•House investigates alleged breach of local content in $2.6bn AKK project
By Emmanuel Addeh and Adedayo Akinwale
The increase in the pump price of petrol has become imminent as Brent crude oil, against which Nigeria’s oil is benchmarked, was up $1.10, or 1.7 per cent, closing at $66.34 a barrel yesterday.
It had earlier hit a high of $66.79 mainly prompted by optimism over the COVID-19 vaccine rollouts and lower output.
The gains by the commodity, whose sales supply a large percentage of Nigeria’s foreign exchange has continued even as the country awaits the outcome of the meeting between President Muhammadu Buhari and state governors over the pricing of petrol tomorrow.
The Nigerian National Petroleum Corporation (NNPC), the sole importer of the product, had last week assured the nation that there would be no increase in February until negotiations with labour were concluded.
However, the corporation had told the labour and government’s negotiating teams that the expected open market price of the product was N206 per litre.
As at that time, the oil price at the international market was $63.
But the corporation has continued to bear the extra cost as the product is still being sold between N165 and N168 per litre.
On Monday, the Minister of Labour and Employment, Dr Chris Ngige, said the meeting scheduled to discuss the issue would determine the next line of action, stressing that the governors needed to be carried along.
When the oil price hit $60 and the landing cost of petrol estimated at N186.33 per litre, the Minister of State, Petroleum Resources, Mr. Timipre Sylva, had asked the country to prepare to bear the pains of the expected increase.
The federal government had said it had deregulated the downstream sector, and that prices would thenceforth be tied to among others, to the international price of crude oil.
However, yesterday’s crude oil price rise was partly as a result of information that shale oil producers in the southern United States could take at least two weeks to restart the more than two million barrels per day (bpd) of crude output that shut down because of cold weather, as frozen pipes and power supply interruptions slowed their recovery.
Goldman Sachs Commodities Research had raised its Brent crude oil price forecasts by $10 for the second and third quarters of 2021, citing lower expected inventories, higher marginal costs to restart upstream activity and speculative inflows.
The Wall Street bank expects Brent prices to reach $70 per barrel in the second quarter from the $60 it predicted previously and $75 in the third quarter from $65 earlier.
Meanwhile, the leaders of the OPEC+ alliance, Saudi Arabia and Russia may once again clash over oil supply management ahead of another crucial meeting of the group next week.
OPEC’s top producer and de facto leader, Saudi Arabia, would likely prefer the March 3-4 meetings to decide that the OPEC+ coalition holds production flat in April, Bloomberg has reported.
However, the key Saudi partner in the deal, Russia, will likely be pushing for further easing of the production cuts, especially as Russian Deputy Prime Minister Alexander Novak said earlier this month that the global oil market was balanced and that the current price of oil reflected this market situation.
Therefore, the two leaders of the pact are once again going into an OPEC+ meeting with diverging views on how to manage supply to the market.
“Oil producers need to remain extremely cautious as uncertainty on the market is still very high, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said last week.
Saudi Arabia, through its extra cut of one million barrels per day (bpd) in February and March, has helped the efforts of the OPEC+ alliance to tighten the oil market in the first quarter, while demand is still relatively weaker, especially outside Asia.
The extra Saudi cut has been one of the factors that have supported the oil price rally in recent weeks, however, analysts reckon more OPEC+ members, especially Russia would likely push for a more aggressive easing of the cuts from April.
House Investigates Alleged Breach of Local Content in $2.6bn AKK Project
Meanwhile, the House of Representatives Committee on Nigerian Content Development and Monitoring has commenced the probe of alleged violation of the Local Content Act by Brentex Consortium in the ongoing construction of the $2.6 billion Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project.
The committee chaired by Hon. Legor Idagbo, has summoned the Corporate Affairs Commission (CAC), Bureau of Public Procurement (BPP) and Infrastructure Concession Regulatory Commission (ICRC) to appear before it at the next sitting.
He directed NNPC, Brentex/CPP, Bablinks to bring all documents related to the contracts as well as all agreements between parties involved within one week for further legislative action.
The committee also directed the Clerk to write to CAC to provide it with details of owners of the companies involved in the project contract.
An advocacy group, Local Content Advocacy and Monitoring Group, had in a letter dated February 2, 2021, addressed to the Speaker, Hon. Femi Gbajabiamila, alleged breach of local content in the award/execution of the Kaduna -Kano section of the Ajaokuta to Kaduna gas pipeline project awarded to Brentex/CPP Consortium.
The letter read: “Mr. Speaker, we wish to draw your very esteemed attention to the implicit violation of the Nigeria Local Content Act in the ongoing execution of the 40″×318.6 Km (BVS12-Kaduna-Kano Section) of the Ajaokuta to Kaduna to Kano Gas Pipeline Project (AKKP) Segment 2 being a contract awarded by the NNPC on behalf of the Nigerian government in 2015 to Brentex CPP.”
The petitioners alleged that some Chinese companies were brought in to lay the pipes that could have been done by Nigerian operators.
It was based on this petition that the companies involved and the Nigeria National Petroleum Corporation (NNPC) were invited to appear before the committee.
In his presentation at the meeting, the NNPC Chief Operating Officer (COO), Gas and Power, Mr. Yusuf Usman, said the contract was awarded to the Brentex/CPP consortium, which brought in Bablink Resource Limited, adding that all the terms of the contract have complied with the Local Content Act.
Usman, who represented the Group Managing Director (GMD), Malam Mele Kyari, said although Brentex/CPP is the main contractor, the NNPC does not dictate how the company delivers the contract or who it engages in the execution of the contract.
Also speaking, the Executive Vice Chairman, Brentex Nigeria Ltd, Mr. Sani Abubakar, said Brentex is a 100 per cent- owned Nigerian company, which was awarded the gas pipeline contract in line with local content laws.
Abubakar said: “We are here to say the facts, naked facts. I didn’t know the larger aspect of this hearing was about my relationship. I am starting with myself. If we have known, our responses would have been more pronounced.”
Briefing journalists at the end of a meeting, the Lead Solicitor of Local Content Advocacy and Monitoring Group, Mr. John Lebor, called on the House to compel NNPC and a Chinese Company, CPP Consortium to take away China Content from the $2.6 billion Ajaokuta- Abuja- Kaduna-Kano Gas Pipeline Project (AKK) to promote Nigerian local content.
Lebor said the Group was going to petition President Muhammadu Buhari to call NNPC to order to ensure that the project reflects Nigeria’s local content to avoid capital flight, stressing that Nigerian companies were folding up and the $2.6 billion can help resuscitate them.
He noted that at the award of that project, NNPC and BPP insisted that there must be a local content company with the capacity and Bablinks Nigeria Limited was the company that has that local content capacity in the sense that they have done a lot of pipeline projects in Warri with Shell and they are one of the best in the country.
Lebor stressed that Brentex Consortium, being a company without experience in oil and gas pipeline entered into partnership with Bablinks.
He added: “The due process document that was produced by the Bureau for Public Enterprise that was taken to the Federal Executive Council to approve this contract, clearly specified that Brentex should be responsible for procurement of the pipelines while Bablinks should be responsible for construction and engineering services. So as technical partners, after they entered the agreement, they now removed Bablinks.
“If Bablinks was not part of the due process, there would have been no local content that the contract would have been awarded. So, because of the impact of that, it means that we went to China. Remember that the Brentex Consortium brought in the Chinese Company CPP because they claimed to be the company financing but when they came in, fraudulently they told NNPC we don’t have the money, bring in the Chinese government. So, CPP was used to bring in the Chinese Government. The Chinese Government now offered loans to us at inhumane sovereign guarantee.”
Lebor insisted that China is not doing Nigeria a favour, because the money borrowed to execute the project would be paid back within 10 years.