FG’s million-dollar oil surveillance contract duplication raises questions
…$2.3bn lost due to termination of old contract
A fresh wave of allegations has hit the Federal Government over duplicated million-dollar oil contracts awarded by the Federal Executive Council.
The first contract, which was awarded to PE Energy Limited, involves the engineering audit of upstream measurement equipment and facilities in the Nigerian oil and gas upstream sector. The contract cost was not disclosed.
The second contract was for the procurement of pre-field development studies for advanced declaration solution technology (international cargo tracking note) in the Nigerian oil and gas upstream sector. It was awarded to P-Lyne Energy Limited. This contract cost was $2.3 million, and the company was also asked to provide a credit line of N13 billion.
Heineken Lokpobiri, minister of state for petroleum resources (oil), explained after the FEC meeting on July 13, 2024, that the contract for the engineering audit or metering of upstream measurement equipment and facilities, awarded by FEC on July 12, would enable the country to track every cargo of crude oil loaded in Nigeria up to its destination.
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This will take 180 days to complete, the minister said.
For the advanced cargo contract, Lokpobiri described it as “a contract to a company that will provide the technology… to enable us know from the point of loading of every cargo of crude oil that is loaded in Nigeria up to the point of destination.”
In his reaction to the cargo contract, Gbenga Komolafe, chief executive officer, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), said on July 25 2024 that, “Advance cargo declaration solution complements the metering audit by establishing a robust system for declaring and tracking crude oil transportation and exports from Nigeria.”
However, leaked documents and extensive interviews with sources familiar with the matter showed the cargo contracts announced by Lokpobiri had earlier been awarded by the previous Muhammadu Buhari administration.
Prior contract
In March 2023, under former President Buhari, the Federal Government awarded the contract for the cargo tracking system for 15 years to Antaser Nigeria Limited.
The contract, which was under a public-private partnership (PPP) arrangement, came with a zero cost to the Federal Government and a commitment by Antaser Nigeria Limited to “procure and install” the necessary on and offshore flow metres in all of the country’s exporting points.”
Based on the terms, the government under Buhari said 15 Nigeria crude oil terminals (FPSO platforms), six floating storage and offloading (FSO) platforms and five crude oil terminals (land platforms) would have electronic magnetic flow metres connected to the Antaser system.
The contract, approved by Bureau of Public Procurement (BPP), was projected to yield $2.3 billion over a decade through a 60:40 revenue formula between Antaser and the Nigerian government.
To kickstart operations, Antaser Nigeria Limited pledged a substantial upfront investment of $52 million to establish local infrastructure, export facilities, and oil installations for 18 months.
“The total costs for running the operations over the initial 10 years, including our global network, maintenance and upgrades of IT infrastructure, licenses, equipment recalibration etc, are estimated to be $1 billion, with an annual average cost of operations at $109 million,” the contract proposal seen by BusinessDay showed.
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Before the contract approval, the National Information Technology and Development Agency (NITDA) had issued a certificate of clearance on 25 January 2023. Hence, Antaser was awarded the two contracts split into two by the current administration.
BPP rejects Lokpobiri’s contract letter
Documents seen by BusinessDay revealed that the Bureau of Public Procurement (BPP) had rejected a project proposal by Lokpobiri and accepted the one sent in by Komolafe.
The BPP said in its due process review letter dated June 7, 2024, that “Due Process Certificate of ‘No Objection’ cannot be granted to the Ministry of Petroleum/ Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for the award of contract for procurement of Pre Field-Development Studies of Advanced Declaration Solution Technology (ADST) in the Nigerian Oil and Gas Upstream Sector in favour of MessrsP-Lyne Energy Limited in the tender sum of US$2,687,625.35 inclusive of 7.5% VAT and 180 days completion period. The position is supported by Section 16 (18) of the PPA, 2007.”
The letter was signed by Mamman Ahmadu, director-general of the BPP.
The BPP, in the same letter, however, said: “However, in the strength of submission by the NUPRC and in order to ensure value for money, Due Process Certificate of ‘No Objection’ can by granted to the Ministry of Petroleum/ Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for award of Contract for Procurement of Pre Field-Development Studies of Advanced Declaration Solution Technology (ADST) in the Nigeria Oil and Gas Upstream Sector in favour of Messr P-Lyne Energy Limited in the reviewed of US$2,278, 050.35includive of 7.5% VAT and 180 days completion.”
The BPP asked the Ministry of Petroluem Resources to request P-Lyne Energy Limited to provide a credit line of N13 billion from its bankers before signing the contract.
The BPP also asked the NUPRC to request from P-Lyne, an unconditional ‘Performance Guarantee’ of not less than 10 percent of the contract sum from a reputable bank “to secure the successful completion of the project.”
Incidentally, the BPP tasked the NUPRC to “ensure that no other Government Agency is undertaking a similar assignment particularly the Advanced Cargo Tracking Note under the defunct Federal Ministry of Transportation.”
Unfortunately, a similar contract had been awarded before then.
Facts about P-Lyne Energy Nigeria Limited
Efforts by BusinessDay to get any recognised or easily accessible website on P-Lyne Energy Nigeria Limited proved abortive at the time of filling this report.
A status report obtained from the Corporate Affairs Commission (CAC) showed P-Lyne Energy Nigeria Limited with registration number 291354 and N1 million share capital is currently inactive on the CAC records.
The CAC documents showed shareholders of the inactive company include: The Consultancy Group Ltd with a total number of shares of 333,334; Tope Shonubi with a total number of shares of 333,333; and Ade Odunsi with a total number of shares of 333,333.
The company’s directors are: Onadeko Aderonke, Temitope Shonubi, Tope Shonubi, Cole Tonye and Ade Odunsi.
The company’s registered office address is No. 7a, Oluwa Road, Ikoyi- Lagos State. It was registered on April 9, 1996, and currently has no visible cargo tracking antecedent in any country at the time of filling this report.
A company is deemed inactive if it has not filed its up-to-date annual returns, according to the CAC.
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An inactive company is not eligible to secure government contracts. Section 374 of the Companies and Allied Matters Act 2020 states that, “Every entity registered with the CAC regardless of whether it is a business name, a private or public company (limited by shares, guarantee, or unlimited), incorporated trustees, or a partnership, must file annual returns.”
A senior source in the international shipping business asked, “The company is inactive as of today for whatever reason. So how and when was the procurement done? Is the company supposed to get the contract in the first place?”
PE Energy Limited, on the other hand, has a functional website. Its status is still active as at press time.
‘Reeks of corruption’
The Citizens Advocacy for Social & Economic Rights (CASER) has raised the alarm over what it describes as a “high-level corruption” scandal regarding the government contract to P-Lyne Energy Ltd and PE Energy, which they argue are duplicative and unnecessarily costly.
According to the statement signed by Frank Tietie, director for advocacy center at CASER, the group is deeply troubled by the revelation that the Nigerian government awarded two significant duplicated contracts related to upstream oil and gas measurement and cargo tracking technologies.
CASER asserted that these recent contracts have duplicated services that are already covered under an existing agreement with a consortium led by Antasser Nigeria Ltd.
The advocacy group noted that the original contract, which includes provisions for advanced cargo declaration solutions and other services, was meant to be executed at no additional cost to the Federal Government.
“Essentially, the above two recent contracts form part of services to be rendered free of charge to the federal government in a different contract which has already been awarded to a consortium led by Antasser Nigeria Ltd, and the services to be provided by these recent awards are a clear duplication of services that are actually meant to be at a total zero cost to the federal government of Nigeria under the implementation of the international cargo tracking note (ICTN).”
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The group asked why the Nigerian Shippers Council and the minister of marine and blue economy have not utilised the existing contract with Antasser Nigeria Ltd, instead of allowing what CASER sees as a redundant and financially imprudent duplication of services by PE Energy Ltd and P-Lyne Energy Ltd.
They argue that this duplication suggests either a deliberate act of corruption or resistance from powerful individuals benefiting from the current arrangement.
“This duplication seems to either be motivated by corruption and the self-enrichment of certain individuals in positions of power or the refusal of a cabal benefiting from the status quo.
“The speed and lack of transparency in the processes that led to the recent announcement of these contracts are deeply troubling,” the CASER statement read.
“Such actions defy public procurement standards and raise more questions than answers at a time when our nation is grappling with significant economic and security challenges.
“The conclusion is easily reached due to the speed and lack of transparency in the processes that led to the recent announcement of the appointment of PE Energy Ltd and P-Lyne Energy Ltd to execute a part of an already awarded contract. These processes defy all public procurement standards, raising more questions than answers at a critical time when our nation is battling with serious economic and security issues.”
CASER called on President Bola Tinubu to intervene to direct relevant authorities to halt what it terms ‘unnecessary and unjust duplication’ of contracts.
The group recommended that the authorities liaise with the Nigerian Shippers Council to implement the already existing contract.
Minister denies the contract
BusinessDay asked Lokpobiri’s office why he announced duplicated contracts to the Nigerian public. Nneamaka Okafor, his media aide, denied that the contract was from the office, directing BusinessDay to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
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NUPRC admits involvement in contract awards
BusinessDay asked the NUPRC to provide an explanation to the duplicate award of the contract. The agency was also asked whether the previous contractor violated provisions of any law to justify the termination of the contract that would have cost Nigeria nothing.
Olaide Sonola, senior manager, corporate affairs, NUPRC, said: “In response to your questions, the two contracts mentioned are within the Commission’s authority under the PIA.
“The awards were made in accordance with Nigerian procurement laws and received all necessary approvals under those laws.”
No explanations were given for the questions.
