NLNG Train 7: Senate Accuses Shers of Sidelining Nigerian Firms in $10bn Contract

Deji Elumoye in Abuja

The Senate has accused the Italian oilfield services company, SAIPEM, of deliberately circumventing the country’s Local Content Act by sideliining Nigerian manufacturers in the bidding for a $10 billion contract awards as provided for in the law.

The upper legislative chamber through its Committee on Local Content chaired by Senator Teslim Folarin, yesterday accused SAIPEM of misleading Nigeria when it claimed in its approved Nigeria Content Plan that it would source 100 per cent of steel required for the project locally.

The Senate committee also alleged how SAIPEM undermined Nigeria’s extant laws when it decided to import steel from manufacturers in South Korea and Italy and in the process overlooked Nigeria’s manufacturers in the multi- billion dollar contracts and in flagrant violation of the Local Content Act.

In its defense, SAIPEM, in a presentation by the Managing Director of Saipem Contracting Nigeria Limited, Guido D’Aloisio, exonerated the company of any liabilities saying it acted on the instruction of the client, Nigeria Liquefied Natural Gas (NLNG).

The MD noted that all it did was within the scope provided by NLNG which allowed it to source for highly specialised steels not available in Nigeria from outside the country.

According to him, the arrangement was within the finance export scheme between NLNG, South Korea and Italy.

Not satisfied with the arguments canvassed by SAIPEM, the Senate Panel was forced to demand from the Managing Director, to provide more information about the foreign finance institutions that will further help it in its investigation.

The Senate Panel also raised concern over the size and capacity of SAIPEM’s steel fabrication yard in the country to be certain it meets the minimum requirement of 10, 000 metric tonne per annum.

Even when SAIPEM said its steel fabrication yard in Port Harcourt has a capacity of 26,000 metric tonne per annum; the Senate Panel refused to take its words for it; insisting on taking an inspection tour of the facility for a first hand assessment.

The other query centred on award of $1.7 million and another $1.36 million contracts to two foreign companies, Dovan and KAO as sole vendors for the company.

While SAIPEM explained that the two companies were selected based on old existing relations and performance, the Senate picked holes in the arrangement saying it was in gross violation of Section 15 of the Local Content Act which emphasizes competition and not arbitrary or unilateral selection.

Also yesterday, the Senate Committee walked out the Deputy Managing Director of Daewoo, Yong Jong and the rest of his management team over alleged infractions in its management positions.

According to the Senate Panel, the position of the Deputy Managing Director should be occupied by a Nigerian citizen as specified in the Local Content Act.

Efforts by Daewoo officials to reverse the Senate position failed to yield any appreciable result as the team was asked to go with an instruction to return on a future date with its substantive Managing Director.


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