Senate fumes over non-adherence to local content law in gas project

The Senate Committee on Local Content, headed by Senator Teslim Folarin, has walked out Deputy Managing Director of Daewoo Engineering and Construction Limited, Mr. Yeon Seop Jung, who appeared in place of the company’s managing director over issue bothering on adherence to local content law.

The managing directors of Daewoo and Saipem had been invited to give evidence, following several petitions and allegations suggesting they breached the content law in execution of the Train-7 project.

Train-7 is Nigeria’s largest gas project valued at around $10 billion. The project is owned by the Nigerian Liquefied and Natural Gas Company (NLNG) and involves the construction of a liquefaction facility that would boost the company’s gas output from 22MTPA (million tonnes per annum) to 30MTPA.

The project, which is sited in the Bonny area of Rivers State, started in May 2020 with award of the contract to a consortium of three companies: Saipem (Italian); Daewoo (Korean) and Chiyonda (Japanese).

A statement by Senior Legislative Aide to the committee, Mr. Bamidele Ajibola, reads: “In walking out Mr. Jung, the committee chairman berated the managing director for failing to appear as invited and choosing to send his deputy.

“He also indicated that the nationality of the deputy managing director, being the same as the managing director (both Koreans), was in breach of Section 31 of the Nigerian Oil and Gas Industry Content Development Act, 2010, which requires a Nigerian to understudy any position held by an expatriate working in the oil and gas company.”

Managing Director of Saipem Construction Nigerian Limited (SCNL), Mr. Walter Peviani, was grilled for over three hours by lawmakers on several areas of breaches of the law.

The committee queried the importation of steel from South Korea and Italy, deliberately ignoring Nigerian manufacturers in gross violation of the Act, which states that full and fair opportunities should be given to Nigerians in the bidding process for acquiring goods and services.

The committee further referred to the approved Nigerian Content Plan where Saipem assured the country that it would source 100 per cent steel required for the project locally but ignored the approved plan by sourcing steel from abroad, using foreign contractors for the purchases.

While responding to this allegation, Peviani said his company only acted upon instructions of the project owner, NLNG, and industry regulator, Nigerian Content Development and Monitoring Board (NCDMB).

Angered by what he described as flimsy excuse, Vice Chairman of the Committee, Senator Aliyu Sabi, wondered if Peviani would have committed murder if he had been instructed to do so by NLNG and NCDMB.