Re: Reps Query NNPC’s $49m Refinery Integrity Test Contract, By Adewole Kehinde




NNPC Towers, Abuja

The Nigerian National Petroleum Company (NNPC) Limited used to be in the eye of the storm in the past due to indictments on transparency and accountability that were directly linked to top managers as well as government executives. But since the assumption of office of the management under Mal Mele Kolo Kyari, the NNPC management has been anchored on Transparency, Accountability, and Performance Excellence (TAPE).

Recalled that Mal Mele Kolo Kyari had explained that while the transparency component of the agenda was aimed at maintaining a positive image and sharing values of integrity and transparency with all stakeholders, the accountability leg of the campaign would assure compliance with business ethics, policies, regulations, and accountability to all stakeholders.

In terms of the two-prong item of performance excellence, Mele Kolo Kyari said the idea was to entrench a high level of efficiency anchored on the efficient implementation of business processes, which would also place an appropriate reward system for exceptional performance among the workforce.

On Thursday, June 23, 2022, the House of Representatives queried the 2019, 49 million dollar contract for integrity testing on Nigerian refineries awarded to Technimont Company by the Nigerian National Petroleum Company Limited.

At a meeting with the company and NNPC officials on Thursday in Abuja, Ganiyu Johnson, the chairman of the House ad hoc committee investigating the state of the refineries, issued the query.

Hon. Johnson said that the company had failed to execute the contract properly as the state of the refineries was not verified.

He also blamed the NNPC for failing to undertake regular turnaround maintenance on the refineries, leading to their current poor state.

He asked the company and the NNPC to submit the contract documents, especially the approval by the Federal Executive Council and payment proofs, including the level of work done, to the committee for scrutiny.

As someone who has been monitoring the activities of the NNPC Limited since the assumption of Mal Mele Kolo Kyari as the company’s GMD, I can say that the award of PHR rehabilitation was transparent as due process was followed in the award of the contract.

It is a matter of public knowledge that the management of the company under the leadership of Mal Mele Kolo Kyari has demonstrated an impeccable capacity for transparency and accountability in the operation of the National Oil Company.

It is unnecessary to highlight that the processes and procedures leading up to the bid cum tendering exercise for the award of the PHRC Rehabilitation EPC contract have not only remained in the realm of public scrutiny but have been heavily subjected to all statutory provisions as provided in the Public Procurement Act and with all relevant agencies of government carried along.

The NNPC Limited requested approval in October 2016 to engage Original Refinery Builders (ORB), JGC Corporation, to rehabilitate the Port Harcourt Refining Company (PHRC) to optimal performance and commercial profitability.

JGC Company instead proposed a joint execution approach and thus nominated Messrs. Tecnimont SpA Italy (TCM) as its representatives on the rehabilitation project.

The submissions by Messrs. Technimont were extremely exorbitant as a result of that single sourcing strategy used. Therefore, NNPC sought and obtained President Buhari’s gracious approval on May 22, 2020, for the change of strategy from Original Refinery Builders (ORBs) to selective tendering of global reputable EPC companies, including the ORBs, to tender for the refinery rehabilitation projects.

The NNPC Tenders Board (NTB) on Friday, June 19, 2020 approved the shortlist of 30 Global Reputable EPC Companies, including the ORBs; ranked by a globally recognised resource tool of the Refining and Petrochemical Middle East for the selective tendering of the EPC phase of the PHRC Rehabilitation Project. (https:/www.refiningandpetrochemicalsme.com/lists/top-30-epc-contractors-2019).”

At the deadline of bid submission, 10 companies responded to the prequalification request, of which Messrs. Linde Engineering and Messrs. Chiyoda Corporation declined to participate in the tendering process, while Messrs. DAEWOO Engineering and Construction only indicated interest as a sub-contractor.

Only seven EPC companies made submissions and their bids were virtually opened and endorsed via Microsoft Teams/Zoom on Friday, July 24, 2020 in the presence of the bidders, Infrastructure Concession and Regulatory Commission (ICRC), Bureau of Public Procurement (BPP), Nigeria Extractive Industries Transparency Initiative (NEITI) and other internal NNPC stakeholders.

The bids were, thereafter, evaluated in line with the approved evaluation criteria by the approved evaluation sub-committee (inclusive of an external representative) from July 27th to July 29th, 2020. A cut-off mark of 75 per cent was required to progress to the next stage of the tendering process.

The NNPC Limited explained that NTB approved the seven underlisted EPC companies to progress to the technical/Unpriced and commercial phases, which include: TechnipFMC, Saipem, Marie Tecnimont, Hyundai Engineering Company Ltd, Petrofac, Tecnicas Reuinidas, and Worley Parsons.

A Certificate of “No objection” to the contract strategy was requested and obtained from BPP on August 14th, 2020.

The technical/unpriced and priced commercials were published to the EPC companies on the 14th of September 2020 with a bid closing deadline of November 23rd, 2020.

A total of four EPC companies declined further participation arising from their inability to submit competitive tenders for a variety of reasons, including challenges with their sub-contractors, the COVID-19, and the tight bid submission period.

Following clarification meetings held with the bidders, the bid closing deadline was extended to November 30, 2020. During the tendering process, 12 clarification requests were received from the bidders and responded to accordingly. However, due to requests from the bidders for the submission of alternative bids, the ITT document was amended to accommodate alternative bids and communicated to the bidders. Furthermore, the PHRC Technical Audit Report was shared with all the 7 EPC companies as well.

At the bid submission deadline of November 30th, 2020, only one company, Messrs. Technimont, submitted a proposal for the Refinery Rehabilitation.

The submission of a proposal by just one company was considered not satisfactory by NNPC.

NNPC Management, in line with the PPA 2007, approved the re-tender of the project to all the prequalified 7 EPC companies with a bid submission deadline of January 7, 2021, to enable NNPC to have a competitive commercial offer and also to ensure transparency and fairness of the process and to all bidders.

From the foregoing, it could be seen that the insinuation that the NNPC Limited “had failed to execute the contract properly as the state of the refineries was not verified” was nothing but a figment of the imagination of the House ad hoc committee investigating the state of the refineries, which, clearly, lacks any understanding of the ongoing process and refused to educate themselves nor get an update on the current position of things; all in an attempt to malign the reputation of the company and its capable leadership.

As the NNPC submits the contract documents to the House ad hoc committee investigating the state of the refineries, the company and its leadership should not be deterred and should remain focused on the pursuit of excellence and taking the company to greater heights.

Adewole Kehinde is the Publisher of Swift Reporters and can be reached via 08166240846, 08123608662, [email protected]

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