Gas project: Senate faults Saipem over alleged violation of Local Content Act

Senate Committee on Local Content has  berated Saipem Contracting Nigeria Limited over alleged violation of Local Content Act on the execution of Train-7 Gas Project in the country.

The committee, chaired by Senator Taslim Folarin (APC Oyo Central), had sought explanation over an alleged award of higher percentage of contracts to foreign companies for supply of steels, rods, among other materials for  execution of the project..

Specifically, Senator Folarin sought the explanation, when management of Saipem appeared before the committee to defend a petition against it over an alleged breach of lLocal Content Act in tender and contract awards to companies.

The committee had invited the organisation’ s executing the Train -7 Gas Project, following a petition on breach of local content act on award of contract for purchase of items for implementation of the project.

The companies, which includes the Nigerian Liquified Natural Gas, NLNG;  Nigerian Content Development and Monitoring Board, NCDMB; Saipem and Daewoo had failed to appear before the committee on November 25.

The senate committee, consequently re-scheduled the meeting.

Senator Folarin, while making his remarks at the re-sheduled meeting read out  a section of the petition that  indicated that Saipem awarded more  contracts to foreign firms than Nigerian companies  for supply of materials running  into millions of Euros in breach of  provision of the Local Content Act.

The chairman berated Saipem for violating the Local Content Act by not adhering to the 50 per cent threshold on  utilisation of local content in award of jobs for the Train-7 gas project.

He said: “Can you explain, how you came about awarding the contract for the supply of steel for 4 million Euros, to TK Corporation, a Korean company, and 4.27million Euros, contract to another Korean company  for pipes, 3.86 million euros to an Italian company and  another 5.5 million Euros. All these are not Nigerian companies.”

Senator Folarin explained that the Local Content Act provided for 50 per cent Nigerian content in the execution of the project.

He, however, noted that document presented by Saipem indicates that it has so far awarded 60 per cent  of contract to foreign firms.

Responding, the Managing Director of Saipem, Mr. Water Peviani said  execution of the project by the company was based on contractual agreement, and documents presented to it by the NLNG and the NCDMB.

“Within the contractual documents, which we received, entailed, a project Nigerian  content plan and entry procedures for Nigerian companies compliance certificate.

“The Nigeria content plan, we have received  states the minimum set of materials that needs to be purchased in Nigeria with no exceptions.

“And then, there are list of them and we have received them from our client, counter signed by NCDMB.

“A foreign vendor can not win a supply that should be supplied from a Nigerian vendor,” Peviani stressed.

He said the client had secured the export credit  for the materials from  companies in  Italy and Korea.

According to him, the materials not to be  bought in Nigeria, also entailed a  minimum of Italian content and Nigerian content, as Nigerian vendors were responsible to source the materials from foreign countries.

He also revealed that members of the board of Saipem, comprised of

One Nigerian and five expatriates.