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African gas projects misfire

  • SOURCE: | qwesa2big
  • As Mozambique and Tanzania gear up to become leading exporters of gas to Asian hyper-economies across the Indian Ocean, there are major lessons they can learn about pricing, management and transparency from Nigeria and Ghana.

    Both countries have seen recent hard-hitting reports critical of pricing, procurement, and the management of gas revenues.

    In Nigeria, the Petroleum Revenue Special Task Force chaired by anti-corruption Czar Nuhu Ribadu claimed that deliberate mispricing by the Nigeria Liquefied Natural Gas (NLNG) company, majority controlled by multinational companies, has cost the state $29bn in lost revenue over the past decade.

    NLNG vehemently disputed the claims, but has so far not provided its pricing structure.

    The revelations follow a 15-year and six-country investigation into corruption around the building of the LNG plant on Bonny Island.

    So far, a consortium of contractors led by former US vice-president Dick Cheney’s Halliburton have paid $2bn in fines to the US government for deliberately overpricing the contract and for kicking back part of their ill-gotten gains to Nigerian officials, who have yet to be prosecuted.

    This lends credence to Ribadu’s argument that Nigeria’s gas export project has been mired in corruption from the beginning.

    Along the coast in Ghana, a similar row has blown up over the gas-processing plant being built by China’s Sinopec in Atuabo, Western Region.

    Ghana’s Civil Society Platform on Oil and Gas (CSPOG) has called for an investigation into inflated costs.

    The best interpretation that can be put on the claims is that in the Ghana National Gas Company’s rush to build the processing plant, the inexperience of its officials meant they were out-witted on price, value and construction standards by the more seasoned managers at Sinopec.

    If CSPOG’s claims are upheld – and they are pursuing them in court – the implications for China as a transparent and credible partner in Ghana would be serious.

    It could also damage the ruling National Democratic Congress’s reputation for efficiency, if not probity.

    The bigger message this is sending to gas producers is that, though gas is increasingly seen as a more valuable asset, the relative underdevelopment of the market and established practices of accountability mean there is massive scope for deliberate mispricing resulting in loss of state revenue by either unwary or blatantly dishonest official

    Source: The Africa Report


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