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Senate moves to probe local content, cost variations of Total Egina oil field

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By Henry Umoru

ABUJA—THE Senate, yesterday constituted an ad hoc committee to local content elements  and cost variations relating to the deep offshore Egina Oil Field Project and two related Bonga South-West and ZabZaba projects in which Total Upstream Nigeria Limited, TUNL is currently the major contractor.

Senate chamber

According to the Senate, the probe became imperative because it observed  that at inception, the project was estimated to cost $6 billion, but has undergone several cost variations that currently put its cost at over $6.352 billion today.

It said the key component of the Egina Project – the Floating Production, Storage and Offloading (FPSO) vessel, has been completed and is currently on sea to Nigeria.

The FPSO contracted to the Korea–based Samsung Heavy Industries (with LADOL Integrated Logistics Enterprise as the local content partner) it is expected to arrive Nigeria from Korea before the end of the year – 2017.

Decisions of the Senate yesterday were sequel to a motion by Senator Solomon Adeola, APC, Lagos West and entitled, “The Legislative Investigation of Local Content Elements and Cost Variations relating to the Egina Oil Field and other related Projects.”

It was co- sponsored by 18 other Senators.

The resolution to set up the Committee was unanimously adopted by the Senators after it was put to a voice vote by Senate President Bukola Saraki.

The Senate also mandated the committee to as part of the investigation, carry out a public hearing on the project, and ensure that there were no future changes necessitating further variations of the project cost.

The ad-hoc committee to probe the local content, has Senator Solomon Adeola as Chairman, with Senators Godswill Akpabio; Tayo Alasoadura; Gershom Bassey as members.

Other members of the Committee are Senators Kabiru Marafa; Philip Aduda, Bassey Albert Akpan; Ahmadu Abubakar; David Umaru; Chukwuka Utazi, and Stella Oduah.

Speaking further, Saraki who charged the committee to take the investigation seriously, said that the allegations were enormous and should not be treated with levity, adding “I find it difficult to understand why cost variation will move from 6 billion dollars to 16 billion dollars in 10 years. Why such variations and when will the Federal Government ever get revenue on these fields.

“We allow this to go with the Egina project, other deep offshore will follow the same model and government will never get the revenue. The second issue is to ensure compliance with the local content law. The committee has the responsibility to turn in the report  as soon as possible. We do not want the report to linger on.

“Please ensure you are done in three weeks so that by the time we resume we will consider the report and be able to address other projects that are going on.”

He urged members of the committee to ensure utmost transparency in order to unravel the truth.

In the motion, Adeola, who is Chairman of Committee on Local Content, said various contracts were awarded for various components of the Egina project.

He expressed concern that many of the contractors handling the projects were found to have engage sub-contractors to provide various aspects of the project’s components.

He said that the Egina project was expected to comply with the provisions of the Nigerian Oil and Gas Industry Content Development Act of 2010.

Adeola stated that the project managers were expected to award required contracts to Nigerian companies, engage local power and provide adequate manpower training and development programmes for the Nigerian workforce.

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