How NPDC lost $36m in five years – Group

A non-governmental anti-corruption group, Youth Coalition for Change (YCC), has petitioned the Group Managing Director (GMD), Nigeria National Petroleum Corporation (NNPC), Dr. Maikanti Baru, over alleged loss of over $36 million by the National Petroleum Development Company (NPDC) through faulty procurement process.

The group claimed it estimated that the faulty procurement process which makes the NPDC lose not less $20,000 a day, would have cost the company about $36 million dollars of loss in the past five years.

National Coordinator of the group, Joe Odudu and National Secretary, Innocent Izoma, who signed the petition dated 10 October, 2016 said that are a duly registered anti-corruption, non-governmental organization working to ensure that President Muhammadu Buhari’s change mantra permeates every government institution and leads to cost saving, eradication of corruption and graft for the good of all Nigerians.

It claimed that the abuse of the procurement process by NPDC officials has been going on since 2008 when the contract for the procurement of security patrol boats to secure oil facilities was signed.

The group said, “It is sad to note that one of your subsidiaries, the National Petroleum Development Company (NPDC) with a considerable number of oil assets in its portfolio, has been unable to make its mark in the petroleum sector in spite of its huge assets of several oil blocs, freely ceded to it by the Federal Government.

“It is in the light of the fore-going that we wish to bring to your notice the monumental rot in the procurement process of NPDC generally and OML 119 in particular, especially the procurement of security patrol boats to secure their off-shore asset.

“This contract was signed since 2008 without competitive bidding, in contravention of extant Procurement Laws, at the rate of $40,000 per day.

“The contract was for provision of three (3) patrol boats with one boat on standby while two boats will provide security coverage. But from the onset of the contract, there has not been any stand-by patrol boat.

“The NPDC has also refused to review or put up this procurement for tender even when oil prices have fallen from over $110 per barrel (which was the price when they initially made the award) to about $40 per barrel. Other oil companies, including TOTAL and SPDC have since cut their procurement costs by over half the price to between $7,000 and $8,000 per patrol boat, equipped with naval personnel and ammunition.

“NPDC advertised the tender for these boats over two years ago, but some criminal cabal within it has refused to process these tenders in line with the Procurement Act.

“This has enabled them to continue sharing monies and even boast that they have the management staff of NPDC and some top officials at the NNPC Corporate headquarters in their payroll.

“We estimate that this faulty procurement process which makes the NPDC lose not less $20,000 a day, would have cost the company about $36 million dollars of loss in the past five years!

“Most scandalous of all, we hear there is a plan to bring in two more patrol boats to this same OML 119 and position them only a few meters from where the other patrol boats are stationed, to protect a platform that is only 14 kilometers away, to be given to the same bogus contractor.

“We shall resist any attempt to commit this impending fraud and bring the entire scandal to the attention of Mr. President and EFCC if necessary.

“Again, we have been informed of another fraud in the short term hire of anchor handling tugs being justified on the basis of emergency procurement.

“This involves the hire of three to four AHTS vessels and three are permanently stationed at OML 119, without the fulfilling of either the Procurement Act or Local Content Act.

“This arrangement has been ongoing since January last year on “temporary contracts”, totally against the Procurement Act. And it was similar crimes that led to the prosecution of officials of NIMASA by the EFCC.

“The NPDC argument is that they don’t want to shut down production, and they are paying between $19,000 and $20,000 every day for the anchor handlers! This a gross violation of the Procurement Act and is tantamount to contract splitting

“To say the least, such expenditure is much above the market price, and it has cost the NPDC about $7.5 million in excess payments in the past fifteen months. We also wonder why any government agency in this era of CHANGE, will award a temporary contract for fifteen months, with monthly or quarterly extensions.

“It is totally illegal and in breach of all extant laws in the oil and gas sector and we demand that those behind this act of sabotage be brought to book, and the tender immediately advertised and awarded to competent local contractors.”

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