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Published On: Tue, Aug 26th, 2014

AGIP, GE defy NAPIMS instructions with impunity (I)

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By Boniface Chizea

Let me first of all explain my involvement in this matter as I should expect that I am more known as an Economist with special focus on fiscal and financial matters particularly banking. And quite recently, I have engaged with a passion to shed some light on the sound initial steps the Governor of the Central Bank has taken. But I have known ARCO for some time now because of its strenuous efforts and commitment to show that a Nigerian indigenous company can acquire competence and experience to positively influence and raise the level of participation of Nigerians in the Nigerian oil and gas sector if the environment is made congenial to all players in the sector.

I am quite familiar with the travails the company has suffered in the hands of multinational companies in Nigeria and became convinced that I should lend my voice by bringing this despicable situation to the public square confident that concerned authority who might not be privy to what is happening, would be eager to engage to bring to an end this sort of injustice in such an important sector of the economy.

What is happening to ARCO is neocolonialism in 21st Century Nigeria despite all the efforts the government has made to ensure that this sort of situation does not persist in the country through the enactment of the Local Content Act amongst other such targeted programmes. What has happened as would soon be made quite clear in the following narrative is a situation whereby an indigenous company, ARCO Petrochemical Engineering Company Plc. has at the same time been shortchanged and marginalized with impunity despite the best efforts of The National Petroleum Investment Management Services (NAPIMS).

NAPIMS in keeping with its major strategic role of promoting local content with regard to input in engineering and construction, supplies and materials utilization in the upstream sector did its best to stop the prevalent situation from happening by the issuance of serial directives which were rejected by the two multinational companies–AGIP and General Electric with little or no consequences resulting in the stalling of progress and as it were holding all concerned to ransom. And from my perspective, this sort of behavior is most unacceptable. Multinationals that do business in Nigeria are most welcome but they must learn to play by the rules and not continue to carry on as if to confirm the impression that Nigeria is a country where anything goes and where any regulator could be compromised provided the price is right.

To ensure that this matter is put in its proper perspective, it is probably in order at this point in time to profile the company, ARCO Petrochemical Engineering Company Plc. ARCO Company is a wholly indigenous company which was incorporated in 1980 as a service provider in the area of maintenance and operations support to upstream and downstream sectors of the Nigerian oil and gas industry. And in response to the changes taking place in the international corporate world, ARCO diversified its operations from its traditional maintenance engineering and support services to venture into Marine Logistics, Pipeline and facilities inspection, and most recently industrial park development in partnership with the Delta State Government under the Public Private Partnership Scheme, with a view to progressing in the near future to being involved in detail engineering, metal fabrication and property development.

ARCO, as a group, currently employs over 400 highly skilled Nigerian engineers and technicians with proven record of excellent performance. About 150 of these skilled engineers and technicians are at OBOB/Ebocha/Kwale gas plants, the subject of this write up. I am aware that ARCO went into a business relationship with Nuovo Pignone SpA of Italy and facilitated its entry into the country in 1982. I am aware too that for a period of about 24 years, ARCO and Nuovo Pignone worked amicably together on several projects.

In 1999, General Electric of America acquired Nuovo Pignone SpA and its name was changed to GE Oil and Gas while the Nigerian subsidiary became known as General Electric International Operations Nigeria Limited (GEION). This change in ownership did not immediately affect the working relationship between ARCO and this company. Seven years later, both companies won the contract for Rotating Equipment Machines Maintenance Services at the Nigerian AGIP Oil Company (NAOC) gas plants at OBOB/Kwale/Ebocha jointly owned by Nigerian Government through NNPC and NAOC. The Nigerian AGIP Oil Company (NAOC) later changed the contract terms after the approval of NNPC Board and awarded the same contract to GE.

ARCO was reduced from being a partner to a sub-contractor, an anomaly that ARCO pointed out but succumbed to pressure to leave the matter as it is.But barely a year from the commencement of this joint project, the Niger Delta crisis erupted reaching frightening levels that led to an exodus of expatriate staff that worked in that region. Consequently GE withdrew its expatriate personnel and sent them back to Italy. In the intervening period, ARCO Engineers and Technicians independently sustained operations and were able to avoid disruptions to operations.

The management of NAOC was impressed that it is on record that commendation letters were issued to ARCO staff in appreciation. But as the situation improved and got manageable in the Niger Delta, GE expatriate staff returned to the gas plants. On discovering that ARCO staff sustained operations at the plants during their absence, GE became furious. It warned ARCO staff never to again touch GE equipment if its own men were not there at the plants. It remains a matter of irony that the same GE proceeded to poach 19 of the staff that were scolded for working on GE equipment in the absence of its own men.

Dr. Boniface Chizea is the CEO, BIC Consultancy Services, Lagos

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