretches of pipeline: 24 inch x 25 km, and 18-inch x 4.5 km., originally cost $4 million but allegedly hiked to $8.4 million.

The allegations were contained in a petition by some anonymous citizens with the tagged 'Concerned Citizens (Senior NNPC Staff), made available to, with copies to President Goodluck Jonathan, the Economic and Financial Crime Commission (ECFF), Independent Corrupt Practices Commission (ICPC), Petroleum Minister and the Special Adviser to the President on Power. The petition dated August 18, 2010 said “technically this contract is flawed.”

“The 18 inch gas supply in question is to come off the old 12 inch Imo River-Aba gas pipeline. This does not make any technical sense viz, I, 180-inch line is being built to take gas from the existing 12-inch line . The 12-inch line is a Low Pressure (LP) line built in the 1960's to deliver gas to Aba industries ( Aba textile Mills Nigeria Breweries, International Equitable Industries, ) This line is an LP line and is very old with suspect integrity.”

Ii , The power stations requires higher pressure to operate and the quantity of gas from the old line will not suffice for the requirement.”

The NNPC which reiterated that the contract was rewarded on the directive of the Presidential Committee on power headed by VP Namadi Sambo, said “ it is astonishing that at a period when the Nigeria oil and gas industry is bracing up to imbibe the full benefits of the new Nigeria content policy, which was recently backed by apt legislation , somebody somewhere is bent on perpetuating the pull him down syndrome will do us no good…contractors wishing to do business with NNPC should desist from adopting cheap blackmail tactics “