Connected Development and Nigerian Young Professionals Forum has called for a presidential inquiry into the award of the contract for the fabrication and integration of the watershed Egina Floating Production Storage Offloading (FPSO) facility to Samsung Heavy Industries (SHI), alleging that the contract involved shady deals.
In the letter co-signed by Moses Siloko Siasia, Chairman, Nigerian Young Professionals Forum and Hamzat Lawal, Chief Executive, Connected Development, the groups asserted that government officials received financial inducement to allow the contract sail through.
The groups also stated that the process for awarding the contract was not only highly fraudulent, but also flagrantly disregarded local content laws, as it allegedly featured bloated project/variation costs and diversion of local content and profits to South Korea, as well as economic sabotage by deliberately frustrating the Egina FPSO project.
The groups also demanded that Samsung Heavy Industries be sanctioned.
The letter written to President Muhammadu Buhari read in part: “While it is not the first FPSO deployed in Nigeria, the Egina FPSO is the largest FPSO and the first to be fabricated and integrated locally in Nigeria and indeed in Africa. Naturally, the economic benefits of the local fabrication and integration of the Egina FPSO within Nigeria’s shores would have been significant, including local capacity development, job creation through the deepening of the participation of Nigerians in the oil and gas industry, facilitating local industrial development and ensuring that the execution of large components for the project was domiciled in Nigeria. This would be in tandem with the nation’s local content laws i.e. the Nigerian Oil and Gas Industry Content Development Act 2010 and in fact, Your Excellency’s presidential directive in the promulgation of Executive Order No. 5.
“As events have unfolded over the years, however, it is clear that the Samsung Heavy Industries (SHI’s) engineering, procurement and construction of the Egina FPSO has been a sham calculated to massively defraud the Nigerian commonwealth, undermine the extant laws and signal corporate corruption of monumental proportions in the highest corridors.”
The letter went ahead to highlight some aspects of the contract content and process, which it believed to be fraudulent and in violation of existing laws, implying that Samsung Heavy Industries engaged in bribery and corruption of public officials to win contracts.
The groups also called on President Muhammadu Buhari, through the relevant office, to ensure that “a thorough investigation is carried out so as to expose the irregularities surrounding Samsung Heavy Industries (SHI) and Samsung Korea, and their involvement in the Egina FPSO Project with possible estimation of the resulting losses to the nation’s economy, insisting that for every variation claimed by Samsung, the company should be made to pay a minimum of 20% to Nigerian companies involved in the Egina contract.”
They also asked that, “Samsung Heavy Industries Korea is given the maximum fine applicable for local content violations that is 5% of their contract sum.
“That Samsung Heavy Industries Korea and Samsung Heavy Industries Nigeria be blacklisted from participating in Nigerian projects for 10 years in order to encourage honest contractors to come to Nigeria and work, safe in the knowledge that if they bid competitively they will be rewarded with contracts and not suffer injustice", believing that this will send a strong warning to other foreign contractors".
In addition, the letter called on the government to "ensure that local content in the Egina FPSO Contract is fully implemented, which will include employment of Nigerian youths and or compensation to those not employed who were unjustly excluded; building of a training school and restoration of majority ownership of the Shipyard in LADOL by LADOL which Samsung Heavy Industries (SHI) had attempted to dislodge as its local content partner and that the NNPC and IOCs produce a 20-year plan for long-term youth employment from future projects".