Re-How $2.4bn Eleme Petrochemical Plant was sold for $215m

21 February 2016, Lagos – The front page of The Nation Sunday of January 31st, 2016, had one of its headlines highlighted in red with the above caption.  As a humbly committed Nigerian, I was excited to see that the issue of the privatisation of EPCL has not been forgotten as is so often the case in these parts.

Indorama operated Eleme petrochemicals plant.

Indorama operated Eleme petrochemicals plant.

My interest in EPCL is deep-rooted. In September, 1985, I was appointed the Project Manager of the Petrochemicals Project, Phase II, which was also called the Eleme Petrochemical Complex Project that became the Eleme Petrochemicals Company Limited-EPCL. In December 1991, I became the Managing Director of the Company and it was under my watch that the first product, Polypropylene, was produced on August 2, 1995. The second product, Polyethylene, was brought out on August 16, 1995.

The first thing I would like to say, loudly, is that the overall cost of the Eleme Petrochemical Complex, is not up to $2.00 billion!! I cannot be specific because, unfortunately, my project documents were taken away by a former Minister of Petroleum Resources for reasons best known to him.

I read with embarrassment and shame, the difficult-to-believe statements credited to  Mr. Alex Okoh, BPE’s Head of Public Communication and Mr. Yunana Malo, Director of BPE’s Oil and Gas Department, in  the report!!! I am worried that we continue to ridicule our selves before the international community in a country where we have some of the best brains in the world. Some years ago, a former Director-General of the BPE told a Committee of the National Assembly that the Eleme Petrochemical Complex was “designed to fail”!!!

This glib, unprofessional, and most embarrassing declaration, confidently made, was reported in many Nigerian media from where it was, naturally, picked up by the international community.

For such a highly placed official to declare, so irresponsibly, that a complex that had the best technologies from France, Canada, Italy, U.S.A. etc for the process plants, and world-renown engineering and construction contractors for engineering, procurement, and construction from Japan, Italy, France etc, reputable consultants from Britain, loans guaranteed by the Federal Government of Nigeria-a guaranty that a former Minister of Petroleum Resources, humbly and personally, went to Japan to pledge, had the overall cost  with all the equipment  confirmed by the World Bank confirmed, verbally and in writing, to the former Permanent Secretary in the Ministry of Petroleum Resources, Owelle G.P.O. Chikelu, as even cheaper than in the West coast (the reference in the industry) etc was shameful. It seems that BPE have a peculiar and unconventional but bizarre way of viewing these things!!

It is doubtful if many people in Project Management know what Mr. Alex Okoh means by the “political cost”!! Nobody has been able to explain to me what percentage of the overall cost of a technical project should be allocated to “politics”.

Mr. Yunana Malo’s “presentation”, if it is correctly reported, is disturbing!! Is this the basis of activities undertaken by BPE?  First, he got all his facts wrong. The complex produced its first product in August, 1995. It was formally commissioned by the then Head of State (General Abubakar) represented by the then Chief of Air Staff in May, 1999, and the privatisation of the company was in 2005/2006!! Yet Mr. Malo is quoted as saying that the project had not been completed when BPE started its privatisation!!!

Mr. Malo should urgently apologise to Nigerians if he was not misquoted or tell Nigerians the facts which are documented.  Are we to assume that BPE has been deceiving Nigerians and their government by deliberately selling completed establishments that have been running for almost ten years as “uncompleted”. This calls for some serious investigation.

Furthermore, the complex was partly financed with loans from Japan, Italy and France. Did BPE make Indorama to inherit all the liabilities? By the way, can Mr. Malo tell Nigerians what equipment Indorama added to the process plants in order to operate them? It is well-known that Indorama could not even operate the complex and had to plead with NNPC to leave their well-trained employees with them for quite some time. Can Mr. Malo tell Nigerians if Indorama added an item as small as a little “dosing pump” on top of the huge inventory of “spares” they inherited in order to get the plants producing with the help of NNPC staff?

Mr. Malo is reported as saying that “over-invoicing and inflation of prices” made the cost of the project to be high!!! Mr. Malo needs to understand certain basic project types. EPCL was executed with the cost of engineering, procurement services, construction, and commissioning as a fixed and invariable lump sum! The cost of materials and equipment, was under a form of guaranteed maximum price (GMP) in which the contractors would bear the cost of any amount above the GMP. Mr. Malo may have no experience in these things but even the most junior member of the NNPC/ EPCL Project Team, will explain to the world the difficulties that would be encountered by anybody trying to “play games” with invoices monitored by the lenders of the loans for the project in Japan, Italy etc. The EPCL project had, absolutely minimal “change orders or variations.“

Malo is also quoted as saying that some former minister has been praising them. It would have been more believable for Mr. Malo to quote the damning reports on the privatisation of some companies by a committee of the National Assembly. Can Mr. Malo tell Nigerians how many foreigners are, currently, doing the jobs that Nigerians have been trained to do there? Does Mr. Malo want Nigeria to “import” expatriates to run all future ethylene/olefins cracker plants?

Mr. Malo should bring the details of the Libyan complex for comparison with Eleme’s! He should get his “Consultants” to produce the utilities breakdown, particularly, the power source. They should also confirm whether provision has been made for the easy expansion of the process units. For instance, to expand the cracker unit in Eleme by almost 100,000.0(one hundred thousand) tonnes per year, there will be no need for piling as this has been done.  In 2003/2004, when we visited a Libyan Polypropylene Plant, they were not producing the range of polyethylene varieties that EPCL is capable of producing easily.

Hiding of facts, manipulation of the true situation, cleverly trying to appeal to popular sentiments known to be easily repulsed by any talk of contract inflation and over-invoicing, lack of knowledge of basic project types, and refusal to  acknowledge or recognise  this, will be very unhelpful in this case. BPE is advised to review their mechanism for assessing their staff in sensitive and highly technical areas in order to avoid the terrible and lasting question mark this issue has evolved. They must either be laughing at or pitying Nigerians in the countries involved in this!!

If Mr. Malo, Mr. Okoh and BPE cannot provide unassailable facts with which to dispute anything in this write-up, they should be humble enough to apologise to Nigerians for ridiculing them before the world!!! As it is now, what they are reported to have said, is a complete disregard and disrespect for the monumental efforts and actions of prominent, distinguished, committed, high-achieving, patriotic and highly and widely respected Nigerians like Chief P. C. Asiodu, Professor Tam David-West, Professor Jubril Aminu, the late Dr. Rilwanu Lukman, Dr. T. M. John and others too many to be listed here, who made unquantifiable contributions to the realisation of Eleme Petrochemical Complex.

P/S: Will BPE be agreeable to a public debate between them and the NNPC/EPCL project team?

*Dr. Oahimin-Akhimien, is a former Project Manager and Managing Director of Eleme Petrochemicals Company Limited (EPCL)

 

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