Reps Investigate NNPC’s Multibillion-Dollar JV Activities

The House of Representatives decided to form an ad hoc committee to look into all joint venture activities and production sharing agreements in the petroleum industry since 1990. “Whether or not the capital expenditure, operations, financials and related structures are within the ambit of law” is what the panel is to determine.

Within eight weeks, the committee must submit a report to the House for additional legislative action.

This is based on a resolution by several House members, including Messrs. Sergius Ogun, Benjamin Kalu, Sada Soli, Ado Kiri, Isiaka Ibrahim, and Mark Gbillah, which was unanimously approved during Thursday’s plenary.

Need to Investigate the Structure and Accountability of the Joint Venture Businesses and Production Sharing Contracts of the Nigerian National Petroleum Corporation from 1990 to the Present was the motion’s title.

The sponsors emphasised that the National Assembly is given the right to investigate the actions of any authority responsible for carrying out or overseeing laws passed by the National Assembly by Sections 88(1) and (2) of the 1999 Constitution.

The lawmakers also noted that the 34,000 barrels per day Gas-to-Liquids (GTL) plant at Escravos, Delta State, is part of the Escravos Gas-to-Liquid (EGTL) Project, a joint venture between Chevron Nigeria Limited and the Nigerian National Petroleum Corporation (now Nigerian National Petroleum Company Limited).

They added that the EGTL project had a total budget of $1.294 billion when it was first planned in 2001. By the time the contract was awarded in 2005, the final approved cost had increased to $2.9 billion, and as of December 31, 2011, it had increased again to $8 billion. By the time the project was completed in 2014, the total cost had reached over $10 billion.

The motion partly read, “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 operators, cost less than $1.5bn.

“The House is also concerned that although EGTL projects are basically governed by the Heads of Agreement, Carry Agreement and the Venture Agreement in line with various legal regimes such as Companies and Allied Matters Act, Petroleum Profit Tax Act, Companies Income Tax Act 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 per cent), ExxonMobil (20 per cent), Agip exploration (12.5 per cent), and Total (12.5 per cent) under the Production Sharing Contract, now seems to be far from being a PSC arrangement as it runs foul to the relevant financial operational laws.”

It further read, “The House is also worried that the Offshore Gas Gathering System, 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.