Local Content: Court Dismisses ARCO’s Suit against AGIP

Ernest Chinwo in Port Harcourt

The Nigerian Oil and Gas Industry Content Development Act, 2010 got its first major test in court yesterday as the Federal High Court sitting in Port Harcourt dismissed a suit filed by an indigenous company, Arco Group Plc, against the Nigeria Agip Oil Company (NAOC) and its joint venture partners over the implementation of the Local Content Act.

Arco had, in suit number FH/PH/CS/02/2015, dragged Agip, Nigerian National Petroleum Corporation (NNPC), Conoco Philips Petroleum Nigeria Limited and the Nigeria Petroleum Investment Management Services (NAPIMS) before the court to determine whether in view of the provision of section 3 subsections (2) and (3) of the Nigerian Oil and Gas Industry Content Development Act, 2010, having demonstrated ownership of equipment, Nigerian personnel and capacity to execute the task of performing the contract for the maintenance service of rotating equipment at the Nigerian Agip Oil Company gas plants at OB/OB, Ebocha and Kwale, it is entitled, being a Nigerian company, to the exclusive right to be considered and granted such contract including any extension of its duration.

Arco also sought a declaration that the persistent and deliberate failure of NAOC to award the contract for the maintenance of the said plants, as well as grant an extension of the award by way of interim or stop gap contract, violated Section 3 (2, 3) of the Nigerian Oil and Gas Industry Content Development Act, 2010.

The court was to deliver judgment on six contentious issues including jurisdiction, motion on notice and contempt charges over maintenance of status quo as ordered by the court.

Delivering judgment in the suit yesterday, the presiding judge, Justice Abdullah Liman, dismissed the suit on the grounds that Agip did not violate the Act by not awarding the contract to Arco since other companies involved in the bid were also indigenous companies.

In the judgement which lasted for about two hours, Liman said his court had jurisdiction to hear the matter.

He however said Arco could not prove that it was the only Nigerian indigenous servicing company that bidded for the OB/OB, Ebocha and Okwale gas plant contract in line with the provisions of the Nigerian Oil and Gas Industry Content Development Act.

He said, “Question number one: The plaintiff, in virtue of Section 32 (3) of the Nigerian Oil and Gas Industry Content Development Act, lengthy although, has demonstrated ownership of equipment, Nigeria personnel and capacity to execute the task of performing the contract for the maintenance service of gas turbines/rotating equipment and machines at the Nigerian Agip Oil Company plant at OB/OB, Ebocha and Okwale, being a Nigerian company.

“But not having proved that it is the only Nigerian indigenous service company that bidded for the contract, it is not entitled to the exclusive right to be considered, and awarded the contract, including earning the extension of its duration. Two; question number two is answered in the negative. The plaintiff not having established any exclusive right under 32 (2) of the Nigerian Oil and Gas Industry Development Act.

“Question three is answered in the affirmative based on the same reasons stated in answer to question number two. Question number four is also answered in the negative because Exhibit ‘M’ was preceded by Exhibit ‘G’, which the Court had found it not been validated by Exhibit ‘S’.

“Question five is also in the negative because the plaintiff had failed to prove on the ground of objectivity it scored the highest mark in the technical competition as submitted by 10 bidders. Secondly, the procedure to prove this claim, which was hotly debated is inappropriate in the originating summons.

“Having answered all the questions, it is only logical that all the leaves sought must be refused and they are accordingly refused. Maximally, all actions are expelled and hereby refused.”

But, lead counsel to Arco, Mr. Beluolisa Nwofor (SAN) said the court erred in its judgment as both companies agreed that Arco scored the highest marks in the bid and wondered why the company would be denied the contract having shown evidence of competence and equipment for the execution of the contract.

He said he appreciated the fact that it was the first time a trial judge was interpreting the provisions of the Nigerian Oil and Gas Industry Content Development Act, adding that it would be interesting to see an appellate court sit on the same matter.

Speaking to newsmen shortly after the judgment Nwofor said, “Most important thing to note is that this is the first time that a Court is interpreting the provisions of the Nigerian Oil and Gas Industry Content Development Act in a final judgement. Being a test case where there are no pronouncements by superior courts, the Appellate Court, to guide the trial court, there may be a mild possibility of error.

“It is apparent in the judgment. If you listen to it, you will feel that the judgment is completely wrong. In that situation, I commended the trial judge for being the first judge to attempt interpretation of the Act. But, you will also agree with me that it is the interest of a party to test it at appeal so that we will have the opinion of the Appellate Court on this. It is in the interest of Nigerians.”

Also speaking, counsel to NAOC, Mr. John Irerhime, expressed delight at the outcome of the judgement, insisting that the bidding for the contract was open to only indigenous companies, including Arco

Irerhime said, “We believe that justice has been done in this case. Our case was simple. We he talked about the Nigerian Content Development Act, it talked about protecting the rights of Nigerians to compete for the award of certain categories of contracts.

“In this case, we were able to demonstrate to the Court that all the companies that went through the bidding process were Nigerian companies. No single Nigerian company has the exclusive right to be awarded any Nigerian contract. They only have a right to compete with fellow Nigerian companies.”