N2.1bn: We Have Genuine Claims Against NLNG, Macobarb Tells Stakeholders

CEO of Macobarb, Shedrack Ogboru

The Management of Macobarb International Limited, has pleaded with the Board of the Nigerian Liquified Natural Gas (NLNG) and other Stakeholders to prevail on the NLNG Management to pay the company the sum of N2.1 billion it has been justifiably claiming.

The renewed plea is coming on the heels of a recent meeting of the intervention panel for the lingering dispute between the NLNG and Macobarb, at the instance of the Nigeria Content Development and Monitoring Board (NCDMB).

The much-awaited meeting, took place on December 16, 2020, dragging from December 9, 2019 when it was last held.

According the CEO of Macobarb, Shedrack Ogboru, the Virtual Meeting in which many executives of the equity holders of the NLNG, their Management and NCDMB top managers participated “has been able to throw up all the facts of the claim by Macobarb to the extent that it is no longer in any doubt Macobarb has genuine claims against NLNG over Contract No. B130142PPI (Titled: Access Control to CCR, Laboratory, Shutdown Village and Gas Plant Area Project).”

In a statement to update the Board and Stakeholders of the NLNG and interested members of the public especially indigenous contractors, Ogboru thanked God all the Stakeholders who participated in that critical Virtual Meeting now know the facts and have all the documents and evidence to reach a decision.

At the said Virtual Meeting, “it was made clear that Macobarb had previously successfully executed over 60 jobs for the NLNG to the extent of winning promotion to a higher contractor category (EPC Category). Thus, both parties are familiar with contract procedures in the NLNG,” he said.

According to the statement, made available to our Correspondent on Monday, the NLNG awarded Contract No B130142PPI dated January 9 January, 2014, to Macobarb to fabricate, procure, and install a special grade of turnstile network in the plant complex amongst other scopes of the contract such as civil, electrical, mechanical and instrumentation works; and because this contract has a lot of foreign exchange input (foreign procurement and manufacture to NLNG specifications) and high foreign technical expertise, Macobarb was asked by the NLNG to handle the forex transactions for the oversees payment and to thus meet the 100% payment demand by the original foreign manufacturers.
The rest of the statement read:
“For the foreign component of this contract, both NLNG and Macobarb agreed on agreed payment schedule of milestones accomplished. Macobarb met all the conditions and obligations to the foreign manufacturer as well as met contract milestones that qualified it for first batch of payment (N32m) milestones, but shockingly, the same NLNG, without contesting the valuation done by its Project Team, paid only N8m.
“We thus tried to let the participants at the Virtual Meeting know that this was where financial strangulations and frustrations were deliberately initiated into the contract by the NLNG and this continued to manifest till the cancellation of contract.

“The Meeting of December 16, 2020, also threw up the fact that the contract was to be managed by the Minutes of Meeting Progressive System whereby decisions reached at such meetings between the NLNG Team and Macobarb Team were final and binding to both parties. See Section 7, Sub-section 5.6 on page 27 of 48: “Any direction or notice given by the Engineer (NLNG Principal Project Engineer/Contract Holder – in this case, Mr Dweller Francis) to a contractor’s representative (Macobarb) shall be regarded as having been given to the contractor (Macobarb) by the Company (NLNG).

“Thus, at the said Virtual Meeting, Macobarb conclusively uploaded and showed all evidence of NLNG payment failures for work items delivered and received by the NLNG for which interim payment certificates were raised and signed by four of the five NLNG mandated signatories but denied without reason by the last (fifth) signatory (Mr Bayo Adenrele- head of project support services), who only rendered support services to the NLNG technical team on this project. This signatory was not to sit and never sat in any of the technical meetings but was one of the NLNG recipients of the project review minutes; and thus, was aware of NLNG’s commitment to pay Macobarb N19.1m as far back as 26th of March 2014 when Macobarb performed the said milestone. Yet, this signatory withheld his consent for the first and other payments without any justification. This payment failure commenced the repeated payment failures caused by this same individual, an action that jeopardized the entire job execution without NLNG addressing these failures.

“The Contract Terms mandated the Contractor to raise a red flag (alarm) should there be any development that could cause delay; see Section 3 (Programme), Sub section 3(vi); “Immediately the contractor determines that there is a likelihood of delay to the programme, the contractor shall notify the Contract Holder (Dweller Francis) in writing of the circumstances that have led or will lead to the likelihood of delay, and the actual or estimated duration of the delay and what remedial action the Contractor has taken or will take to avoid or minimize the delay to the execution (of programme of works)”. Macobarb raised this mandatory red flag (Standing Time notification) on the 30th of July, 2014 through the Contractor Holder to the NLNG (evidence available) which the NLNG ignored for 559 days of Macobarb equipment and personnel being idle on Site in a security-related project inside NLNG most critical plant area. Sadly, this situation remained this way till the forced contract cancellation (close-out) of 10th February 2016.

“To date, Macobarb equipment mobilization to site is still accruing Downtime Payment on Site because NLNG has failed to address these payment failures to enable Macobarb finally demobilize and pay workers, suppliers (rentals), etc. Amongst documents shown at the Virtual Meeting include; Macobarb Bill of Quantities incorporated into the NLNG Contract Document Section 9. Macobarb highlighted Page 8 of the Bill of Quantities (BoQ) where the foreign procurement items (Turnstiles and Vehicle Barrier) costing over N38m to which the NLNG eventually paid only N33m one year after delivery and on the day, they forced contract close-out on Macobarb. It was made clear that NLNG did not pay while the contract was live and only paid to push out the Contractor with a ridiculous amount that had been overtaken by events. The documents displayed at the Virtual Meeting showed that the outstanding amount of N5m as at that time has still not been paid to date. This showed that NLNG was liable and is still liable; this liability has kept our equipment still on site, accumulating costs. The rods and other work items already accomplished before the forced contract close-out are yet to be paid for to date, to the knowledge of the NLNG. This therefore showed the Stakeholders that Macobarb is not crying wolf for nothing and is not a gold digger as has been styled by some NLNG officials.

“Macobarb also showed the schedule of payments as agreed by both parties during Progressive Review Meeting of March 26, 2014, the basis for which various payment certificates (which Macobarb showed during the virtual meeting) were raised to facilitate Macobarb’s payments for work done and to pay bank loans for work duly executed but payments denied.

“This contract did not provide for upfront payment or mobilization fee to help indigenous contractors but however provided for speedy payment of any milestones met. But, these payment failures financially strangulated Macobarb on the contract and impeded its programmed execution and therewith put Macobarb personnel and equipment on Idle Time and duly put Macobarb equipment and personnel on Standby Mode of contract which the contract stipulates NLNG should pay Macobarb using Standby Contract Rates as enshrined in the said Section 8 of Contract.
“Because of time constraints during meeting, the entire position Macobarb canvassed during meeting chronicled in 22 pages with 40 documented attachments were electronically uploaded and received by all participants (NLNG, NCDMB, Macobarb) including the NLNG MD and Legal Adviser, Mr. Akachukwu Nwokedi, as evidence of NLNG abuse of it’s own Contract Processes.

“Macobarb pointed out the Standing Time provisions of contract (by NLNG default) which holds NLNG liable to paying Macobarb; see Section 7, Sub section 5.1, Page 28 of 48; “If, by reason of any failure or inability of the Engineer (NLNG), the Company’s Representative and/or the Company (NLNG) to issue within a time reasonable in all the circumstances, any drawing, instruction, approval (such as payment approval failures) or the like for which notice has been given by the Contractor (Macobarb), the Contractor suffers delay and/or incurs cost, the time for the execution of the works shall be extended accordingly and the amount of such costs shall be added to the contract sum.
“ Let it be noted that Macobarb issued the Notification and did all it was mandated to do to avoid the crisis that eventually came; thus Macobarb has been forced to invoke the relevant clause of the contract for remedies; see Section 3 GCC of NLNG 15th October 2012 Sub Section 37 (Termination Generally); “The Termination of the Contract in respect of all or any of the works shall not prejudice any rights or remedies accruing (to Macobarb) before, at or in consequence of the termination or any proceedings with respect to any such rights or remedies”. In consequence of this termination without addressing the payment issues that Macobarb had raised with the NLNG since June 2014 when the contract subsisted, which has also made Macobarb not to be able to demobilize up to this day, Macobarb equipment are still accruing Standing Time charges to this day, as was pointed out during the Virtual Meeting.
“ Macobarb consistently pointed out and NLNG is aware that Contract Term forbids Contractor (Macobarb) from removing its personnel, plants, equipment and materials from Site without written approval; For personnel, see Section 7, Sub Section 4. 3. 4 “Key personnel shall be employed solely for this contract and the Contractor (Macobarb) shall not re-assign or reclassify or remove or replace any key personnel without the consent of the Engineer (Contract Holder who is Principal Project Engineer of NLNG)”
“And on plant, equipment and materials on Site, see Section 3, Sub Section 8 (i) “Unless otherwise agreed in writing by the Company (NLNG), all plants, materials, temporary works owned by the Contractor (Macobarb) or the Contractor’s sub-contractor or by any firm or corporation in which the Contractor has a controlling interest, shall for the duration of the contract, when brought upon the site, be used solely and exclusively for the purpose of the Works. Such plants, materials, and temporary works shall not be removed from Site without the consent in writing of the Contract Holder (NLNG), which consent shall not unreasonably be withheld.” All through the contract life, the Contract Holder never gave Macobarb any authorization to remove its plants, equipment, materials or personnel from site, to date, and never documented anything that Macobarb did wrong.
“It was also pointed out at the Virtual Meeting that whereas NLNG would claim that the stated Contract B130142PPI does not have Standing Time provision for which Macobarb can make claims, notwithstanding all the Standing Time clauses stated above, in particular, the stated contract unequivocally stated that it would pay for Standing Time (of Macobarb equipment and personnel) even if an act of Nature such as unforeseeable rainfall were to occur, thus; Section 7, Sub Section 13.2 Page 31 of 48; “The Contractor (Macobarb) shall be responsible for taking due account of the Site conditions, climate, and incidence of inclement weather on Site, which may include periods of very heavy rainfall and a high level of ground water. The Company (NLNG) shall not make any additional payments, or pay for any Standing Time for personnel or equipment IF the Contractor (Macobarb) encounters such conditions unless such Site conditions are considered as being exceptional and unforeseeable by an experienced contractor.” This shows that actually there is Standing Time clause and conditions for it were stated. Here is a situation where the NLNG forced unforeseeable conditions that affected the contract. Why would they not comply by paying for Standing Time? Contract made sure that nothing should hold Contractor from delivering, but when payment is repeatedly refused without justification, how would Contractor deliver and how would the NLNG not mitigate this or be held liable? “

Ogboru further noted that Macobarb was supposed to be paid N32m in June 2014, but was paid only N8m for no just cause, leading to deliberate crisis. Nobody higher up in the NLNG has cared to ask why this took place.

He added that Macobarb was supposed to be paid N33m in Febuary 2015 but was paid only in February 2016, a year after for a project that provided for progressive payment for job done and valuated by Contract Holder (evidence available). This act of refusing to pay was clearly orchestrated to lead to only one outcome, cancellation of contract.

He observed that for a N95m project started in Jan 2014, NLNG paid only N8m in first two years against repeated job certificates. This is the point Macobarb wants the world to take note of; this is where the liability of the NLNG hinges. This is what frustrated the contract and provided the ground for Macobarb to make claims that have now risen to over N2Bn since 2014. (Claims details submitted to NLNG)

Yet, Ogborun said “there are many other pieces of outstanding payments. No kobo has been paid for demobilization which is a fact of the contract, and which NCDMB seemed to take particular notice of during Virtual Meeting.”

He said it was absurd that the NLNG continued to claim that the N33m they paid for Turnstiles/Barrier alone two years late amounts to full and final payment, pointing out that it was on this basis that the Mediator, the NCDMB, ruled that because they are a government agency, allegedly not empowered to look into Contract Terms and Conditions (for a contract that permits for third party mediation), declared the meeting INCONCLUSIVE.
“This is where we are. This is where Macobarb pleads to the Board and Stakeholders to intervene,” he said.

On liability or otherwise of NLNG over bank debts, Ogboru said that Macobarb provided evidence that the NLNG is vicariously liable by not paying when they were mandated by Contract Terms to pay and the amount required of them by the same rules to pay. These payment shortcomings could only mean one thing; financial crisis in the contract especially in managing the loan obtained with NLNG’s tacit approval to execute the project.

He noted that Macobarb submitted the proper amount that ought to be paid at that point in time but this was ignored. We have provided evidence that the NLNG did not offset all payments at contract close-out even for materials and work items delivered to date.

He alleged that Macobarb was forced into contract close-out with threat of not even getting the paltry amount that the NLNG offered to pay. The real amount to be paid was duly submitted by Macobarb to the NLNG which they conveniently chose to ignore.
On Down-Time, Ogboru insisted that sufficient evidence had been presented to show that there is Down Time clause in the Contract. This clause is so important that the NLNG head of legal, Barr Akachukwu Nwokedi, had in written statement to Festus Keyamo (Macobarb’s lawyer then), denied existence of such a clause but had said if this clause is found to exist, that he would simply by honour advise the NLNG to pay since they entered into such a contract free. Now that Macobarb, at the said Virtual Meeting of December 26, 2020, presented the evidence to the view of all NLNG big shots and Industry lords, the least expectation of any right-thinking person is to face the payment of this claim.
He noted that up till this moment, the NLNG team has not submitted any document to controvert this Down-Time clause or any other of the facts or computations of figures submitted by Macobarb. It simply means they have nothing to present to show that there was no Down-Time clause. This is because they will not find any clause to counter this provision because none exists. The contract Macobarb signed with the NLNG clearly provided for Down-Time claims and Macobarb has so claimed.
“Macobarb suspects that why the NLNG does not want to enter into arbitration or mediation where procedures are simple as provided for in the Contract Terms could be because, unlike the small indigenous companies, they (NLNG) can outlast any protracted case in Court and many of those who caused the crisis would retire and the litigant may die, and the case would rot in the courts and no winner will ever be known. Otherwise, if they had any single clause backing their actions, why do they do their best to stifle every single attempt at arbitration despite clear provision in the contract for such? Why would the NLNG pressure every single FG agency trying to mediate to say such an agency has no power to look into Contract Terms? What is in the Contract Terms that every agency is scared of looking at? Simple! The terms said anyone who caused delay in the execution of the programme would pay the cost. The people who caused the delay do not want any eye to look at that clause. That is all,” he said.

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