NNPC rejects $1.53bn AKK contract inflation claim, says process transparent
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September 8, 2020764 views0 comments
The Nigerian National Petroleum Corporation (NNPC) has debunked reports that its newly signed project, the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project was inflated to the tune of $1.527 billion. The national oil company described the accusation by an online medium against it as “false, baseless and unfounded.”
A statement in Abuja by Kennie Obateru, the corporation’s group general manager, group public affairs, said, the AKK pipeline project was one of the key landmark projects that have had transparent processes from inception to date, with the entire evaluation exercise carried out by it (NNPC) and the Infrastructure Concession Regulatory Commission (ICRC).
It explained that BPP, following a detailed review and analysis of the procurement bid, confirmed that the unit costs for line pipes adopted by the NNPC for the project were reasonable when compared with current market prices for 40”, 36”, 20” and 14” steel pipes; adding that it was on that basis that BPP confirmed and granted certificate of no objection dated August 11, 2017.
The state-owned oil company said the AKK project underwent a transparent and open competitive tender process that resulted in the emergence of the most competitive bidders, wondering how a competitive tender process could be inflated. “Approval of all relevant authorities were obtained after an intense scrutiny by the various agencies. This is a deliberate attempt to mislead the Nigerian public with baseless information,” the company said.
Additionally, NNPC said there was extensive review of the AKK design and its final cost in 2017 by the Bureau of Public Procurement (BPP), culminating in the issuance of a ‘certificate of no objection’ in August 2017.
There was receipt of due process certificates for the project, including original business case and final business case from ICRC and local content compliance certificate from the Nigerian Content Development and Management Board (NCDMB) before presenting the project to the federal executive council (FEC) for approval in December 2017. A stalemate due to the inability of the company awarded the contract to progress financing in 2019 led to renegotiation of the contract when financing was not to be provided by the contractors. This led to further cut of $300 million off the contract value under Mele Kyari-led NNPC management, the NNPC spokesman said.
He said, a steering committee was set up in July this year by Kyari, comprising key project stakeholders such as: NNPC, ministry of finance, ministry of justice, the Central Bank of Nigeria, Debt Management Office, Nigeria Extractive Industries Transparency Initiative (NEITI) and representative from the Presidency, to ensure transparency in the implementation of the project.
NNPC stated that after several failed attempts in the last 13 years to commence the AKK project activities, Kyari brought the project on track under a year, leading to the award of the contract at a competitive price and eventual flag-off of construction in June this year.
According to Obateru, the national oil company was considering instituting legal actions against the medium and its collaborators; stating that the corporation brought the unfounded accusation to the attention of the BPP which rejected the analysis of the online medium as speculative, false, and not portraying the true position of BPP’s report on the subject.
“This is clearly a concocted analysis aimed at attacking the character of the Group Managing Director (GMD) of NNPC, Mallam Mele Kolo Kyari, and the integrity of the Bureau of Public Procurements (BPP). Mallam Mele Kyari did not become the GMD until July 2019 and he is being mentioned in a process that took place in 2017 by the account of the publication. This is rather unfortunate and malicious, considering that a further cut of $300 million of the contract value was achieved under the Mele Kyari-led NNPC management, leading to the recognition by the Federal Executive Council as an unprecedented action,” the NNPC spokesman said.