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Energy: Lawmakers raise concerns over $10.7bn gas-to-liquids JV project

House of Represenatatives in a Session

*The House of Representatives’ Committee on the Joint Venture of the NNPC Limited has raised concerns about the review of the cost of the project from $2.9billion to $10.7billion

Isola Moses | ConsumerConnect

The House of Representatives Committee, in the National Assembly (NASS) Tuesday, October 4, 2022, in Abuja, FCT, raised questions over the implementation of the  Escravos gas-to-liquids (EGTL) Gas Project in Nigeria.

The committee said the project which should cost 2.9 billion dollars was quoted as 10.7 billion Dollars, agency report said.

The Committee on the Joint Venture (JV) of the NNPC Limited, raised concerns when the Management of Chevron Nigeria Limited appeared before the lawmakers in NASS.

Nigeria’s oil and gas hub in the Niger Delta region

Hon. Hassan Fulata, Chairman of the Committee, demanded an explanation and the reasons behind the review of the cost of the project from $2.9 billion to $10.7 billion.

Fulata said that a similar project was executed  in Qatar for less than $2.5 billion within a very short period.

The Federal legislator stated that the NNPC limited should have protested against the cost review and demanded a value-for-money audit.

Responding to the concerns raised by the lawmakers, Mr. Monday Ovuede, Chevron’s Director of Joint Venture,  told the committee that several factors caused the upward review of the cost of the project from the initial $2.9 billion to $10.7 billion.

Ovuede also explained that immediately after the project was signed, prices of commodities, such as  oil and steel increased, thereby necessitating an upward review of the project.

Chevron, he  agreed to a value-for-money audit despite not having it in the contract for the project.

The Chevron Director of Joint Venture stated: “This is a very complex technology to be executed in this part of the world. “When project construction started in 2005— coincidentally, if you check the record, commodity prices, including that of oil and steel started rising in the international market.

“The project was given as engineering, procurement and logistics, which means the sum was fixed. In the course of executing the contract, the contractors came back.”

In respect of the Qatar project, Ovuede explained that the project was built in an industrial complex with a seaport and access to an international airbase.

There was access to skilled labours compared to Nigeria, but such skills were hard to come by, said he.

Ovuede further said: “The plant in Qatar is built in an industrial complex close to a seaport and there is an international airbase there.

“It has access to skilled labour from Europe, when you come to our side, we try to build—for some of the technology, we had to develop the local labour to the level required to implement the project.”

In spite of the explanations, the legislators remained dissatisfied and requested for documents to back the claims.

Rep. Ibrahim Isiaka, subsequently, moved a motion for Chevron to submit a written response justifying the increment.

In his ruling, Fulata alleged that Chevron was claiming capital allowance for the project without capital importation or a certificate to make such a claim.

He ruled Chevron should appear again on Tuesday, October 11 with relevant documents to defend its claims, according to report.

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