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Reps probe oil contracts at Shell

By Tordue Salem
ABUJA — The House of Representatives has begun investigating a petition filed against Shell Petroleum Development Company(SPDC), on alleged manipulation of the tendering process for provision of catering services in fifteen locations.

The House Committee on Public Petitions led by Rep. CID Maduabuabum (PDP/Nnewi/Ekwusigo-Anambra),stated this while hearing the petition from the SPDC caterers under the umbrella of Association of Oil Producing Catering Contractors.

In the petition to the Speaker, House of Representatives, Mr. Dimeji Bankole, the group alleged that Shell had purposely bypassed its standard bid process to manipulate fifteen catering contracts.
The bids, it was gathered, went on inspite of an order by the Nigerian National Petroleum Corporation (NNPC), a joint venture partner that they be put on hold.

NNPC had in a letter with reference NAP/GM/MMD/JV04.18, dated January 8, 2010 rejected requests by Shell for approval of payment for the 15 catering contracts under the Cash Calls agreement.

Here are excerpts of the letter: “We cannot endorse the unilateral action taken by SPDC as contained under reference because these contracts have not received NNPC management endorsement and the approval of NNPC Executive Board. Consequently, requests by SPDC for payment of Cash Calls incurred on these contracts will be borne 100 percent by SDPC”.

The contractors, through their lawyers, Chief Chucks Mpama, alleged that Shell had in 2006,   “Introduced a strange and new system to aid their preferred bidders” are asking the Speaker to recommend the cancellation of the bid results and conduct a fresh bid.

“The mode of award of Shell contract is on the basis of the lowest bidder. Prior to this time, the bid process of Shell used to be transparent in that all the contractors had equal access and level playing field First, there will be pre_qualification, followed by technical bid from Shell. Secondly, any contractor who passes the technical bid will have their facilities visited by Shell for inspection.  Contractors who technically qualify will do the job based on commercial bid.

“In 2006, shell adopted their known procedure but at the end of the exercise, the lowest bidder was not awarded the contract. The whole exercise was aborted because their preferred contractor did not win. In spite of protests and complaints, Shell did not bulge.

“In 2008, Shell introduced a strange and new system to aid their preferred bidders. First Shell went to commercial bidding straight as against the pre_qualification, technical bid, inspection of facilities before commercial bid.

Secondly Shell directed all the contractors to register within two weeks with NIPEX and that whosoever was not able to register within two weeks is out, even when Shell is aware that it was almost absolutely impossible for any contractor to complete registration within two weeks.

“Thirdly, on November 14, 2008 or thereabout, Shell invited all the contractors to Port Harcourt and urged them to follow the new procedure, even when the bid documents were not in NIPEX system until November  that is, less than 24 hours to submit to 15 tenders. It is a stipulation of the tender process that all bids must be by electronic means and that November 28, 2008, is the closing date for the submission of the bid” he alleged.
The group told the Committee on Public Petitions that the manipulation of the bid process had generated a lot of controversy in the industry.

But the Group Executive Director, Exploration and Production, NNPC, Mr Philip Chukwu,  who didn’t give details of the bid process, said the industry had recently put in place a unified bid system known as NIPEX to streamline tenders in the industry.

Asked by Maduabum about the possibility of an authourised person tampering with submissions of contractors before the official opening of tenders, Chukwu said although the system has a recording device to detect such access, the organisation had not verified the claims of the contractors yet.

Shell was however absent at the hearing which was also attended by representatives of the Ministry of Petroleum Resources.


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