An alleged questionable recommendation on a contract under the $13.35 billion offshore Egina project by the Group Executive Committee (GEC) of the Nigerian National Petroleum Corporation (NNPC) is creating tension in the oil corporation, Sunday Vanguard can reveal.
Highly dependable sources claimed the recommendation is characterized by claims to justify the imposition of particular contractors
The NNPC GEC noted that there was the need to re-align the faulty Floating Production, Storage and Offloading, FPSO, bid evaluation process and award of the contract to the actual lowest, most competitive bidder in line with the original contracting strategy and due process requirement.
The NNPC GEC also touts Samsung’s $3.3 billion bid for the Egina FPSO as the lowest bid, whereas the bid submitted by Hyundai and duly recommended by both NAPIMS, Total and endorsed by the NCDMB is for $3.1 billion.
The NNPC GEC claims that it arrived at the $3.3 billion at a negotiated price for the FPSO ranging between 5% and 10% of Samsung’s quoted price.
The Egina main field is a 1993 production sharing contract located offshore Nigeria within OML 130 in water depths ranging 1150-1750m. The block is operated by Total Upstream Petroleum Nigeria 24% on behalf of the NNPC in partnership with Brasoil 16%, Sapetro 10%, on the PSA half side of the block and NNPC 50%.
Top level sources described the action of the GEC as frightening. “If sets a very bad precedence”, one of the source noted.
“You just can’t jettison the recommendations of both NAPIMS, Total and the NCDMB, and invite a contractor to negotiate on your own, it runs against the grain of due process. If you are not satisfied with the processes, the best thing would have been to demand a re-tender exercise,” another sources stated.
The recommendations and observation of the GEC also indicted NAPIMS, Total and the tenure of Mr. Andrew Yakubu as group executive director; exploration and production. Yakubu is the current group managing director of the NNPC .
Although the NNPC, GEC claims that $238 million (taxes, VAT, NCD) was calculated and added by Total and NAPIMS to the Samsung tender on the basis of 7% as against 6% or $186.9m and zero per cent to Hyundai, investigations revealed that Samsung did not quote taxes, VAT and NCD in its commercial bid submitted in December 2011.
Hyundai’s commercial bid however included all the taxes, VAT and NCD Fund in line with the bid requirements. The 7% represents Nigerian Withholding Tax 6% and 1% statutory contribution to NCD Fund.
The NNPC GEC also claimed that $525m was added to Samsung’s bid, while $336m was added to that of Hyundai, but failed to explain to the Board that the different additions were a result of a post-bid clarification meeting with each bidder in February 2012.
NAPIMS, Total, NNPC GMD indicted
In a submission that completely indicts all those who superintended the bids evaluation, including NAPIMS, Total and Yakubu, the NNPC group executive director in charge of exploration and production at the time, the GEC claimed that the evaluation team compromised the tender process.
“The FPSO package analysis revealed several issues and inconsistencies in the evaluation prices, especially the differences in values between the initial round and subsequent rounds of bids evaluation,” the GEC stated.
“We noted that the FPSO tender evaluation team opened negotiation process during the commercial evaluation exercise, which compromises the entire tender process where ridiculous figures were assigned to one of the two bidders in order to arrive at a conclusion.”
Our investigations further revealed that even though these submissions appear far -fetched and designed to justify the imposition of Samsung, Yakubu endorsed the indictment of his tenure as GED exploration and production.
Efforts to reach the NNPC GMD proved abortive at the time of filling this report. A text message urging him to respond was also not answered.