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Monday, 24 October 2005

This critique is based on the provisions of the International Project Agreement which states the conditions, representations and warranties of the parties to the project, the Treaty on the West African Gas Pipeline Project which determines the structure of the company and the Enabling Legislation which stipulates the laws and regulations that should exist in each country having been passed by the National Assembly.


It is pertinent to state that these documents were prepared by a consultancy firm from the United States known as Nexant with the active support of the United States Agency for International Development (USAID). Those who have perused the documents are still wondering why “our government” agreed to the terms they contain. Sadly, those representing us have failed in their responsibilities. They have refused or neglected to do what is appropriate.


Section 1 of the Enabling legislation and similar clauses in the International Project Agreement states quite clearly that the West African Gas Pipeline Company (WAGP) “would not be required to incorporate a subsidiary in Nigeria or conduct its operations in Nigeria through a subsidiary”. It would be recalled that in our earlier issues, we had stated that the company was registered in Bermuda. This is a company that will depend on gas to be sourced from Nigeria .

Besides, the company through the Nigerian government has acquired large tracts of peoples’ lands for the laying of the onshore portion of the gas pipeline and the building of a compressor station. With all these contributions it would be inexplicable for the government to agree to waive the legal requirements of the Companies and Allied Matters Act, requiring a company like this to have a subsidiary. This failure gives the company a free rein to do as it pleases without its actions being inquired into by the Corporate Affairs Commission (CAC) or any other institution in Nigeria.

The Enabling Legislation lists seven specific laws apart from the Companies and Allied Matters Act, which will not apply to the company or any other WAGP company, project contractors and Shippers etc. It is frightening to envision that with the massive infrastructure that the company will put in place in Nigeria, the hazards associated with the project and possible frictions between the company and aggrieved impacted communities, that the company is not subjected to Nigerian Laws and is in fact above our laws.

But as if this was not enough the Treaty in S 14 under the heading “Derogation/ Disapplication of Existing laws” states quite clearly that “if the provisions of the enabling legislation for Nigeria are inconsistent with the provision of any other law in Nigeria, the provisions of this law (Enabling Legislation) shall prevail” the purport of this is that the Enabling legislation which the House of Representatives hurriedly passed into law some few weeks back makes itself superior to all our laws and this may even include the constitution of the country. The question is whether our Honourable members consider this aspect of the legislation before stealthily passing the Enabling legislation?


Article III of the Treaty and clause 8 of the International Project Agreement in effect say that each State Party i.e. Nigeria, Ghana, Togo and Benin Republic shall take all necessary steps to ensure the passage of the treaty and the draft enabling legislations in their various parliaments. The documents also constrain the member states to deregulate their petroleum sectors and petroleum pricing mechanisms.

In Nigeria, we set up the Petroleum Product Price Regulatory Agency (PPPRA) though his sole duty since inception seems to be increase in prices of petroleum products. Besides, the Ghanaian National Assembly passed the petroleum sector deregulation bill. Even with the Hurricane Katrina and the emergency situation it bred, the United States Congress still held a public hearing before approving emergency funding for the victims of the Hurricane.

It makes one wonder why parliaments in Ghana and Nigeria would stealthily and in undignified haste pass laws that will set the stage for the eventual recolonisation of the economy of the entire West African sub-region by Shell and ChevronTexaco. The Ghana Energy Commission (GEC) had in a report stated that the practice in other parts of the world is to make sensitive sectors like energy be under the control of government. But with the WAGP laws, the entire West African sub Region has decided to hand over its energy security to multinational oil firms whose profiteering antecedent is etched on the degraded environment, livelihoods and lives of our people.


In this milieu, where the catchphrase is open market and liberalized trade; two behemoths, Shell and ChevronTexaco take a strangle hold on sensitive aspects of the economies of the states in the region. as From December 2, 2003, the International Project Agreement under its clause 3, effectively bars states from entering into negotiations, granting permits and licenses to any person for the establishment of cross border pipelines to transmit natural gas where delivery of gas from such pipeline would be capable of competing with the delivery of natural gas shipped through the West African Gas pipeline system.

The grave danger with this restriction is that it is open ended. Clause 3 of the International project agreement does not give a time limit for this period of exclusivity. This effectively shuts out competition which has the tendency over time to reduce prices. It means the company can arbitrarily fix prices and the people will be left holding the short end of the stick. Furthermore in clause 29.3 of the international project agreement the West African Gas Company can carry out activities on its own or through directly or indirectly owned subsidiaries. This sets the stage for the award of contracts to the company to the detriment of local businesses in the participating countries. These are issues that should have called for circumspection on the part of the Executive arm of government and the legislature before rushing to pass the bill.

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