Industry stakeholders have slammed the Nigerian National Petroleum Company Limited (NNPC) over the response to allegations of its frequent preference for MRS Oil Nigeria and AA Rano on pipeline contracts in Nigeria’s downstream sector.
BusinessDay had exclusively reported that NNPC awarded new contracts to four companies, including two downstream firms, for the rehabilitation of the country’s pipelines, sparking criticisms from industry operators.
NNPC, on Sunday, described BusinessDay’s report as “fallacious” explaining that the pipeline contracts were advertised and were awarded based on rigorous evaluation criteria and in line with industry norms.
The state-owned company said it subjected the selection process to a competitive tender guided by the Bureau of Public Procurement standards, infrastructure concession regulatory commission expertise, and the active involvement of a transaction advisor.
Read also: If NNPC has been transformed, its conduct must also change
However, industry stakeholders who spoke to BusinessDay described the NNPC’s reaction as “unsatisfactory” and “evasive”.
“Is the state-owned company that prides itself in transparency and accountability saying it’s not aware of the consequence of awarding pipeline contracts to retail firms?” Tunde Adeniran, an energy analyst, told BusinessDay.
“The response is unsatisfactory; this is not only unfair to other companies, but it is also a risk to the country’s oil and gas infrastructure,” Adeniyi added.
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Other industry experts have echoed Adeniyi’s concerns, warning that the NNPC’s decision to award contracts to companies that lack the necessary expertise could lead to accidents and environmental damage.
“The response was evasive; they need to be more transparent and accountable in its procurement process,” said one industry expert who spoke on condition of anonymity. “It cannot afford to continue awarding contracts to companies not qualified to do the job.”
He raised concerns about the growing danger of a lack of transparency and accountability in Nigeria’s oil and gas sector.
“NNPC Ltd deviated from the standard evaluation protocol by sidelining key stakeholders like the Infrastructure Concession and Regulatory Commission (ICRC), Ministry of Justice, Bureau for Public Procurement, and other project delivery team members in picking the retailers that emerged winners,” an industry source said.
Another source pointed out that MRS and AA Rano were among the companies selected for Nigeria’s crude-for-fuel swap contracts in 2021 and 2022.
“These contracts are highly lucrative, and they have given MRS and AA Rano a significant advantage over their competitors,” a source said.
Read also: NNPC debunks love affair with AA Rano, MRS
Another industry expert, who spoke on the condition of anonymity, said that the NNPC’s frequent preference for MRS and AA Rano is harming the Nigerian oil and gas sector.
“The NNPC’s favouritism is creating an unfair playing field for other oil companies,” the expert said. “This is discouraging investment and innovation in the sector.”
For the first time in Nigeria’s history, the country’s oil and gas industry did not record any new investment in the second quarter of 2023, according to a new report published by the National Bureau of Statistics (NBS).
Data sourced from NBS revealed Nigeria’s oil & gas sector, the lifeblood of Africa’s biggest economy, garnered $750,000 in the first quarter of the year. However, it recorded nothing in the next quarter.
Analysts have said that a conducive environment to do business in Nigeria’s oil and gas sector is not obtainable yet because of failed reforms to keep the industry on track, which is leading to underinvestment and divestment.
“Some oil companies are deprioritising Nigerian portfolios either for deeper offshore activities or are moving where the capital can attract more returns,” said Jide Pratt, country manager of Trade Grid.
