NNPC: AKK Pipeline Contract Not Inflated


Emmanuel Addeh in Abuja

Nigerian National Petroleum Corporation (NNPC) yesterday dismissed the allegation that Ajaokuta-Kaduna-Kano (AKK) gas pipeline project was inflated to the tune of $1.527 billion.
The corporation, which listed the due processes the project underwent before final approval, described the allegation as false, baseless and unfounded.

A statement issued yesterday in Abuja by the corporation’s Group General Manager, Group Public Affairs, Dr. Kennie Obateru, said NNPC was considering instituting legal actions against the medium that published the allegation and its collaborators.

He said the corporation brought the ‘unfounded’ accusation to the attention of the Bureau for Public Procurement (BPP), which rejected the speculative analysis of the online medium as false and not portraying the true position of BPP’s report on the subject.

“This is clearly a concocted analysis aimed at attacking the character of the Group Managing Director (GMD) of NNPC, Mallam Mele Kyari, and the integrity of the Bureau of Public Procurements (BPP).
“Kyari did not become the GMD until July 2019 and he is being mentioned in a process that took place in 2017 by the account of the publication.

“This is rather unfortunate and malicious, considering that a further cut of $300 million of the contract value was achieved under the Kyari-led NNPC management leading to the recognition by the Federal Executive Council as an unprecedented action,” it stated.

The statement explained that BPP, following a detailed review and analysis of the procurement bid confirmed that the unit costs for line pipes adopted by NNPC for the project were reasonable when compared with current market prices for 40”, 36”, 20” and 14” steel pipes.
It added that it was on that basis that BPP confirmed and granted a certificate of no-objection dated August 11, 2017.

NNPC stated that AKK project underwent a transparent and open competitive tender process that resulted in the emergence of the most competitive bidders, wondering how a competitive tender process could be inflated.
“Approval of all relevant authorities was obtained after intense scrutiny by the various agencies. This is a deliberate attempt to mislead the Nigerian public with baseless information,” the statement added.

The corporation said AKK pipeline project was one of the key landmark projects with transparent processes from inception to date, adding that the entire evaluation was carried out by NNPC and Infrastructure Concession Regulatory Commission (ICRC).

The corporation cited the various stringent due process reviews and scrutiny, internally and externally, which AKK pipeline project went through.

According to the oil corporation, they include the conduct of project bankability study, at project’s conception in 2013, undertaken by Standard Chartered Bank to confirm appetite for attracting financing from international community and execution of project feasibility and Front End Engineering Design (FEED) by a reputable international company, ILF of Germany, in 2014.

“The details developed at this phase had enough engineering design details to enable a competitive class of estimate to be submitted by the contractors,” it said.

It listed other processes as the advertisement of the project in both local and foreign print media in 2013, while after completion of the FEED study by ILF in 2015, the pre-qualified bidders were issued tender documents.
It stated that the competitive tendering and evaluation of the bids by both NNPC and transaction advisers, Alpine and also by a team from ICRC, extensive review of the project design and the final cost in 2017 by the BPP, culminated in the issuance of a ‘Certificate of No Objection’ in August 2017.

NNPC added that it received due process certificates for the project, including Original Business Case and Final Business Case from ICRC and Local Content Compliance Certificate from Nigerian Content Development and Management Board (NCDMB) before presenting to the Federal Executive Council (FEC) for approval in December 2017.

It added that there was a renegotiation of the contract when financing was not to be provided by the contractors following a stalemate due to the inability of the company, awarded the contract to progress financing in 2019, leading to a further cut of $300 million of the contract value under the Kyari-led NNPC.

The corporation stated that it set up a steering committee in July 2020 comprising key project stakeholders as NNPC, Ministry of Finance, Ministry of Justice, the Central Bank, Debt Management Office, Nigeria Extractive Industries Transparency Initiative (NEITI) and a representative from the presidency to ensure transparency in the implementation of the project.

NNPC stated that after several failed attempts in the last 13 years to commence AKK project activities, the leadership of Kyari, within one year of stewardship, brought the project on track, leading to the award of the contract at a competitive price and eventual flag-off of construction in June.