Senate Committee Begins Investigations Into Breach Of Local Content Law On Train 7 Project

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Nigeria

*frown at Daewoo MD absence 


By; BAYO AKAMO, Ibadan
The Senate Committee on Local Content has commenced investigation into alleged breach of local content laws in the execution of Train -7 project.
At its sitting, the Senate’s Committee on Local Content walked out the Deputy Managing Director of Daewoo Engineering and Construction Limited, Mr. Yeon Seop Jung, who appeared in place of the Company’s Managing Director. Daewoo and Saipem’sMDs who was invited by the Senate’s Committee.
The Managing Director was invited by the Senate committee  to give evidence following several petitions it had received on allegations of breach of Local Content Law in the execution of the Train-7 project. 
Chairman of the Committee, Senator Teslim Folarin frowned at the failure of the Managing Director of Daewoo Engineering and Construction Limited for failing to appear personally as invited only for him to send his deputy. 
Senator Folarin stressed that the nationality of the deputy MD being the same as the Managing Director (both Koreans), was a breach of the law (section 31 of the Nigerian Oil and Gas Industry Content Development Act (2010)), which required a Nigerian to understudy any position held by an expatriate working in the Oil and Gas Company. 
Also at the sitting, the Managing Director of Saipem Construction Nigerian Limited (SCNL), Mr. Walter Peviani was grilled for over 3hrs by the lawmakers on several areas of alleged breaches of the law by the Company, with the committee quering the importation of Steel from South Korea and Italy, deliberately ignoring Nigerian manufacturers.
According to the Committee, this was  in gross violation of Act which states that first consideration; full and fair opportunities should be given to Nigerians in the bidding process for acquiring goods and services referring to the approved Nigerian Content Plan where SAIPEM assured the country that it would source 100% steel required for the project locally but ignored the approved plan by sourcing steel from abroad, using foreign contractors for the purchases.
Responding to this allegation, the Managing Director of Saipem (Walter Peviani) admitted the deviation from contract terms and breach of this provisions of the law adding that his company only acted upon the instructions of the Project owner (NLNG) and the industry regulator, The Nigerian Content Development and Monitoring Board (NCDMB). 
The Committee further questioned the appointment of Dover Engineering and KOA Oil and Gas companies as sole vendors for engineering services worth millions of dollars quarterly, without offering other qualified Nigerian Companies the opportunity for fair consideration in clear breach of the Law.
While Peviani in his response, told the committee that both companies were involved at the earlier/engineering stage of the project and were therefore entitled to such privilege, though it may have breached provisions of the Law with the  lawmakers quickly informed Peviani that all records at their disposal showed that only one of the two companies mentioned was involved in the Engineering stage and demanded Peviani to provide evidence to the contrary. 
The Committee also queried the lopsided award of contracts to Italian and Korean Companies and the sending of tender invitations to only foreign companies while excluding suitably qualified Nigerian Companies, 
A member of the Committee and Deputy Majority Leader of the Senate, Sen Ajayi Borofice (Ondo) cited the award of the following contracts to foreign companies: supply of steel for 4 million Euros to TK Corporation (a Korean Company), 4.27 million Euros for the supply of pipes to another Korean company and 3.86 million Euros and 5.5 million Euros to Italian Companies when the Act provides for the award for the procurement of these items, must go to Nigerian Companies.
 In replying Senator Borofice, Peviani suggested that the funding for the projects was obtained from Italian and Korean financial institutions who stipulated within the fund agreement that certain contracts must go to Italian and Korean Companies.
The Committee then gave SAIPEM one week to submit all necessary and correct information to its secretariat.

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