The Nation Newspaper

Tag: Baru

  • Kachikwu’s camp hits Baru with six posers

    Kachikwu’s camp hits Baru with six posers

    ‘GMD’s response full of  distortions’

    David-West: minister’s claims wild

    Loyalists find gaps in NNPC’s position

    POSERS FOR BARU, BY KACHIKWU’S LOYALISTS

    •What becomes of Sections 130(2), 148(1) of the Constitution and Section 1(1) of NNPC Act?
    •How can the NNPC Tenders Board appointed by Baru be responsible for approving
    contracts in the light of Section 20(1) of the Public Procurement Act?
    •What is the proof that Kachikwu as NNPC GMD did what Baru is doing?
    •How can NNPC Board oversee budget without information?
    •Why was Baru silent on the controversial appointments he made without briefing the board?
    •Are there standards of transparency and due process when NNPC awarded contracts of
    that magnitude without carrying NNPC Board along?

    The crisis of confidence in the oil sector raged on yesterday, with some associates of the Minister of State, Dr. Ibe Kachikwu, taking on the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru.

    Kachikwu wrote to President Muhammadu Buhari, alleging that Baru

    • awarded $25billion contracts unilaterally;
    • ran a “bravado” management; and
    • made appointments without consultations.

    Baru denied it all. He said no money was involved in the contracts and that the NNPC Tenders Board had no business reporting to Kachikwu and the corporation’s Board. The Presidency backed his position.

    But Kachikwu’s “loyalists” have described Baru’s response as a potpourri of contradictions and distortions. To them, Baru’s and NNPC’s defence is “unconvincing”.

    These verdicts were contained in a fact-sheet meant to clarify issues surrounding the disputed $25billion transactions by NNPC.

    The Nation stumbled on the fact-sheet yesterday. It may have been prepared against the backdrop of NNPC’s Monday statement, which described Kachikwu as a “liar” with his August 30 memo to President.

    The loyalists of the Minister raised six posers for Baru and NNPC to answer.

    The six posers, based on the 1999 Constitution, the NNPC Act and the Public Procurement Act, are as follows:

    • What becomes of Section 130(2), Section 148(1) of the 1999 Constitution and Section 1(1) of the NNPC Act if Baru said he did not have to consult the Minister and NNPC Board?
    • How can the NNPC Tenders Board appointed by Baru be responsible for approving contracts in the light of Section 20(1) of the Public Procurement Act?
    • What is the proof that Kachikwu as NNPC GMD did the same things that Baru is doing?
    • How can NNPC Board oversee budget without information?
    • Why was Baru silent on the controversial appointments he made without briefing the board? Did the silence confirm that the appointments were irregular or wrong?
    • Are there standards of transparency and due process when NNPC awarded contracts of that magnitude without carrying NNPC Board along?

    The fact-sheet reads in part: “While not joining issues, it will be worrisome if relevant section of Nigerians and keen watchers of oil and gas industry are not put through on the response of the NNPC GMD, Dr. Maikanti Baru on policies on public procurement as enshrined in the relevant laws and regulations governing procurement in Nigeria, which include Public Procurement Act 2007 and Procurement Procedures Manual.

    “The Public Procurement Act 2007 provides procurement guidance to all Federal ministries, extra-ministerial agencies, departments, agencies, parastatals, corporations and other public entities set up by the constitution or Acts of the National Assembly and /or whose funding derives from the Federation Accounts, their own internally generated revenue, the Federation share of the Consolidated Revenue Fund and special allocations in the federal budget or being entities outside of the foregoing description, derive at least 35% of the funds appropriated or proposed to be appropriated for any type of procurement described in the Public Procurement Act 2007, which NNPC is one.

    “The procurement Act 2007 borders on Efficiency, Fairness, Transparency, Accountability and Ethical Standards, and way and manner such procurement shall be conducted, and the entities like Tenders’ Board with powers to do.

    “And any procurement system that fails to take into consideration these relevant sections stimulated hesitation to compete, submission of inflated tenders containing a risk premium, or submission of deflated tenders followed by delayed or defective performance, collusion in bribery, bad value for money, and betrayal and abuse of the public trust for personal gain.

    “Dr. Kachikwu’s leaked memo to the President sought among other things, to promote application of fair and competitive standard and ethical practices.

    “But in his public response to the private memo to the President, it is clear to all fair-minded persons that the attempt of the NNPC GMD, Dr. Maikanti Baru, to defend himself is unconvincing, clear embarrassment to the person of President Buhari, his dream of sanctified institutions, and our dear constitution.

    “The public response to the issues raised in the leaked memo to the President is a potpourri of contradictions, distortions, and clear breach of facts and logic.”

    The loyalists faulted Baru’s claim that he did not need to consult the Minister and the Board on the alleged $25billion transactions.

    They asked the NNPC boss to be more forthcoming on his non-consultation of the Minister and the Board in respect to the provisions of sections 130(2) and148(1) of the 1999 Constitution, and Section 1(1) of the NNPC Act

    The fact-sheet  added: “The ministerial issue as viewed lacks substance. The 1999 Constitution of the Federal Republic of Nigeria (3rd alteration) is very clear on the powers of the President of the Federal Republic.

    “By virtue of Section 130(2) of the Constitution, “the president shall be the Head of State, the Chief Executive of the Federation and Commander-in-Chief of the Armed Forces of the Federation,” and by virtue of Section 148(1) of the Constitution, ‘the president may, in his description, assign to the Vice-President or any Minister of the Government of the Federation responsibility for any business of the Government of the Federation, including the administration of any department of government.’

    “So by the enshrinement of that Section 148(1) above, and the supremacy of the Constitution, according to Section 1 sub-section (1),  Baru’s submission as regards Kachikwu’s role as an appointed Minister by Mr. President is wrong, null, void and inconsistent with the constitution to the extent of its inconsistency.

    “Again apart from the fact that every Board of parastatals, extra-ministerial or corporations etc. are the supervisory entities of such, the NNPC Act in Sections below are clear

    “S. 1(1) says: ‘There shall be established a corporation by the name of the Nigerian National Petroleum Corporation (hereinafter in the Act referred to as “the Corporation”) which shall be a body corporate with perpetual succession and a common seal and may sue or be sued in its corporate name.

    (2) The affairs of the Corporation shall be conducted by a Board of Directors of the Corporation which shall consist of a Chairman and the following other members, that is (a) the Director-General, Federal Ministry of Finance and Economic Development;

    (b) The Managing Director of the Corporation; and

    (c) Three persons to be appointed by the National Council of Ministers, being persons who by reason of their ability, experience or specialised knowledge of the oil industry or of business or professional attain.”

    “Sub-section (2) of the Act is clear that the NNPC Board has overall supervisory powers over the corporation. How can these supervisory powers not include some kind of oversight on contracts worth billions of dollars?”

    The minister’s loyalists faulted Baru’s claim that the NNPC Tenders Board is the only legal body to approve contracts and not the NNPC Board.

    The fact-sheet said: “Baru’s claim that the NNPC Tenders’ Board, not the NNPC Board, is the right body to approve such contracts in question is also false. According to Public Procurement Act’s Section below:

    S.20. (1) The accounting officer of a procuring entity shall be the person charged with line supervision of the conduct of all procurement processes; in the case of ministries the Permanent Secretary and in the case of extra-ministerial departments and corporations the Director-General or officer of co-ordinate responsibility.

    (2) The accounting officer of every procuring entity shall have overall responsibility for the planning of, organization of tenders, evaluation of tenders and execution of all procurements and in particular shall be responsible for.”

    “Apart from the GMD as the appointor of the Tenders’ Board, which he also chairs, his duty is purely to plan, organise, evaluate, execute and supervise the conduct of ‘procurement processes’ and not to approve contracts above his threshold under the seal of the Corporation.

    “He cannot plan, organise, evaluate, execute procurement process, approve and execute approved projects. He lacks the statutory capacity to be the sole determinant of due process in the corporation.

    “But after the approval by the NNPC Board, President or FEC, it is worthy of note that the Tenders’ Board, according to Public Procurement Act in Section 22 (3), ‘shall be responsible for the award of procurement of goods, works and services within the threshold set in the regulations.”

    “Under the seal of the NNPC Board, according to the First Schedule, Part A, Sections 11, 12 and 13 of the NNPC Act which says:

    “11. The fixing of the seal of the Corporation shall be authenticated by the signature of the Chairman and any other person authorized in that behalf by the Board.

    1. Any contract or instrument, which if made or executed by any person not being a body corporate would not be required to be under seal, may be made or executed on behalf of the Corporation by any person generally or specially authorised to act for that purpose by the Board.
    2. Any document purporting to be a contract, instrument or other document duly signed or sealed on behalf of the Corporation shall be received in evidence and, unless the contrary is proved, be presumed without further proof to have been so signed and sealed.”

    The loyalists claimed that it was not true that Dr. Kachikwu as NNPC GMD did what Baru is doing

    The fact-sheet states: “At the inception of Dr. Kachikwu’s term as the GMD NNPC, there was no NNPC board in place, and this void Kachikwu bridged by briefing the President weekly on all key issues. All actions and activities were sanctioned by Mr. President.

    “Beyond that, it is on record that Dr. Kachikwu as the then GMD of NNPC instituted a culture of transparency at all levels which culminated to monthly publications of the operational activities and briefings of stakeholders of the corporation. This practice, which is a key component of the oil and gas reform plan, has since ended with his exit as the GMD.”

    The loyalists asked Baru to explain how NNPC Board oversees the budget without information.

    They also challenged NNPC and Baru to explain their silence on some controversial appointments made by the GMD.

    They said Baru could not hide behind illegality to justify wrong actions.

    The fact-sheet said: “Baru admitted that one of the NNPC board’s statutory responsibilities is overseeing the budget. How can the board perform this function if it has no information or input about contracts to be executed?

    “Why was Dr. Baru silent on the controversial appointments he made without briefing the board? It is noteworthy that Dr. Baru was silent on the appointments which he carried out without informing the NNPC board, and were not subsequently ratified by the board.  His silence confirms that his appointments were irregular and wrong.

    “The truth is, there are no standards of transparency and due process that will allow NNPC to award contracts of that magnitude without carrying the NNPC board along. Due process is about being open, not taking refuge behind distorted and convenient interpretations of the rules.

    ” Due process is not just the letter of the law. It is also about the spirit of the law. People who have nothing to hide, welcome the opportunity to share information with relevant stakeholders. As they say, transparency is the best deodorant.”

     

  • $25b contracts: NNPC, Baru tackle Kachikwu

    $25b contracts: NNPC, Baru tackle Kachikwu

    Board can’t approve contracts, says oil giant’s handbook

    Is the controversy over the $25 billion contracts a storm in a tea cup? So believes the management of the Nigerian National Petroleum Corporation (NNPC).

    A source has stated the details of the contracts, following allegations by Minister of State Dr Ibe Kachikwu, who said Group Managing Director (GMD) Maikanti Baru:

    • awarded $25b contracts unilaterally;
    • ran a “bravado management”, sidelining the board and the minister; and
    • made appointments without consultations.

    Neither the Federal Government nor the NNPC is committing any cash into the $25billion transactions involving more than six International Oil Companies (IOCs).

    Some of the international competitive biddings on the transactions were witnessed by Non-Governmental Organisations (NGOs) for transparency, the source said.

    Both the NNPC and its Group Managing Director, Dr. Maikanti Baru, have insisted that the transactions validly conducted within the expenditure limits of the agency.

    They claimed that the board of NNPC cannot approve contracts but they can review and give advice.

    President Muhammadu Buhari is said to be keeping mum to hear from all sides and let the facts and figures speak for themselves. He is said to be unruffled by the allegations in an August 30 memo to him by Minister of State for Petroleum Resources Dr. Ibe Kachikwu.

    To avoid any ethnic backlash, there is pressure on the President to spare Kachikwu and Baru if any infractions are noticed at the end of ongoing investigation.

    The Federal Government and the NNPC will not commit any money to the five projects in question, it was learnt.

    It was gathered that prospective investors were expected to source for funds as may be applicable.

    It was also learnt that as for crude transactions and Direct Sales, Direct Purchase(DSDP), the buyers were expected to pay directly into dedicated account (s) of the Federal Government.

    These facts are contained in the presentations of NNPC and GMD to the Presidency and some board members on the allegations raised by Kachikwu on five transactions.

    The projects are:

    • Over $10b Crude Term Contracts
    • Over $5b DSDP contracts
    • The $3b AKK pipeline contract
    • Various financing allocation funding contracts with the NOCs valued at over $3bn
    • Various NPDC production service contracts valued at over $3bn – $4bn

    A source in NNPC management, who spoke in confidence with a document, said: “Our position is that there is so much ignorance on the $25billion transactions. First, there is nothing like a Contract Award in the real sense of the word where money is paid out by NNPC to Contractors.

    “The NNPC was actually in the red as at the time the Minister took over as the GMD. Kachikwu tried his best to exit the debts especially the over $7billion JV cash calls in which he was able to secure 25% relief/rebate. Now, with Kachikwu’s efforts, all the JV partners are back.

    “Baru came around to turn things around and make NNPC and its subsidiaries viable or profit-oriented. There was no money to spend on projects in NNPC and we had to look for alternative sources of funding. So, NNPC is not committing any Kobo to the five transactions. Instead, the oil buyers and investors are to look for money in return for some products or other returns as peculiar to every agreement.

    “And all the transactions have clauses that returns from the investments be paid directly to the government’s account(s), not NNPC’s.

    “Therefore, NNPC selling crude oil to a customer is not a Contract Award; it is a commercial transaction.”

    The document also clarified a few things as follows: “It is the GMD of NNPC that has ever been signing Crude Oil Sales Term Contract at NNPC from the beginning of that corporation as NNOC. From Lawrence Amu, to Chief Morinho, Aret Adams until even when Kachikwu was GMD.

    “When a Customer signs a Term-Contract to buy Nigerian Crude Oil; it is covered by the customer’s bank opening in favor of NNPC either a Standby Letter(s) of Credit (SBLC) or a Documentary Letter(s) of Credit (DLC). Such banks are only amongst the top 50 international banks that are acceptable.

    “It is after lifting any crude oil under the Sales Contract that the L/C is negotiated and the proceeds go to the accounts of the Federal Republic of Nigeria, in the name of NNPC. These accounts are held in New York, mostly. There is no cash that changes hands between individuals for and on behalf of NNPC.

    “Dr. Kachikwu as GMD it was that signed these same contracts in his capacity in 2015/16.

    “There is no law violated here by the NNPC. NNPC Handbook (January 2017) and Public Procurement Act are explicit on the financial limits.

    “The Board of NNPC cannot approve transactions or contracts; it can only review and advise because most members are technical experts who have paid their dues in their careers. All these issues will come forth during Senate investigative hearing.”

    Responding to a question, the source added: “The AKK Pipeline Project was inherited and almost 80 per cent completed. We have investors coming in with funds to complete it and we reached an agreement on how to recoup the invested funds.

    “The Direct Sales, Direct Purchase (DSDP) policy was an alternative to the Crude Oil Swap of the administration of ex-President Goodluck Jonathan. It was formulated by a staff, tabled before the Board and implemented. In fact, some members of the Board recommended the promotion of the affected staff.”

    Regarding the transactions, the NNPC source said there were documents to show that the transactions went through international competitive biddings.

    “Some of those involved are International Oil Companies (IOCs). We will release their names. Even the $10billion crude terms transactions; about 10 companies were involved. At the appropriate time, we will release the details on those with links with two of these firms.

    “The bidding process was internationally competitive and witnessed by some Non-Governmental Organisations. The standards set by the Minister were strictly followed and everything was reported to the Board of NNPC.”

    President Buhari is said to be planning to hear from all sides and let the facts and figures speak for themselves.

    Buhari was allegedly unruffled by the allegations in Kachikwu’s August 30 memo.

    To avoid any ethnic backlash, there is pressure on the President to spare Kachikwu and Baru if any infractions are noticed at the end of the investigation.

    A government source said: “The President has decided to be quiet because he is hearing from all sides. He does not want to be seen as interfering in the case at hand. At the end of the day, the presidency will release the facts and figures to Nigerians.

    “The President has not personally benefited from the transactions and there is no trace of any money missing. The good thing is that some IOCs were involved in these transactions and Nigerians will soon know them.

    “The only thing the leakage of the memo has caused the administration of President Buhari is embarrassment on some issues which were distorted.”

    Another government source added: “Baru may have to respond to the allegation of insubordination. The Minister may be asked to account for the leakage of the memo. Being once a journalist or writer, no one gives him any benefit of doubt. Yet, Kachikwu has denied any knowledge of the leakage.”

    “But there is pressure on the President to avoid any ethnic backlash by cautioning the two leaders after clearing the Augean Stable,” the source said.

     

    What NNPC handbook says

    The Handbook reads in part: “Due process involves the award and execution of contracts, projects and other activities by organizations openly, economically and transparently in accordance with the provisions of the law and without any regard for self-interest.

    “NNPC as an organization has established a Tenders Board in all its subsidiaries as well as the Corporate Headquarters.

    “By the provisions of the Public Procurement Act 2007, the NNPC Tenders Board is the final approving body for NNPC awarded contracts.

    “Any contracts for a value beyond the financial limits of the NNPC Tenders Board will go via the Board to the Federal Executive Council (FEC) for approval.

    “The limits of financial authority for expenditure as approved by the Federal Government are as follows:

    • Federal Executive Council (FEC)—( From N2.70billion or from $20million)
    • NNPC Tenders Board—( From N1.40million up to N2.70billion and $410million up to $20million
    • Group Executive Committee (GEC)——( From N540 million up to N1.40 billion and from US$4 million up to US$10 million)
    • Directorate Executive Committee (DEXCOM)—( From N270 million up to N540 million and from $2 million up to $4 million
  • Baru: A reporter’s nightmare

    Baru: A reporter’s nightmare

    Since he was appointed Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) on July 4, last year, Dr. Maikanti Baru has been a nightmare to reporters.

    He neither grants interviews nor takes reporters’ questions at events or after delivering lectures – the few occassions when he meets face-to-face with reporters.

    He also does not give his telephone number(s) to reporters.

    A few months ago, the NNPC refurbished tanks and he was in Lagos to inaugurate them.

    On such an ordinarily happy occasion, when they thought he would be disposed to speaking, the reporters’ attempt to ask him some questions was rebuffed.

    It is not unusual for security men to form a ring around the NNPC GMD immediately after finishing his lecture delivery and after an address to visitors at the NNPC headquarters in Abuja.

    Baru rose through the ranks in the NNPC to become an Executive Director before his appointment as GMD to replace Dr. Ibe Kachikwu, who blew the whistle on his activities with his August 30 letter to President Muhammadu Buhari.

    That was the situation at the time the minster’s letter found its way to the media on Tuesday.

    Since that time, it has been virtually impossible to reach Baru, a PhD holder and First Class Mechanical Engineering graduate of the Ahmadu Bello University, Zaria, to speak on the matter.

  • Refined petroleum products imports to end 2019, says Baru

    Refined petroleum products imports to end 2019, says Baru

    • Targets 3mbpd production 

    The 2019 deadline set by the Federal Government to end all forms of petroleun products imports shall be enforced, the Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Kacalla Baru, has said.
    Baru, who stated this at the ongoing Offshore Technology Conference (OTC) in Houston, United States. told reporters that currently the three refineries are producing petroleum products, adding that the importation exit target is achievable.
    The NNPC chief who was represented by the Corporation’s Chief Operating Officer, Gas & Power, Saidu Mohammed, stressed that there is no going back on the 2019 target set by the Federal Government to stop all forms of importation of refined petroleum products.
    He said: “We load out at least five to six million litres of premium motor spirit (petrol) daily and about that same quantity of automotive gas oil (diesel) daily from the three refineries. That is part of what is making the PMS market in Nigeria stable today. We believe that the set target of exiting PMS importation in 2019, is achievable.”
    He maintained that because rehabilitation of the refineries has been hampered by lack of regular Turnaround Maintenance (TAM) over the years, it would take more years to get the refineries fully back to their installed capacities.
    “Don’t forget also that for us to exit PMS importation in 2019, we have to also bring in new refineries that will co-locate with existing ones together with the new ones that will be built. Then, we see ourselves as a net exporter of products. On this, I can tell you that we are on course,” he added.
    Baru said following NNPC’s foray into the energy sector through electricity generation and other renewables, Nigeria’s perennial power sector woes would be over soon.
    Essentially NNPC has been there. Many people don’t know that the NNPC has been part of the power sector. We supply steadily about 1,000 megawatts (Mw) from Afam and Okpai, two of Nigeria’s most reliable power plants serving as one of the cheapest sources of power today in the country, he said.
    The NNPC chief said the Corporation has engaged its Joint Venture (JV) partners, including Chevron and Total to build similar power plants at Obite and Agura, adding that the Corporation was also looking at bringing in new investors.
    “We have advertised and are currently evaluating potential partners in this regard. The Corporation was fulfilling part of its commercial obligations to Nigeria’s energy sector through power supply from Afam and Okpai, as well as excess power from its refineries. He said that its role in the power sector will be enhanced with the completion of the power plants that it has started and most especially, the three mega power plants in Abuja-Kaduna-Kano that have combined 3000Mw capacity.
    Baru said “NNPC is also attending the OTC in order to attract potential investors and most significantly, to showcase its efforts of transforming into a full-fledged energy company.
    “We want to showcase to people who have the capacity, competence and technology to invest in Nigeria and help us increase our reserves and enhance the capacity of the Nigerian Petroleum Development Company (NPDC), NNPC’s exploration and production arm. We want to raise NPDC’s production capacity by about 700,000 barrels per day (bpd) to about three million barrels per day.