Senate queries Chevron Nigeria over $7.4bn contract inflation

Posted by News Express | 8 June 2016 | 2,829 times

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THE Senate, on Tuesday, commenced investigation into Escravos Gas To Liquid (EGTL) project contract which was awarded at a sum of $2.9 billion and was allegedly increased to $10.03 billion by Chevron Nigeria Limited (CNL), leaving a difference of $7.4 billion

Senate Committee on Gas, at a public hearing on Tuesday, queried reason why the company increased the contract sum without contacting its partner, the Nigerian National Petroleum Corporation (NNPC).

Senator Bassey Akpan, chairman of the committee, blamed CNL for increasing the contract sum at such magnitude, adding that with that, the company had violated the terms of the Joint Venture Agreement (JVA).

She wondered why the project, with 33,000 barrels per day capacity, would cost $10.3 billion, while a similar project in Qatar, with 34,000 barrels per day, was constructed for $1.2 billion.

According to him, investigation into the EGTL project was also done by the Sixth and Seventh Senate, while pledging that the Eighth Senate would conclude the investigation within the shortest time.

“Between 2008 and now, the project cost had risen by an additional $5 billion and this is quite worrisome.

“We need to sit down and look at the cost, it is quite astronomical for you to have the cost that was approved at $2.99 billion with a completion cost of about 10.3 billion.

“We are going to guide our decision by the venture agreement and every other related Act of the National Assembly, we would frown on anybody who breaches the law,” she said.

The committee also queried why the share ratio on the EGTL project was 75 per cent to Chevron and 25 per cent to NNPC, when all other simiter ventures between the two were 60 to 40 per cent.

However the Director, NNPC/Chevron Joint Venture, Mr Monday Ovuede, disagreed, saying the CNL never violated the agreement as it invited the NNPC on several occasions to meet and that when it was evident that the contract had to be reviewed, he notified NNPC and called for meetings of several occasions which the NNPC shunned.

He said the company was left with two choices, either to forget the over $2 billion investment and abandon the project or go ahead with it.

Senator Akpan, however, insisted that NNPC’s non response was not synonymous with a go-ahead order to CNL to increase the contract sum. (Nigerian Tribune)


Source: News Express

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