The Nation Newspaper

Category: Energy

  • Fabrication yard to begin operation in August

    The fabrication yard being constructed at the Snake Island in Lagos by Kaztec Engineering Limited, a leading oil service company and a subsidiary of the Chrome Group owned by business mogul, Sir Emeka Offor, will begin operation in August, it was learnt.

    The fabrication, which Kaztec is building with its technical partner, Addax Petroleum Limited when operational, will be fabricating jackets, topsides, and other equipment as well as develop a lot of talents in the process.

    A Director of the company, Mr Tochukwu Odukwe, who spoke to The Nation at the Kaztec’s stand during the offshore technology conference (OTC) in the United States, said the company showcased its capabilities at the event and attracted numerous international and Nigerian companies that have shown interest to do business with it and also collaborate in different areas.

    He said: “We showcased our capacity in engineering, procurement, construction, installation and commissioning in the oil and gas industry. Specifically, in pipeline construction, Kaztec has done tremendously well in this area. We have installed over 145km of pipeline offshore and we have done a lot of heavy leads, which is one of the biggest attributes and capabilities we have, which many companies in Nigeria don’t have.

    “On the fabrication facility we are setting up in Snake Island, it is going to start earnestly at the end of August. Our first order which is the Anthan platform and jacket, we are starting construction from the first week of September. From August, you will see operation going on at the fabrication yard. Also in 2014, we will be fabricating a 1600 ton jacket for a Gabonese company.” He, however, didn’t disclose the name of the Gabonese company.

    Odukwe also dispelled fear of competition in the emerging fabrication and construction sector of the industry noting that Kaztec is the industry leader. “In Kaztec we have the best team. Members of this team came from different companies globally and Nigeria. For instance, the CEOL of Thailand, one of the famous fabricating companies, we have seven experts that we hired from there that are working with us now. We don’t have any problem with competition. As a matter of fact, we are leading in the area,” he said.

    He said the conference opened window that enabled the company to create a lot of synergies. “We met a lot of companies that are interested in Kaztec and are willing to do business with us. Some of the Nigerian companies that don’t know what we do came to have information about us and a lot of international companies have shown interest to do business with us. We had a rewarding exhibition,” he added.

    Kaztec’s consultant, Dr. Njideka Kelley, corroborated Odukwe. She said: This year’s OTC has given Kaztec a platform that is better than what we had last year. There are several international and Nigerian companies that have built collaboration with Kaztec. We have a database that is almost filled to capacity. We are still collecting information and collaborating and partnering and we intend to keep developing that line of work because as Odukwe rightfully said, synergies is what it is all about.

    Kaztec is a global company not just a Nigerian company because we are doing great things. We are 100 per cent Nigerian company with global vision. As you can see we believe and implement local content to the highest level but with global vision, standards and practices. That is what drives our business.

    Besides, we are dynamic in building our community relations. In the communities where we operate we carry out developmental works and they work with us and in terms of technology, what makes Kaztec stand out is its research and development division. This is a platform we are building and want to use to bring new technology to identify the problems that exist within the market and that we do through collaborative efforts with other companies all over the world, she added.

  • Offor’s Foundation redeems $600,000 pledge to BFA

    •Carter Centre receives $250,000

    Sir Emeka Offor Foundation (SEOF) has redeemed the $600,000 pledge to Books For Africa (BFA), a United States education-focused non-profit organisation.

    The donation is part of SEOF’s upport for the development of education in African countries, including Nigeria. It is driven Nigeria’s business mogul and Chairman, Chrome Group, Sir Emeka Offor.

    Confirming receiving the funds, BFA Executive Director, Dr. Patrick Plonski, in a letter to SEOF Founder, Sir Emeka Offor, dated May 20, 2013, expressed the organisation’s and the benefits the books reading publics in Africa would derive from the donation.

    He said the donation will fund the delivery of well over one million books to Nigeria and other locations in Africa, adding that the money represents the single largest donation BFA has ever received. He noted that the generosity of Offor in promoting education across Africa is not only outstanding, but quite commendable.

    Plonski quoted the founder of BFA, Tom Warth, as saying: “The benefits that will accrue to the younger people of Africa through this generous donation are immeasurable. We, at Books For Africa, struggle every day to convince folks of the wisdom of education in the advancement of African nations. Over our 25 years, many have agreed with us, but to have your generous donation as an example in the future will make our task easier. I say a big thank you on behalf of the children of Africa, and the general book reading public across the continent,” he added.

    Books For Africa is the world’s largest shipper of donated text and library books to the Africa, shipping over 28 million books to 49 African countries over the past 25 years.

    The organisation also said it will be working with SEOF to confirm the final list of countries to be served and the number of containers of books to be delivered to the respective countries.

    Also, the Carter Centre, founded by former United Sates President, Jimmy Carter, has expressed appreciation to SEOF, for its generous donation of $250,000 to the Centre.

    In a letter dated May 23, the Carter Centre thanked Sir Emeka Offor, for the “generous contribution of $250,000 to aid the fight against blindness in Southeast Nigeria.”

    In the letter, Carter, expressed a desire to meet with Sir Offor, at the Atlanta Georgia-based Centre. He said: “Your commitment to improve Nigeria will prove invaluable for the prospect of a better future for millions.”

    Before Carter’s letter, the Country Representative/Nigeria of the Carter Centre, Dr. Emmanuel Miri, had expressed appreciation for the donation, acknowledging that this generous and humane gesture will signal the beginning of a long and fruitful collaboration/partnership between the Carter Centre, SEOF and the Chrome Group for the benefit of the good people of the Southeast states in particular, and Nigeria in general.”

    He said though the funds will be administered from Atlanta, he assured that the Nigerian branch would be committed to the programme and judicious utilisation of the funds in the states in accordance with SEOF/Chrome Group instructions.

  • Alison-Madueke: no going back on zero gas flaring

    The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has restated the Federal Government’s commitment to end gas flaring.

    Delivering a paper entitled: The future of African energy in a changing world, at St Anthony’s College, University Oxford, United Kingdom, she said the government has begun the implementation of mitigation strategies that will over time compensate for years of carbon emissions arising from gas flaring and environmental pollution.

    Nigeria, she said, aspires to achieve carbon neutrality by 2025.

    She said the government’s aspiration was being realised with gas flares now at a significantly reduced level relative to previous levels. She said as at 2010, flared gas was 30 per cent, but now it is down to 11 per cent and would be down to two per cent by 2020 and beyond.

    Mrs Alison-Madueke highlighted the rising profile of African energy in the global energy matrix, citing the numerous offshore and onshore oil and gas discoveries across the continent, which she noted, has placed Africa on the front burner of the global energy industry.

    She advised that the continent should rise up to the challenge of the potent threat posed to Africa’s oil producing countries by the embrace of shale oil and gas by the United States and China.

    The minister appealed to the global community and the developed economies to invest in the development of the growing African energy economy so as to ensure a win-win scenario for the continent and the rest of the globe.

    She argued that while it may make economic and geo-strategic sense for a nation to meet its energy needs from domestic sources instead of imports, it may not make so much sense from the perspective of the broad-based global development necessary to ensure the global stability.

  • NNPC: A year after Ajuonuma

    NNPC: A year after Ajuonuma

    At is one year since the ill-fated Dana Air saircraft that crashed in Lagos claimed one of Nigeria’s best public relations practitioner, Dr. Levi Ajuonuma.

    While he held sway as the Group General Manager (GGM), Group Public Affairs Division, Nigerian National Petroleum Corporation (NNPC), hardly does a week pass without his appearing in national newspapers and television explaining one point or the other in defence of his organisation.

    He was always ready to talk on any issue concerning NNPC just to get the public to understand the workings of the oil and gas industry, especially from the perspective of the corporation. He carried out his duties as the spokesman and chief image maker of NNPC with such dexterity, professionalism and wit.

    The memories of his hardwork even resonated at the just concluded Offshore Technology Conference (OTC) in Houston, Texas, United States, where he was given a post-humous Outstanding Leadership Award in recognition of his distinguished and outstanding contributions to the development of the oil and gas industry in Nigeria by the Petroleum Technology Association of Nigeria (PETAN), the umbrella body of indigenous service, exploration and production companies. The award was received on behalf of his family by Emy and Michael Ajuonuma, his children.

    Ajuonuma was appointed the spokesman of the NNPC in November 2003, and for the eight years he handled the job, he was in charge of organising NNPC’s participation at OTC, a responsibility he discharged with passion and enthusiasm.

    For the years he stayed in the office, he was always controlling blows directed at NNPC, explaining to the public to understand the challenges faced by the corporation, especially in terms of allegations of inappropriate management of proceeds from the nation’s hydrocarbon.

    For his outstanding performance in his career, the Nigerian Institute of Public Relations (NIPR), the professional body of those in the business of reputation management, honoured him with its Fellowship, the highest award of the Institute.

    Long before his appointment as the spokesman of NNPC, Ajuonuma had launched himself into public consciousness as a renowned broadcaster and public relations consultant with his radio and television talk and entertainment shows such as Levi Ajuonuma Live, The Sunday Show and Showtime on NTA Network as well as The Nation Today Live on NTA Channel 10 and Open House Party on Raypower 100FM that ran from the late 1980’s through the 1990’s. His proficiency in delivering these shows led to his being dubbed ‘Larry King of Nigeria.’

    Ajuonuma was also the Managing Director/Chief Executive Officer of Lasom Communications Limited – a consortium of media and public relations consultants – engaged in marketing and public relations consultancy for some organisations, including the United States Information Service, Federal Road Safety Commission and Nigerian Institute of Structural Engineers, among others. He also designed and produced corporate marketing and brand promotional television programmes for blue chip companies.

    The Group Managing Director of NNPC, Andrew Yakubu and the President of PETAN, Emeka Ene, said the industry will continue to miss Ajuonuma in different ways.

    Ajuonuma started his career in 1977 as an announcer/newscaster with the Imo Broadcasting Service(IBS) in Owerri. He left IBS in 1979 and proceeded to the United States for further studies at Huntington College, Indiana, where he bagged a Bachelor of Arts in Communications. He later got a Master of Arts and Ph.D in Mass Communication from the University of Minnesota in 1983 and 1987. He topped these qualifications up with MBA from Plymouth State College of the University System of New Hampshire in 1989.

  • Ikeja DISCO explains cause of fire incident

    Ikeja DISCO explains cause of fire incident

    •’No customer without electricity’

    Officials of the Ikeja Electricity Distribution Company have said the fire at the Ikeja West Transmission station in Ipaja, Lagos did not cause disruption of power to any consumer, adding that the burnt transformer has been on load for days, which might be the cause of the incident.

    They explained that the lines that were connected to the facility were immediately rerouted to other transformers soon after the fire was arrested.

    At a joint briefing by the Chief Executive Officer of Ikeja DISCO, Chris Okaa Akamnonu and the General Manager, Transmission Company of Nigeria, West Region, Adeoye Oyeleke, they said contrary to reports that the burnt transmission threw most parts of Ikeja zone into darkness, the company rerouted the lines served by the burnt transformer to other transformers soon after the fire was put out.

    The officials said the incident was caused by some defects in the transformer, adding, however, that other transformers at the station were not affected.

    Akamnonu said: “We deem it fit to inform the general public, most especially our customers within the axis not to panic over power outage due to the fire incident, as adequate measures have been put in place to ensure no place within the axis is left without supply.

    “The essence of this media briefing is to set the record straight because we have read various versions of the stories from different media which are inaccurate. There was a fire incident on Tuesday, May 14 at the Ikeja West station, which resulted in loss of one of the five numbers of units that transmit voltage from 132/33kv line, which basically feed customers in Ikeja and part of Ogun State.

    “The transformer was lost due to the fire incident, but we are able to embark on network re-arrangement to move load from other place to affected area to be able to get supply.

    “Immediately the incident occurred, we were able to transfer some feeders to Oworonshoki, Ajah, Ojo and Akangba to accommodate supply in the affected transformers. We moved load to Aja and Akangba where we have capacity, the purpose is to ensure that those affected customers from Ikeja West Station are not stranded and the rearrangement was done within 24-hours.”

    Akamnonu noted that no customer within the affected area has been in darkness. No customer and business operator in the area has been out of supply since the incident. I want to assure Lagos residents and customers within the network to put their mind at rest, as the station has enough power to distribute. We are also working hard to ensure that the burnt transformer is replaced immediately, he said.

    He assured people who have businesses or transactions within the area, and are not resident in Lagos not to fall for flimsy excuses some unscrupulous people might give with the incident, as power was restored shortly after the fire was put out.

    He said: “The fire has nothing to do with total outage in the affected area because immediately the incident occurred; we restructured the supply channel to ensure effective power supply to our customers within the axis. A good number of projects are on-going in Lagos as part of the upgrade of the power sector in the country in accordance with President Goodluck Jonathan’s power sector agenda.

    Oyeleke also corroborated Akamnonu, saying the fire was caused by some defects in the transformer, adding that the affected transformer was isolated from the rest to avoid being affected.

    “The burnt transformer didn’t affect the area as claimed by reports, because other loads were restructured into the area. Currently, Akangba’s capacity of 600MW is still working to ensure that customers are maintaining stable supply,” he said.

    Adeoye also said the burnt transformer has been on load for days, which might be the cause of the fire outbreak, adding that another transformer will be deployed to the place immediately. “We have the transformer on ground for the replacement, but we are embarking on assessment of the transformers.”

  • ‘Develop local content ahead of PIB passage’

    The Nigerian Content Development and Monitoring Board (NCDMB) has warned that until robust domiciliation of services and manufacturing of oil and gas equipment and components are achieved, the chunk of investment inflow into the sector would be lost to capital flight.

    The Executive Secretary of NCDMB, Ernest Nwapa, who spoke at the offshore technology conference in the United States, drew attention to the need to sufficiently domicile service and manufacturing ends of petroleum industry operations noting that failure to do so would mean that investments would flow into the country, but take flight in the form of overseas procurement of equipment used for operations and remuneration of expatriate personnel working on projects.

    To maximise benefits of investments inflow into the multi-billion dollar industry, Nwapa advised that concerted efforts be made to develop Nigerian Content, so that Nigerians and the economy derive value from the expected huge investment that would come into the sector after the passage of the PIB. Therefore, he said there is urgent need to expand discussions around the PIB beyond just the fiscal provision.

    He said: “It is expected that when PIB is passed, it would result in massive investment flow and those investments will yield revenue for Nigeria. But what the Board is concerned about is the kind of impact the bill on passage will give Nigerians in terms of employment on top of the expected revenue.

    “That type of impact would only come from the investments that result in domiciliation. It is a good thing we have had a three-year head-start in the implementation of the Local Content Act, which has enabled us create some capacities in Nigeria such that as the PIB is being passed and investments come, we would have jobs arising from the investments being executed locally.”

    Nwapa canvassed for industry support for the Board’s initiatives especially the Oil and Gas Industrial Park Scheme and the establishment of a new pipe mill to support the existing SCC Mill in Abuja, adding that when the initiatives become successful, Nigerians would reap immense benefits from them.

    He said: “It is a good thing to get the investments in because we need to increase our revenue intake from oil production, but the real endgame for us is to ensure that as we are getting revenues, we are getting our people to work.

    “Government agencies can only employ a few thousands, but the real employment can come from commercial activities that would arise from our preparedness to expand operations.”

  • OTC: local firms’ participation increasing, says PETAN

    •Oil reserves declining

    The Petroleum Technology Association of Nigeria (PETAN), a group of Nigerian firms that play in the exploration, production and service segment of the petroleum industry, has said Nigerian firms’ participation in the oil and gas industry is increasing resulting in indigenous in-country capacity development.

    Its President, Emeka Ene, said the increase was demonstrated by the number of Nigerian firms that attended this year’s offshore technology conference (OTC) in Houston, United States to showcase their offerings to attract investments.

    He said 60 members of PETAN signified interest to exhibit at the conference, but due to lack of space, all of them weren’t accommodated.

    “We have 60 PETAN members and due to lack of space, we were not able to accommodate all our members who signified interest in taking part in this year’s conference. We have 50 of our members in attendance. Beyond PETAN members, we have at least another 50 exhibitors. So, in all, there are over 100 Nigerian companies that exhibited in this year’s offshore technology conference.

    “What has happened is that the OTC pavilion has become a very viable platform for exhibitors to showcase what they are doing in the industry, and also to attract investors to the Nigerian oil and gas industry. It is a very good platform for striking new business deal. Apart from that, it has really portrayed Nigeria in a very positive light,” he said.

    Ene stated that the conference created opportunity for people to meet and interact with serious Nigerian players, business men, entrepreneurs and technocrats who have been in business for over two decades, adding that this is why PETAN is taking this extra step to bring Nigerian companies to exhibit and make new business negotiations.

    “We arranged elaborate programme through the OTC week. We had plenary session where the issues concerning the Petroleum Industry Bill (PIB) were discussed, as well as a workshop with Nigerian oil professionals abroad, where issues in the country’s oil and gas were also discussed. These are ways and means to create a platform for Nigerians to interact concerning the issues in the oil and gas sector.

    On the impact of non-passage of the PIB on operations of PETAN and attraction of foreign investments, he said the PIB is like setting the rules of the game. All stakeholders recognise the need to have the rules set straight and the PIB is set to achieve that.

    The PIB, he noted, tries to set a clear structure for operations in the oil and gas industry putting into considerations that there are laws that are decades old, which are no longer applicable in the oil and gas industry. Every stakeholder in the industry recognises the need for the PIB. It is inevitable that the interest of different stakeholders will conflict. There have been some issues concerning investors taking investment decisions on some projects due to the PIB. The reason is some investors want to understand the PIB. PIB look at the industry in long term and PETAN has found itself on the side of the international oil companies (IOCs) and the side of the government.

    PETAN said by holding the PIB workshop, it was easy to bring the stakeholders to the table to discuss on the need to have the PIB, so as to attract long term investment in the industry, he added. He said the oil that we are producing, was not found yesterday, it was found some decades ago. So, the oil that we will be produced in the next 10 years has to be discovered today, or else, oil reserves will continue to deplete.

    “If you look at the net oil reserve in the country, for the first time, it has started to decline. If the oil reserve is on the decline today, so what are we going to produce in the future? The oil reserve is also a tool to negotiate OPEC quota, if the oil reserve is declining, it is going to be extremely difficult to make case for higher OPEC quota, and it will affect oil revenue to the country. It is in our interest to have the PIB passed. What we are saying is that there is need to pass the PIB because it addresses the concerns of short term and long term investors in the oil and gas sector. It is not just about passing the PIB alone, but a PIB that would encourage investment in the oil and gas sector,” he said.

    He explained the need for Nigerians to adopt the Brazilian model of local content. He said Brazil has built its local content in the last five years, but Brazil’s approach to local content issue is different from the way we operate our local content in Nigeria. We look at how much work is available and we say in the next 50 years, we will build like 100 wells, but in Brazil, they calculate all these things and put them into a mathematical formula and come out with the result.

  • ‘IOC’s oil assets divestment good for local players’

    The Nigerian National Petroleum Corporation (NNPC) has said the divestment of petroleum assets by multinational oil companies operating in the country is good for local capacity development as such assets will be taken over by indigenous oil companies.

    The Group Managing Director of NNPC, Andy Yakubu, gave the assurance while fielding questions at an investment forum organised by the Petroleum Technology Association of Nigeria (PETAN) in conjunction with NNPC in the United States.

    Yakubu said the Federal Government would soon start the bidding for some of the abandoned assets by the oil majors once it completes a review of the assets.

    He noted that a lot of the oil assets that have been divested by the oil majors were abandoned and it was only a good thing that they were being taken over by local participants for onward exploitation and production of crude.

    He said: “There is no doubt that Nigeria has a very huge asset base and very robust reserves to production ratio. Nigeria in time to come will continue to remain centralised and strategic. It will continue to dominate the region and stand as a key and prominent player in the global scene.”

    He, however, lamented that indigenous participation has not been high enough, but added that there has been significant improvement over the years.

    “As at last year, we were just about 10 per cent of total production, but because of increased government attention, we are expanding the capacity of upstream participation because within the past couple of years there has been a significant divestment of assets from the majors and those assets were the ones that they (majors) actually did not pay much attention to,” he said.

    The NNPC boss noted that Shell divested about five assets, which were taken up by indigenous operators. “We also have other assets that are being listed for farm-in by indigenous participants because they have not received adequate attention by the IOCs.

    “The Department of Petroleum Resources has itemised quite a number of these assets, which had been neglected by the IOCs, and they are receiving presidential attention. As soon as they are properly compiled, the bid round will commence and the assets will be made available,” he said.

    He pointed out that there have been divestments by other IOCs, including ConocoPhillips, Total and ExxonMobil, adding that those assets were expected to end up in indigenous hands.

    “There is a conscious effort to build the capability and capacity of indigenous operators in the upstream sector of the oil and gas industry. That is the good news,” he added.

    He said Nigeria is very central and strategic in contributing to the energy mix of the world. “As at today, the country has over 36 billion barrels of crude reserve and 187 trillion cubic feet (tcf) of gas reserves and that makes us about the 12th highest reserves in the world.

    “These reserves are spread across mainly in the Niger Delta basin. There is additional potential, which has not been exploited, and we believe when we go into that, it is estimated that we are going to strike almost 600tcf of gas,” he added.

    He said the fiscal regime for the industry as contained in the Petroleum Industry Bill would definitely be in the interest of the country in terms of revenue flow, and it will also encourage investors to come in and play in the hydrocarbon industry in Nigeria.

  • PIB debate‘ll produce robust Act, says DPR

    •Flays multiple regulation

    The continued dialogue and debate on the Petroleum Industry Bill (PIB) by stakeholders will produce a robust and balanced Act at the end of the day, the Department of Petroleum Resources (DPR) has said.

    Its Director of DPR, Osten Olorunsola, disclosed this while fielding questions from reporters at the Offshore Technology conference in Houston, Texas where the Nigerian delegations focused on the PIB.

    Olorunsola said the more the dialogue, the closer the middle ground where the provisions in the bill would be accepted to all stakeholders. He, however, noted that out of the over 200-page document, only provisions in 10 pages are seen as contentious and often discussed.

    He said: “My view is that you cannot take away the importance of dialogue. The more we discuss, the more we share; the more the chances that we will get to a common ground at some point. In my view, I am quite happy with what has happened at this conference. It shows there is still a lot of interest. The mere fact that people are speaking their minds is even the important thing. If people keep quiet over their views, it does not help.

    “It is nice that people came up with their views because it makes the key areas of gaps narrow down. If I will take the words of Hon. Samson Osagie, Deputy Chairman, House Committee on PIB, we will soon see the end of the PIB.”

    On the divergent views of stakeholders on the bill, Olorunsola said it has several pages. The areas of divergence you are talking of are less than 10 pages. People have been repeatedly talking about these 10 pages, completely undermining the 200 pages that are areas of convergence. We should focus more around where we have actually agreed. People can choose to look at a cup half empty. I like to look at a cup half full. Let us give attention to the 200 pages that we have convergence, but address these little areas that are remaining.

    “In my view, there are three or four things people are still talking about. If they don’t talk about fiscal gaps, they talk about host communities, or institutional authorities. But there are several other parts we can actually run with. We should not stop talking about these little areas that are remaining. In any case, after going through the PIB for 12 years, if it is only three or four areas that are remaining, we can try and resolve them. My view is that we should not spend another 12 years trying to fix these three or four items. Where we are today, we are ready to go. I think half PIB is better than none,” he added.

    The DPR chief also agreed with the operators on the issue of multiple regulators provided in the bill. The operators were of the view that multiple regulations are unhealthy and do not do anyone any good. Their view is that the PIB could have reduced or streamlined regulations but rather it created multiple regulations.

    He said it is true that PIB created multiple regulations, adding that it is an area to be looked. “It is an area that still has to be looked at, not from the point of what can be resolved in Nigeria alone, but actually looking at the benchmarks across the whole world. Apart from fiscals, one thing international investors look at is the robustness, simplicity and transparency of your regulation.

    “The National Assembly is aware of that. I think they will look at it very well. However, in looking at it, we also have to take our local environment into consideration. The mere fact that there is only one regulator does not mean that we cannot have another two or three. The only thing is that it has to work. It does not have to become a bureaucracy to the industry. That is really the point. Any institution that has too many regulations, is recipe for disaster. I think the National Assembly will look at that angle,” he said.

    On whether the DPR is worried about the streams of regulations as some of its functions are being whittled down in the process, he said it is not just the DPR, adding that even the PIB itself has addressed it to some extent. He said: “Even some of the extant regulations that have been around, have been somehow addressed in the PIB. However, we have to wait until it becomes an Act.

    “If it does not become an Act, all will still continue to parade themselves as regulators. We have made our views known very well. In any case, we were part of the team that put the bill together as an executive arm. Let us all wait and see the wisdom of the outcome of the National Assembly,” he added.

  • Multi-million naira contract splits oil, insurance firms

    TWO business associates have been split by a failed contract.

    An oil service company, UM Petroleum Limited (UMPL) and an insurance firm, Leadway, parted ways over the latter’s alleged failure to honour its obligation on an Advance Payment Bond (APB).

    Leadway was said to have issued the APB on behalf of a subcontractor to the oil firm, Control Systems International Company (CSIC), for an “outstanding sum of N4,202,771.06.”

    UMPL is threatening to take Leadway to court over the matter.

    Leadway was said to have issued the APB to CSIC, which allegedly did not complete aspects of the works in the sub-contract.

    According to an April 19 letter by Stanley Onyenze of B. Chinedu Moore & Associates (Ezedinachi Chambers), on behalf of UMPL, Leadway is to pay the N4,202,771.06 for which it guaranteed CSIC.

    It said UMPL, engaged CSIC in 2010 to execute a N38,800,690.10 contract.

    The letter claimed that “some specified aspects of the jobs for which the sub-contractor was paid in advance, included those covered with an APB, for N6,805,023.06 issued by Leadway.”

    It said its client, UMPL in letters dated November 10, 18 and 28, 2011, notified Leadway of CSIC’s default in executing the job covered by the APB No. AP/11/00021/LA for N6,805,023.06.

    The letter reads: “For the sake of clarity and emphasis, by their letters dated 8th March and 3rd April, 2012, respectively, they (UM Petroleum Limited) furnished your company with detailed breakdown of the jobs covered by the said APB, the contract value of those jobs, the value of the works done and values of the work not done by the sub-contractor (Control Systems International).

    “The relavant letters and documents are chronologically attached hereto for easy reference.

    “It is our humble opinion that our client’s demand for the payment of the sum of N4,202,771.06 being the value of the jobs covered by the Bond but which were not properly executed or executed at all by the sub-contractor is proper and lawful and that you were duly notified.

    “If the payment is not received within the ultimatum period we shall proceed to file a claim of the same amount (with the attendant damages) at the Lagos High Court.”