Home News $16bn Egina probe: NASS to amend Local Content Act

$16bn Egina probe: NASS to amend Local Content Act

ABUJA— THE Senate has said it will amend the Nigeria Oil and Gas Industry Content Development, NOGICD Act, 2010, noting that the existing law was not achieving the aims for which it was enacted.

The decision of the Senate was reached by the Ad-Hoc Committee currently investigating local .content and cost variation on the $16 billion Egina Deep Sea oil project.  The committee is led by Senator Solomon Olamilekan Adeola (APC, Lagos).


Disclosing the need by the Senate to amend the Act, Senator Adeola declared that investigations by the lawmakers had shown loopholes in the local content law being exploited by foreign companies with some local collaborators.

He said: “From what we are discovering in this investigation, it is clear that the Local Content Act is not achieving much result, with Nigeria losing billions in expatriated hard currency and not much local skill or transfer of technology taking place.

‘’We have a case of award of a contract of $42 million to a supposedly local company by Total Upstream Nigeria Limited under the Egina Project, with Total making direct payment to another foreign company on behalf of the local company in just a pipeline procurement contract without the money passing through the Nigerian company.”

“This is unacceptable and is a way of circumventing the NOGICD Act. It is apparent that indigenous companies are just being used as conduit pipe when they are used at all.”

According to him, the committee has made discoveries of “unqualified foreign companies” like NOV Oil and Gas Nigeria Limited cornering multi-billion dollar contract that should ordinarily go to Nigerian companies from Total Upstream, while various kinds of suspicious variations of original contract sums running into millions of dollar are embedded in the Egina Project. According to him, it is either the regulatory mechanism under NOGICD is not embracing or there are collusion to undermine its efficacy.

He said the new amendment to the Act would seek to place final approval for projects and its execution under the NOGICD Act in the National Assembly to ensure strict compliance, adding that from revelations so far, many things were being done wrongly to the benefit of International Oil Companies, IOCs, and a few local collaborators.

A member of the committee, Senator Chukwuka Utazi (PDP, Enugu) who revealed that before becoming a senator he was part of the civil society group that fought for the passage of NOGICD Act, regretted that from what was being revealed, it seemed that what Nigeria had succeeded in doing was to get local collaborators with IOCs to fleece Nigeria of its resources.

He said  if Nigeria companies cannot benefit from what he described as mere procurement contracts, it was unlikely it would benefit from technical aspects of the oil and gas industry contracts.

During the proceeding, Mr. Mario Lagunes, the Managing Director of FMC Technologies Nigeria Limited, a Mexican, who got a subsea pipe contract varied from $1.3billion to $1.6 billion on the Egina Project, told the committee that his Nigerian company is 100% owned by a parent company in Netherland and that its dividends were paid to the offshore owners.

The committee, however, frowned on a situation where three quarters of FMC Technologies Limited procurement were purchased abroad with approval of regulatory bodies in flagrant contravention of the NOGICD Act.

It will be recalled that Senate’s Resolution to investigate Egina Project was passed to ensure that Nigeria derive benefits from the project as well as avoid lapses that may be discovered in two similar offshore projects, namely Bonga Southwest, Aparo and Zabazaba, that are on stream to come up in the industry.

Other companies involved in the Egina Project that appeared before the Committee and requested to re-appear with Total Upstream Nigeria Ltd and Samsung Heavy Industry (SHI) this week include Dorman Long Nigeria Limited, AVEON, Bell Oil and Gas Services Ltd, EWT Services Ltd and DUCO Technic Offshore Ltd.

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