Petroleum Marketplace Pilot Go-Live Event

The 5% - 15% savings in contracting and procurement in the Nigerian oil & gas industry has been proven. "It is the auction system, but in a reverse direction. It would be transparent, open and there would be no delay for approval. If we do this, we will save at least 10 to 15 percent of the procurement cost that we have currently".

This is NNPC's GMD, Engineer Funsho Kupolokun, description of the Petroleum MarketPlace, a project under the NNPC transformation Programme, Project PACE. The project is aimed at entrenching transparency, efficiency and improvements in the value procurement in the Nigerian Oil industry.

To prove the efficiency of the Petroleum MarketPlace, the system was recently demonstrated on August 24, 2005 in an event tagged Petroleum MarketPlace Pilot Go-Live.

The event, an on-line bidding event of one of the oil majors on the marketplace involved the commercial bidding for SERVER Consolidation and upgrade".

Six suppliers participated in the bidding process. They were taken through the pre-qualification and technical evaluation phases of the contracting process as well as trained on how to access and use the facilities for the marketplace prior to the event.

The participants, six of them suppliers, were located at 10 different areas including two viewing sites at NAPIMS and NNPC Towers, Abuja; a 'war room' (central coordinating point) at Shell and a backup 'war room' at the Accenture office in Lagos.
Two bidding events were held. The first focused on computer and communication equipments; while the second, in two lots, focused on hardware installation & support system; training and transportation/ supply and disposal services

The first bidding event lasted for forty minutes while the second was for one hour twenty- four minutes. The best bid indicated a 29.5% reduction in the initial quoted price for the computer and communication equipment bid and 91.3% reduction in the initial quoted price for the hardware installation & support system, training and transportation/ supply and disposal services bids. This represented a 63.39% reduction in the initial quoted price on the second bid.

In line with the objectives of the Petroleum MarketPlace, the buyer monitored the suppliers' activities online through the Live Auction Cockpit (LAC) chat room facility; the auction results were approved by the oil major the 'buyer' tender board in less than 24 hours; NNPC staff monitored the auction process online through the chat room facility; the suppliers accessed the system and used it effectively and the system generated the required Auction monitoring and approval reports. All approvals are currently being done online.

Assessments carried out on all participants before and after the event showed that 100% of the suppliers received all materials needed to perform the Reverse Auction On Line Bidding; 100% agreed that accessing the system was easy; 100% strongly agreed that it was easy to find the Reverse Auction Information and 100% of Suppliers, Operator, Viewers and Stakeholders agreed that the system is transparent. At the end of the event, the SPDC sent a congratulatory remark to the GMD, executives and top management of NNPC for the success of the event.