Local Content Board lied on receipt of complaints from Arco, Nigerian firm sidelined by Agip

The Nigerian Content Development and Monitoring Board, NCDMB, lied when it claimed not to have received complaint from Arco, an indigenous firm sidelined by Nigeria Agip Oil Company, NAOC, PREMIUMT TIMES can authoritatively report.

The NCDMB spokesperson, Obinna Ezeobi had last week told this newspaper that the board had not received any complaint relating to a contract dispute between Arco and its Joint Venture partners.

In a telephone conversation, Mr. Ezeobi said, “We have not received any complaint from Arco on the matter you are talking about.

“If Arco has a case like the one you are talking about, it should have written to us and we could have been in a position to check whether there is an infringement of the Nigerian law.”

But PREMIUMT TIMES has since found that the aggrieved indigenous oil firm wrote to the NCDMB on May 9, 2013 complaining of attempts to sideline it by Agip and GEION in the stop-gap maintenance deal.

The letter titled, “Actualizing Local Content Development in Nigeria – A Brief on Arco’s Experience in the Nigeria Agip Oil Company Maintenance Contract Service at OBOB/Kwale/Ebocha Gas Plants,” was addressed to the Executive Secretary of the board, Ernest Nwapa.

Part of the letter reads, “We write to present our complaints as well as express our support and deep appreciation for the good work the Nigerian Content Development Monitoring Board, NCDMB, has been doing to create awareness of the existence of the local content law.

“It is our intention here to provide you with a brief on our travails in the hands of General Electric, GE, over the Nigeria Agip Oil Company, NAOC maintenance service contract for the rotating machines at Obob, Kwale and Ebocha gas plants for your intervention.

“We are doing this for the following reasons: It is a study that exposes a crafty scheme to frustrate and circumvent the enforcement of the local content development law; GE’s plan to keep a perpetual hold on running of the contract in question.

“The Local Content Act provides us with the responsibility to grow local capability and take advantage of the opportunities it has created.

“We recognise that some foreign companies who until now have made substantial profits from marginalizing of local workforce may require a nudge to comply. Redress is available through the NCDMB.

“We appreciate your time and effort required to examine the attached brief and the accompanying document with a view to redressing the matter. We look for an opportunity to clarify any questions you may have on the document we have provided.”

The follow-up letter dated June 3, 2013 was more instructive as Arco gave clear information on how the JV partners lied about the claims they made during a meeting with the board.

The letter reads in part, “We wish to update you on the development between Arco and ION in respect of the stop-gap contract for the maintenance of Obob/Kwale/Ebocha Gas plants.

“GEION did not sign off the Memorandum of Agreement, MoA by Friday, June 24, 2013, contrary to presentation made to you at our above referenced meeting and in accordance with the directive of JV partners.

“By 4.10pm on Friday, May 24, 2013, which was the deadline for us to sign the MoA as directed by the JV partners, GEION requested for a meeting with Arco. It presented a new proposal that added a new layer of GEOIN’s supervision to the work relating to the 19 trains that have been ceded to Arco, contrary earlier agreement with the JV partners.

“In the minutes of the JV’s meeting of February 13, 2013, signed by all parties – NAPIMS, NAOC, GEION and Arco, a key summary resolution states as follows: ‘In order to boost local content in the contract and enhance capacity building, Arco would be in complete control of some identified units while other units will be run as per existing framework.

“We have, therefore, rejected this layer of supervision in the MoA as a late addition by GEION to foist its agenda of masking local capability contrary to the JV objective of increased local content.”

Given the contents of the two correspondences with NCDMB, it was surprising that Mr. Ezeobi feigned ignorance of the dispute among the JV partners.

PREMIUM TIMES had exclusively reported how Agip and GEION had sidelined Arco in the Stop-Gap maintenance contract for its gas plants.

The JV maintenance contract for the Agip’s facilities located in Bayelsa and Rivers states was first awarded in 2006 to GEION and Arco.

The two companies executed the contract based on terms mutually agreed to by the JV partners.

At the expiration of the contract in 2011, negotiations were opened for a short-term or stop-gap maintenance service contract pending the award of a fresh 4+1 year contract.

But two years after the expiration of the JV contract, Agip has failed to engage Arco for the stop-gap maintenance of the gas plants despite repeated advice by the NNPC.

Pressed by the national oil firm to adhere to the country’s local content law which makes it mandatory to cede a number of dedicated units of the gas plants for exclusive maintenance by the indigenous firm, GEION signed a Memorandum of Agreement, MoA with Arco in July 2013.

In the MoA, GEION agreed to abide by the nation’s local content policy of ceding dedicated facilities to the indigenous firm.

Years after signing the agreement, the company is yet to allocate a single unit of the facilities to Arco for maintenance.

Instead of adhering to its agreement with the local firm, this newspaper found that NAOC and GEION exploited a lacuna in the JV agreement which enabled them to offer the maintenance of the facilities to Plantgeria Company Limited through Purchase Order arrangement.

Plantgeria Company Limited is said to be partly owned by a former top military brass from Taraba State and some Italian investors.

It was incorporated in 1981 as logistics/technical support and mechanical services provider in the Nigerian oil and gas industry.

Under the superfluous Purchase Order arrangement, PREMIUM TIMES learnt Agip has already paid a whooping $182 million (N29.5 billion) to GEION in a deal that is not backed by any law in Nigeria.

It was also found that NAOC and GEION have consistently rebuffed NNPC’s directive to operate within the laws of the land.

In two separate letters addressed to Agip, one of the JV partners, the NNPC through the National Petroleum Investment Maintenance Services, NAPIMS, strongly frowned at the deliberate attempts to sideline Arco in the maintenance deal.

In a letter dated January 5 and referenced NAP/GD/GM/84, the NNPC firmly insisted that NAOC should urgently enter into negotiations with Arco.

In another letter dated March 4, the NNPC drew the attention of one Guglielmo Orecchi to its directive on the Six Months Contract Extension on the Global Maintenance of Rotating Equipment for OB/OB and Kwale Gas Plants.

While making reference to an earlier letter from Agip dated February 14, the NNPC disagreed with the decision of the Italian firm to offer interim maintenance contract to its proposed bid winner for the substantive contract.

In that letter, the NNPC gave reasons for supporting Arco’s involvement in the deal to include high cost and excessive manpower required under the PO for the maintenance of the gas facilities.

Part of the letter reads, “Please be advised that NAPIMS cannot support an interim contract award to an entity based on a tender process that is yet to be concluded.

“We, therefore, reiterate that the interim contract be negotiated with Arco Petrochemical Company Limited based on the manpower loading that was earlier agreed.

“Please convene a meeting urgently to negotiate the contract for a six month extension while we are trying to resolve the issue of the substantive replacement contract,” concluded the letter signed by Fidel Pepple on behalf of GGM, NAPIMS.

Similar letters were sent to NAOC on April 14 and 24 respectively.