By Ikenna Omeje
The Nigerian National Petroleum Corporation (NNPC) on Tuesday dismissed the allegation that the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project was inflated to the tune of $1.5 billion, describing the accusation by an unnamed online medium against it as false, baseless and unfounded.
The national oil company noted that the award of the gas pipeline project followed due process, adding that it was considering instituting legal actions against the medium.
This was contained in a release issued by the Corporation’s Group General Manager, Group Public Affairs, Kennie Obateru,
NNPC stated in the release that the corporation brought the unfounded accusation to the attention of the Bureau for Public Procurement (BPP) which completely rejected the speculative analysis of the online medium as false and not portraying the true position of the 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 Kolo Kyari, and the integrity of the Bureau of Public Procurements (BPP).
“Mallam Mele 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 $300million of the contract value was achieved under the Mele Kyari-led NNPC Management leading to the recognition by the Federal Executive Council as an unprecedented action.”
The release explained that BPP, “following a detailed review and analysis of the procurement bid, confirmed that the unit costs for line pipes adopted by the NNPC for the project were reasonable when compared with current market prices for 40”, 36”, 20” and 14” steel pipes”.
The statement added that it was on that basis that BPP confirmed and granted certificate of no objection dated August 11, 2017.
NNPC stated that the AKK project underwent a transparent and open competitive tender process that resulted in the emergence of the most competitive bidders. It wondered how a competitive tender process could be inflated.
“Approval of all relevant authorities were obtained after an intense scrutiny by the various agencies. This is a deliberate attempt to mislead the Nigerian public with baseless information,” the statement exclaimed.
NNPC said the AKK pipeline project was one of the key landmark projects that have had transparent processes from inception to date, with the entire evaluation exercise 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 the AKK pipeline project was subjected to.
According to the corporation, “these include a project bankability study, conducted at project’s conception in 2013, undertaken by Standard Chartered Bank to confirm appetite for attracting financing from international community”.
“There also was 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.”
The NNPC said there was also advertisement of the project in both local and foreign print media in 2013, “and competitive tendering and evaluation of the bids by both NNPC and transaction advisers, extensive review of the project design and the final cost in 2017 by the BPP, receipt of due process certificates for the project.”
It listed other steps to include “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, and formation of a Steering Committee in July 2020 by Mallam Mele Kyari 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 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 the AKK project activities, “the leadership of Mr 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 that the world witnessed in June 2020.”