Nigeria’s House of Representatives is probing the cost of the Escravos gas-to-liquids (EGTL) project, which has risen from $2.9 billion to $10.7 billion, an increase of $7.8 billion.
The project is a partnership between NNPC and Chevron Nigeria Limited (CNL), to increase gas supply by 400 million standard cubic feet per day (MMScfp/d), projected to be 26% of Nigeria’s domestic gas supply, and to generate $2 billion annually, according to Nairametrics in 2019.
The chairman of the committee on the Joint Venture of the NNPC Limited, Rep. Hassan Fulata (APC-Jigawa), raised concerns on Tuesday and demanded reasons for the rising costs in less than 3 years.
What he said:
The Chairman of the committee, Rep. Hassan Fulata (APC-Jigawa), stated that a similar project being executed in Qatar costs less than $2.5 billion within a very short period.
He also noted that NNPC Limited should have protested the cost review and demanded a value-for-money audit.
Chevron’s director of joint venture, Mr. Monday Ovuede, told the committee that several factors caused the upward review of the cost of the project from the initial $2.9 billion to $10.7 billion, citing increased steel prices needed for the project.
“This is a very complex technology to be executed in this part of the world. When the construction of the project started in 2005, commodity prices, including that of oil and steel were not as high as they are on the international market today.
“The project was given as engineering, procurement, and logistics, which means the sum was fixed. In the course of executing the contract, the contractors came back,” he said.
He also noted that Chevron agreed to a value-for-money audit despite not having it in the contract for the project, citing that the Qatar project was built on an already existing industrial complex with a seaport and access to an international airbase, with access to skilled labour, compared to Nigeria.
“The plant in Qatar is built in an industrial complex close to a seaport and there is an international airbase there.
“It has access to skilled labour from Europe. When you come to our side, we try to build—for some of the technology, we had to develop the local labour to the level required to implement the project,” he said.
Fulata claimed that Chevron was claiming capital allowance for the project without capital importation or a certificate to make such a claim, and ordered them to reappear Tuesday, Oct. 11 with relevant documents to defend its claims.
What you should know
- Nairametrics reported in 2019 that The Nigerian government projected to earn $2 billion annually from the Escravos Gas to Liquid (EGTL) project, the Nigerian National Petroleum Corporation (NNPC) disclosed.
- According to Mele Kyari, the group managing director, NNPC at the sign-off meeting of the EGTL project, which is in partnership with Chevron Nigeria Limited (CNL), Chevron Nigeria would be able to increase gas supply by 400 million standard cubic feet per day (MMScfp/d), projected to be 26% of Nigeria’s domestic gas supply.
- The NNPC boss disclosed that the multi-billion dollar EGTL plant would be a cornerstone of the energy ecosystem of Nigeria, with the potential to yield $2 billion yearly into the coffers of the federal government
