The Federal Government has set up an inter-ministerial committee to access the Kaztec fabrication yard located in Snake Island, Lagos and make recommendation on how to get facility back into operation.
Chairman of the committee, Senator Magnus Abe, stated this when the committee paid an assessment visit to the fabrication yard. According to him, members of the committee were drawn from the Federal Ministries of Justice, Finance, Trade and Industry, Nigerian National Petroleum Corporation, Department of Petroleum Resources and other relevant agencies.
Abe said work stopped at the yard in 2015 when in 2015, Addax Petroleum ran into tax and audit issues with the Federal Government. As a result of the problem, government declared force majeure and suspended activities at the fabrication yard. Addax was the main contractor to Kaztec Engineering Limited, owner of the fabrication yard. Addax awarded fabrication contracts for its 90 million barrels of oil Antan project to Kaztec, which was a lifeline. When government declared force majeure on the project, everything collapsed.
Considering the amount of money spent on the yard by Kaztec, which is a wholly owned Nigerian company, and the number of direct and indirect employees rendered jobless by closure of the yard, affected banks and impact on the economy, the government wants to bring the facility back into operation, said Abe.
Abe said: “This is the Inter-Ministerial Committee on Assistance to Kaztec Engineering, set up by President Muhammadu Buhari to look at ways and means by which the Federal Government can legally assist this company to come back to life. This facility we are here to inspect is called the Antan facility established by Kaztec Engineering sometime in 2012 as part of contracts that were awarded to them by Addax Petroleum. Addax Petroleum awarded this contract to Kaztec Engineering to establish this fabrication yard as part of the exploration activities of Addax. Later, sometime in 2015, Addax ran into some tax and audit issues with the Federal Government and so, they called a force majeure on the contract that they were no longer going ahead with them. By that time, Kaztec Engineering had already spent more than $600 million and built this yard, imported a lot of equipment and materials and was employing over 3,000 direct workers and with over 10,000 ancillary dependents on this contract. But when a force majeure was declared, all those people lost their jobs.
“This facility was projected to save the country and also help generate income values of over $33 billion over a 10-year period. But as a result of that force majeure, the entire thing collapsed and all those people are out of work and the country is losing a lot, not only in terms of the work that could be done here that now has to be outsourced to outside vendors, for which we have to pay in dollars, but also in terms of over $600 million that has been invested here, which is closed to a billion dollars that is actually lying waste here. The banks are affected, the workers are affected, the capacity of the Nigerian economy to expand and also incorporate new technologies in terms of technology transfer, is also affected by the collapse of this project. So the President directed that an inter-ministerial committee be established to look for ways by which the government can legally assist in trying to see that this trend is reversed.
The Director of Engineering, Kaztec, Mike Simpson, said company has the expertise and capacity to revamp the fabrication yard. “Kaztec Engineering Limited is anxious to resume operations, implement further planned investment, and remobilize our labor force. Support from your good offices in the form of activation of previously committed projects that were suspended and new projects that will ensure a steady workflow is necessary for our return to the market. Expertise accumulated during our years of operation is completely retained in our internal practices and procedures and ready to be put back into use. KEL is capable of restarting with little or no learning curve – we are still in continuous touch with our released personnel,” Simpson said.
