An oil firm, Saipem Contract Nigeria Ltd, allegedly breached Nigeria’s local content laws.
The Senate Committee on Local Content on Wednesday, grilled the Nigerian Content Development and Monitoring Board (NCDMB) over an alleged breach of local content laws by a foreign oil company, Saipem Contracting Nigeria Limited.
Saipem, an Italian multinational oil company currently serves as a principal contractor in a $10 billion gas project – the Train 7 project.
The project, owned by the Nigerian Liquid and Natural Gas (NLNG) Company, is expected to boost the nation’s gas capacity by 35 per cent.
It is a dual-feed project with one consortium made up of three companies, including, Messrs Saipem, Daewoo and Chyonda, all involved in the delivery of one feed.
Saipem was accused of not only breaching local content laws but also failing to involve indigenous companies in the processes of awarding contracts on the NLNG Train-7 project.
The allegations were contained in a petition to the Senate President, Ahmad Lawan, and the Independent Corrupt Practices and other Related Offences Commission (ICPC) in June 2021.
The petitioner, Messrs Moboluwaduro Abimbola, also claimed that the Nigerian Content Plan for the Train-7 project was approved and that a Certificate of Authorisation had been issued by the NCDMB in March 22, 2019.
He explained how Saipem allegedly created a strange system which “exclude qualified Nigerian companies in the bidding and award process of contracts” – against the local content laws.
This prompted the Senate, through its committee on Local Content, to begin investigation.
Previous hearing
Prior to Wednesday’s investigative hearing, the panel had invited officials of Saipem, alleging that the oil company undermined Nigeria’s extant laws by importing steel from manufacturers in South Korea and Italy and overlooking Nigeria’s manufacturers in the multi-billion dollar contracts and in flagrant violation of the Local Content Act.
The Managing Director of Saipem, Guido D’Aloisio, had said it acted on the instruction of NLNG and also within the scope provided by NLNG – which allowed it to source for highly specialised steels not available in Nigeria from abroad.
The arrangement, he said, was within the finance export scheme between NLNG, South Korea and Italy.
But an unsatisfied panel asked the MD to provide more information about the foreign finance institutions that could aid the investigation.
Another query on the award of $1.7 million and another $1.36 million contracts to two foreign companies, Dovan and KAO as sole vendors for the company was laid before Mr D’Aloisio.
After he explained that the two companies were selected based on old existing relations and performance, the panel said it was gross violation of Section 15 of the Local Content Act which emphasises competition and not arbitrary or unilateral selection.
Investigative hearing
At the hearing on Wednesday, which was done behind closed doors, the panel questioned officials of the NCDMB on the queries raised so far.
Chairman of the committee, Teslim Folarin (APC, Oyo Central), had summoned the Executive Secretary of NCDMB, Simbi Wabote, for a meeting on the perceived regulatory negligence.
Shortly before the executive session, he informed the panel of the reasons for the hearing, expressing disappointment at the outcome of the previous meeting with the MD of Saipem.
“SAIPEM appeared before this committee in December last year on alleged violations of local content laws in the execution of the $10billion Train 7 Project without any convincing defensive submissions.
“The management of the construction firm failed to defend any of the allegations made against it by the petitioners as far as adherence to local content laws is concerned.
“Failure of SAIPEM to speak convincingly on the petitions, led to the appearance of management of NCDMB before us today being the regulatory agency monitoring the implementation of the local content laws,” he said.
Same was the panel’s testimony after the executive session which lasted over two hours. The lawmakers said the submissions were “unsatisfactory.”
Addressing journalists after the session, the Deputy Whip of the Senate, Sabi Abdullahi (APC, Niger North), who is also the vice chairman of the committee, said NCDMB is to re-appear before the panel on next Tuesday.
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“Submissions made by the Executive Secretary of NCDMB before the committee at the closed door session, were unsatisfactory by grossly lacking in facts and figures.
“In ensuring thoroughness on investigation of allegations made against SAIPEM and by extension, regulatory negligence on the part of NCDMB, the committee has directed the agency to re-appear before it next Tuesday.
“We are being cautious in coming up with report on the investigation because issues involved are very sensitive to the nation’s economy and development,” he said.
While officials of NCDMB are expected to appear before the panel next week, it is unclear if officials from Saipem will be invited as well.