Brass modular refinery project: Federal House of Reps launch probe into allege NCDMB payment of $35M to a company worth mere N10m

Members of the Federal House of Representative Committee on Local Content led by it’s Chairman, Hon. Boma Goodhead, has launched a probe into the alleged payment of a whooping sum of $35 million, with 40 percent equity, to a company with registration value of 10 million naira by the former management of the Nigerian Content and Development Monitoring Board, NCDMB.

According to the Committee, the former management team of the board, headed by erstwhile Executive Secretary, Simbi Wabote, showed signs of alleged financial recklessness for investing a total of N14 billion naira for shares to a company one year after it was registered in 2020.

Hon. Boma Goodhead, during the hearing of the Committee with representatives of the NCDMB board, wondered how a company registered in 2020, not up to one year after it’s incorporation, was awarded a contract worth $35 million.

“The company was registered as a family company, and has one naira per share capital of 10 million naira. How can the board pay 14 billion naira, by 40 percent to such company? That simply means the company have just cash out on us. Tax payers are used anyhow, if it were to be your owe money will you go into such investments? How will you retrieve such money without equity.”

“Monies were just disbursed without due diligence, if you are claiming those funds are backed by CBN guarantee why haven’t you recovered them after contract had expired.”

“The tenure for loan domiciled with Bank Of Industries is 5 years, with the first set at 2018/2019. We have a document of 160 million out of 320 million dollar, which means 50 percent disbursement by the board, and you mentioned that you were proud of the business between the board and the bank, when recovery after expiry tenure is just 45 million dollar, resulting to a 30 percent bad business loan”

Responding, Former Director of Finance & Personnel, who also doubled as Chairman, Investment Review Committee of NCDMB, Mr. Isaac Iyalla, insisted that all contracts were approved and monies disbursed by council, adding that all the processes required for disbursement were followed.

On the issue of awarding a contract worth $35 million to a company valued at 10 million naira, and yet the project is abandoned, Iyalla said the project is delayed due to the challenges encountered by post COVID era which had changed the dynamics of the projects and affected a lot of things.

He appealed to the committee that all necessary documents to back their transactions will be provided, adding that some contracts tenure were also extended due to COVID.

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri had last month alleged that the past executive of the NCDMB of allegedly wasting about $500m on questionable projects and loans.

Lopkobiri disclosed this at a dinner held in Lagos by The Petroleum Club. During an interactive session at the event, Lokpobiri alleged that the past leadership of the NCDMB paid $35m for the Brass modular refinery in Bayelsa State without anything to show for it.

Also, he also claimed that $20m was paid for a fertiliser factory, which has yet on ground.

The minister, however, commended the investment made in Waltersmith.

He explained, “It is brilliant for the NCDMB to partner with potential investors to build modular refineries, but there are some cases. I give an example: In Bayelsa, there was the Atlantic Refinery that was supposed to be in Brass, my predecessor’s hometown. $35m was paid out by NCDMB, not even one block is there. Normally if the NCDMB is to make an investment, there is a disbursement threshold, but this $35m was released at once. This is the same town that Simbi, the former NCDMB Executive Secretary also came from. When you go there you see an open field, not even one block.

“There is also the Brass Fertiliser, NCDMB also released $20m, empty field. So, NCDMB has made some very bad investments. In this case, NCDMB has disbursed about $19Om in different equity investments, and none of them, apart from the Waltersmith modular refinery, can you say is worth a good investment. But the NCDMB under my leadership will not do a thing like that.”

Lokpobiri claimed the former NCDMB boss made the payments against professional advice, stressing that the payments were being reviewed.

“Even when there are documents showing, ‘do not do this refinery of $35m’, it was done against the advice. The money was not paid in installments, it was paid at once. The NCDMB under my leadership is reviewing the entirety of those investments. $190m is almost N200bn, some states don’t have that kind of budget,” he added.

The minister mentioned that about $350m was taken to the Bank of Industry by the board to give loans to investors, while alleging that the fund was mismanaged.

“But what was in addition to the money that was taken to the BOI. The BOI had about $350m. Also, of those loans that were given, 90 per cent of them were non-performing. So, on the whole, you are talking of over half a billion dollars ($500m) wasted. We can’t follow the same trajectory, it doesn’t make any sense. We must do things differently. We are now reviewing the entire loans that were given out.

“Some people applied for a $10,000 loan, you gave them $500,000. On my salary as a minister, I earn less than N1m in a month; even if I am a minister for four years, I won’t even get up to N50m. So, imagine for somebody to make just one bad investment and then wipe away $35m. In the same location we have the Brass refinery, we another $20m; we have $50m of investment. The same man-$35m, $20m, and there is another $50m – one man. He should be in jail. If it’s China, they will execute them, but Nigeria is a democratic nation.”

Reacting, the immediate past Executive Secretary of the NCDMB, Simbi Wabote, debunked all the allegations, declaring that the Nigerian Content Intervention Fund was the best loan scheme in Nigeria as of today with a 96 per cent payback rate.

Wabote said, “NCDMB does not interfere in the process you go through to obtain the loan. You go through the BOI because it takes the entire credit risk, and for any loan you take, you have to present a bank guarantee, and if you are not able to perform, BOI calls back the loan. So, the $300m that is given to BOI is the best loan scheme that this country has ever known.”

On the investments, he said NedoGas on Monday paid a dividend of $1m to NCDMB on one of the investments done with the company.

“You can also reach out to Waltersmith and ask them about the state of the equity investment the NCDMB made in their modular refinery. If it was all a bad investment, that would not bring dividends. As we speak, Waltersmith perhaps, would declare a profit-after-tax of maybe about N28bn or N20bn,” Wabote explained.

According to him, the Brass Fertiliser is an investment between the Nigerian National Petroleum Company Limited, the NCDMB and the Brass Fertiliser Company, adding that the Brass Fertiliser Company has been trying to get to financial close before it faced headwinds.

“NCDMB did not invest in it alone. NNPC was part of that investment,” he declared.

“Among the 15 investments that we made, the only investment that is challenged is Atlantic Refinery and the reason is not far-fetched. We invested in Duport Refinery and Petrochemicals in Egbokor in Edo State. As I speak, that project is 100 per cent completed, but there is a problem between the owner of the business and his partners, Summit Oil, and they all took themselves to court.”

“They are in various courts challenging each other, and you know if there are issues in court, you have to wait for those issues to be concluded. The plan for the owner of the business was that if he got Duport Refinery going, whatever resources he had from Duport Refinery would be used to complete the Atlantic Refinery. That is the only project that is challenged out of the 15 investments we entered into.”

“Before I left, we instituted a forensic audit to be conducted on that project, I am not too sure what the status of the audit is,” Wabote maintained.

The former NCDMB boss spoke further, “Today, if you go to BOI, ask them what is the interest that has accrued to NCDMB since the loan scheme started the then Minister Ibe Kachukwu. We have generated over N20bn into the account of NCDMB, and I’m telling you this authoritatively. You can reach out to the BOI. You cannot drag a man to want to destroy him without having facts and no evidence to back it up.

“But on whether these projects will be delivered, they will be delivered. Again, the only project that is currently challenged is the Atlantic Refinery. And for your information, the proprietor of Atlantic Refinery had written to NCDMB before I left, to buy us out. The letter is in the system. For your information, before I left NCDMB that organization was rated as the best-performing MDA in the entire country by the Presidential Initiative on the Ease of Doing Business.