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Transparency in NNPC, oil sector: what role for PIB?

The row between Minister of State for Petroleum Dr. Ibe Kachikwu and Nigerian National Petroleum Corporation (NNPC) Group Managing Director Dr. Maikanti Baru has refocused attention on the Petroleum Industry Bill (PIB), which analysts believe has the capacity to entrench transparency in the sector, writes EMEKA UGWUANYI.

Rev. David Ugolor, the Executive Director of the Africa Network for Environment and Economic Justice (ANEEJ), believes the row between Minister of State for Petroleum Dr. Ibe Kachikwu and Nigerian National Petroleum Corporation (NNPC) Group Managing Director Dr. Maikanti Baru would not have happened if the National Assembly and President Muhammadu Buhari had concluded the passage and assent of the Petroleum Industry Governance Bill.

Ugolor said the conclusion of the enactment of the law would forestall that kind of row and also ensure transparency in the oil sector.

He said: “We believe that the inconsistencies being thrown up by the startling revelations from the Minister of State for Petroleum Resources include some of the issues which the Petroleum Industry Governance Bill seeks to address and redress.”

A former Minister of Petroleum Resources, Prof. Tam David-West, is, however, not excited about the PIB.

David-West said: “Some people also said that the Petroleum Industry Bill (PIB) would have prevented that kind of situation if it had been passed. That is not correct. The PIB is not the solution to the problem in the Nigerian oil industry. In fact, if passed the way it is, it can destroy the industry. I have read it. It is not a serious bill. It has only 40 words. If they don’t look at it carefully before passing it, it can destroy the industry.”

President of the Nigerian Association of Petroleum Explorationists (NAPE), Mr. Abiodun Adesanya, said: “This issue brings to the fore the issue of passage of the Petroleum Industry Bill (PIB). PIB has solution to this problem and it becomes surprising why the House Representatives is sitting on the Bill while the Senate is giving it speedy treatment.

“Let us not allow political issues to destroy the good deeds achieved in the sector. The President should call Kachikwu and Baru, resolve the issue amicable and ensure such issues are treated and resolved internally and kept away from public consumption in future.”

For the Lead Director, Centre for Social Justice (CSJ), Mr. Eze Onyekpere, the issue calls for need to speedily and totally pass the Petroleum Industry Bill (PIB) into law. He said the managers of Nigeria’s oil and gas resources should be more concerned with maximizing value from the resources for the benefits of Nigerians especially as oil and gas are being threatened by shift to use of renewable energies.

Onyekpere said he is yet to see any company law that doesn’t present its activities to the board before implementation, adding that the issue is test case for the reforms for the sector.

“The situation presents a water-tight case for the enactment of the Petroleum Industry Bill (PIB) because the world is not waiting for Nigeria. The nation is currently facing the challenges posed by the increasing production and choice for renewable energy worldwide.

“The world is moving away from use of fossil fuels and we should be concerned as a nation what to do with the hydrocarbon resources we have before it becomes totally useless. The world is leaving Nigeria behind.

“The allegations against the Nigerian National Petroleum Corporation (NNPC) are critical because they border on lack of transparency and lack of due process and should be taken seriously irrespective of who is involved.

“I want to look at the company law that says a company doesn’t report its activities to the board. It is nonsensical to classify firms that lift crude oil as off-takers. Also at what point did the NNPC present the report to the Federal Executive Council (FEC), and who presented the report to FEC when the Minister of Petroleum was not aware? Is it the President the presented it to FEC or was it the Vice President when the President was away?

“What is happening is an aberration and a watertight case for reforms for the oil and gas sector that is the mainstay of the country.”

Members of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) alleged that over N235 billion had been lost in the last 17 years that the bill’s passage had been delayed.

NUPENG Chairman Hyginus Onuegbu expressed worry that the aspect of the bill passed by the Senate only deals with the governance and institutional framework of the country’s petroleum industry. The other aspects of the PIB, which was unbundled into five different components, ostensibly for easy passage, include: Petroleum Fiscal Framework Bill; Petroleum Industry Downstream Administration Bill; Petroleum Industry Revenue Management Framework Bill and Petroleum Host Community Bill.

He said: “We look forward to the passage of the other aspects such as the: The Petroleum Fiscal Framework Bill; The Petroleum Industry Downstream Administration Bill; The Petroleum Industry Revenue Management Framework Bill and the Petroleum Host Community Bill.

“The bill, as passed, will not deliver the full benefits of the intended reforms, except a legislation is made in the other parts. It is worrisome that no mention was made of the petroleum host community fund, particularly as it is the major challenge in the Niger Delta area.”

The Managing Partner, J.O Adidi and Co., Mr. John Adidi, expressed his disappointment over the passage of the PIGB, which is an aspect of the Petroleum Industry Bill (PIB) by the Eighth Senate. He described the PIGB as a component of the original Petroleum Industry Bill (PIB).

“It’s not the most critical aspect of the PIB as far as the IOCs and indigenous operators are concerned”, Adidi said.

The Eighth Senate, under the leadership of Senate President Bukola Saraki and the Joint Committee on the Petroleum Industry Governance Bill (PIGB), chaired by Senator Tayo Alasoadura, passed the PIGB 2016, after PIB’s 17 year’s hiatus.

Adidi and other industry experts argue that the National Assembly put the wrong foot forward by first passing the PIGB without first considering other critical aspects of the bill, particularly the Petroleum Host Community Bill and the Petroleum Fiscal Framework Bill.

He said: “Now you have passed the PIGB and the other bills are nowhere to be found, what will the PIGB do on its own without being complemented by the Petroleum Fiscal Framework Bill, the Petroleum Industry Downstream Administration Bill, the Petroleum Industry Revenue Management and the Host Community Bill?”

According to him, splitting the PIB into six components and passing an aspect that has nothing to do with fiscal and host community concerns will hurt current efforts at driving significant investments in the industry.

“We are just dancing in circles. The most important bills have not even gone anywhere in the House. The first reading in the House is just for mention. The international investors are watching and they would want to see what has been passed”, Adidi said.

The Chairman, Enfrasco Energy and Infrastructure Services, Mr. Chukwuma Okolo, said the unbundling of the PIB into components and their passages in instalments would hurt investment.

He accused the National Assembly of avoiding the real subject matter (fiscal matters and peace and stability in the Niger Delta) and settling for the least important issue (governance and institutional framework).

The Managing Director/Chief Executive Officer, Gacmork (Nigeria) Limited, Alex Neyin, advised the Senate to pass a bill that would be conclusive, insisting that it was wrong for the Red Chamber to have passed the governance bill and ignored the component that is expected to add value to the lives of the host communities.

He said: “If you pass the bill without the host community part of it, then it could be classified as scam because you cannot be telling the people that you are going to compensate them and you will now turn around and talk of how much money to make out of them without thinking of what to put back to improve their lives.”

Mrs. Ibilola Amao of Lonadek Consulting and Local Content Advisory Services also stressed the need for the communities to be more involved in the exploration and exploitation of resources in their areas. She said there must be equity and fairness.

Mrs. Amao, who commended the PIB, however, said there must be adequate provision that the owners of the resources are engaged more effectively. This, she said, will make them more participatory stakeholders.

Her words: “We would like to see that the communities are more involved. The primary intent of the PIB was to commit the communities to maximising the return on investment for harnessing their natural resources so that it would create jobs and wealth for members of the communities.”

Mrs. Amao also accused governors in the Niger Delta for not addressing the welfare and wellbeing of people in their domains.

According to her, the state governors see the assets as avenue to enrich themselves and not to address the local community issues rather.

She said: “The state governments should be engaging with the oil companies and the people in the communities to make sure that work goes on, and not seeking for their own personal interests. We need to go back to equity and fair play if we want to move forward as a country.”

She emphasised that no investor (local or foreign), would want to put his money in a volatile atmosphere.

The PIGB, which split the Nigeria National Petroleum Corporation (NNPC) into three different entities, was also faulted by Okolo. He expressed doubt over government’s readiness to run the NNPC in a way that it would compete with its peers such as Petro Brass, PETRONAS or Saudi Aramco.

The PIGB as passed by the Senate created three entities from the NNPC, including: Nigeria Petroleum Regulatory Commission (NPRC), National Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC).

The NPRC will serve as a regulatory entity for the entire petroleum industry (upstream, midstream and downstream), the NPAMC will serve as the counterpart and administrator of production sharing agreements and such other risk-based agreements as the government may decide to conclude.

On the other hand, the NPC will serve as an integrated oil and gas company operating as a fully commercial entity across the value chain.

Its activities include: joint venture operations, operation of the Nigeria Petroleum Development Company (NPDC), frontier exploration and other upstream/service activities, refineries, and petrochemicals, among others.

Okolo said: “I don’t think we are yet politically mature to run a true international oil company that is owned by the government. You don’t make somebody competent by passing a law, without competent hands. The skills set necessary to drive the oil and gas industry does not exist within Nigeria, it does not exist in the NNPC.

“If the government wants to run an organisation with competent hands, then it should select people purely on the basis of competence and merit. There must be consideration to quota system, ethnicity or even nationality.

Neyin recommended that the NNPC workers and other government employees be reoriented, adding that their attitudes have never made the system profitable.

The Deputy Chairman, House Committee on Federal Character, Petroleum Resources (Upstream), Sergius Ose Ogun, informed that the bill had gone through the second reading in both chambers.

Ose Ogun said that an ad hoc committee was set up to look into it. According to him, both the host community and the fiscal framework bills were all in the component bill that went through the second reading in the Senate and in the House.

He added that they are being considered all together. “The committee set up had met and hopefully before the end of the year, the bill will be passed into law,” the lawmaker assured.

The Head of Energy Desk, Ecobank, Mr. Dolapo Oni, said as much as the passage of the PIGB was welcome, the knotty part of the PIB that has kept the bill on the table has not been tackled.

It remains to be seen if the National Assembly will hearken the calls for the conclusion of work on the PIB.

October 11, 2017
NNPC: Buhari’s silence not helping matters – CSO

The reaction of the Nigerian National Petroleum Corporation (NNPC) Group Managing Director (GMD), Dr. Maikanti Baru to the Minister of Petroleum Resources, Dr. Ibe Kachikwu memo to President Muhammadu Buhari, on Tuesday, attracted its own reaction.

Speaking with The Nation on phone, Convener, Say no Campaign, Ezenwa Mwagwu, urged Buhari, who doubles as the substantive Minister of Petroleum Resources to make clarifications on the ranging war of words in the NNPC over award of contract, insubordination and sidelining of Kachikwu from the scheme of things.

According to him, Buhari should confirm whether Baru presented the report to him and also awarded the contract within the threshold that the Federal Executive Council allowed.

The member of the Civil Society Organization said that since the president promoted Kachikwu to become the Minister of State for Petroleum Resources, the latter has become irrelevant in the oil and gas industry.

Ezenwa noted that all the powers in the industry now reside with Buhari and Baru, while Kachikwu is only an onlooker.

He said that “I think the intervening power of the substantive Minister of Petroleum Resources, (Buhari), who has the responsibility to clear the air on most of the issues.

Stressing that the issues are about procurement, the activist noted that some critics may have veered of the point to conclude that money is missing.

Ezemwa submitted that it may not necessarily mean that money is missing.

He explained that “The issues are around procurement- who has the right to do what. The country is waiting for Buhari to intervene to put an end to the conversation.

The people talking about money missing have already missed the point because it is about contract award and not necessarily money.”

He said that: “The silence of the minister (Buhari) has not assisted in putting an end to that rivalry . I know that the BPP has intervened to say issues about procurement and contracts. The minister (Buhari) himself should also come out and state categorically what all of this means.

“The power is with the GMD and the minister. Having promoted him out of relevance do you still think he has some power? That is why I am asking the substantive minister of petroleum to put an end to the conservation by stating whether him and the Federal Executive Council operated within the threshold that Baru talked about.”

He said that he submitted the report the minister and Kachikwu is not the minister. He (Buhari) should tell us and his silence is not helping matters.”

Meanwhile, the Executive Director, Africa Network for Environment and Economic Justice (ANEEJ), Rev. David Ugolor, said that Baru acted with the support of the president, who has refused to react to the issue.

The advocate of good governance in the oil and gas industry added that Baru “acted with the backing of Mr. President. It wouldn’t have ever happened.”

According to him, it is unfortunate that Kachikwu has not realized that it is time for him to resign.

Ugolor said that “Now, he (Kachikwu) has not only been deeply embarrassed but he has also been deeply insulted.”

He recalled that what happened to the secretary of the NNPC in Jonathan’s administration, Dr. Yinka Omoruke was summarily dismissed by the former Minister of Petroleum Resources, Mrs. Diezani Alison Madueke is now repeating itself.

The minister had overwhelming influence in the government but now the NNPC boss is wielding the power.

Ugolor noted that Kachikwu is protecting the interest of the citizenry but doubted whether Nigerians will be there for him when he is facing the music.

He urged Nigerians to take their destiny into their hands, noting that “if they think that Buhari is going to rescue them, they (Nigerians) are on their own. This is not the first, not the third and not the last, they should not expect any miracle from President Buhari.”

October 10, 2017
‘NNPC doesn’t need minister’s approval to award contracts’

The Nigerian National Petroleum Corporation (NNPC) yesterday defended its integrity following Minister of State Ibe Kachikwu’s allegation that $25b contracts were awarded without due process.

All it needed to award a contract, said the NNPC was the tenders board’s approval and not the minister’s.

The President directed the Group Managing Director (GMD) and management of the NNPC to respond expeditiously to the allegations.

The substance of the allegations made by the Minister of State for Petroleum Resources, in a letter to the President dated 30th of August 2017, is that a number of “major contracts were never reviewed or discussed with me (sic) the NNPC Board.”

The NNPC said yesterday in a statement: “It is important to note from the outset that the law and the rules do not require a review or discussion with the Minister of State or the NNPC Board on contractual matters. What is required is the processing and approval of contracts by the NNPC Tenders Board, the President in his executive capacity or as Minister of Petroleum, or the Federal Executive Council (FEC), as the case may be. There are therefore situations where all that is required is the approval of the NNPC Tenders Board while, in other cases, based on the threshold, the award must be submitted for presidential approval. Likewise, in some instances it is FEC approval that is required.

“It should be noted that for both the Crude Term Contract and the Direct Sale and Direct Purchase (DSDP) agreements, there are no specific values attached to each transaction to warrant the values of $10billion and $5billion respectively placed on them in the claim of Dr. Kachikwu. It is therefore inappropriate to attach arbitrary values to the shortlists with the aim of classifying the transactions as contracts above NNPC Tenders Board limit. They are merely the shortlisting of prospective off-takers of crude oil and suppliers of petroleum products under agreed terms. These transactions were not required to be presented as contracts to the Board of NNPC and, of course, the monetary value of any crude oil eventually lifted by any of the companies goes straight into the federation account and not to the company.

“Furthermore, contrary to the assertion of Dr. Kachikwu that he was never involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, Dr. Kachikwu was in fact expressly consulted by the GMD and his recommendations were taken into account in following through the laid down procedure. Thus, for him to turn around and claim that “…these major contracts were never reviewed or discussed with me…” is most unfortunate to say the least.”

October 10, 2017
NNPC board: Agbakoba sues FG for ‘discriminatory’ appointment

A former Nigerian Bar Association (NBA) president Dr Olisa Agbakoba (SAN) has sued the Federal Government over alleged violation of the Federal Character principle in the composition of the Nigerian National Petroleum Corporation (NNPC) board.

He said none of the persons appointed to fill the nine positions is from the states that make up the Southeast geopolitical zone.

According to Agbakoba, more than one person was appointed from other geopolitical zones in violation of the Constitution.

Members of the board include Dr Tajuddeen Umar (Northeast), Dr. Maikanti Baru (Northeast), Mr. Abba Kyari (Northeast), Mr. Mahmoud Isa-Dutse (North Central), Mallam Mohammed Lawal and Mallam Yusuf Lawal (both Northerners).

Others are Dr. Emmanuel Ibe Kachikwu (South-South), Dr. Thomas M.A John (South-South), and Dr. Pius O. Akinyelure (South-West).

“The reason for the action (lawsuit) is that the Federal Government has always discriminated against Nigerians indigenous to the states in the Southeast zone in the appointments into the board of the second respondent (NNPC).

“The Federal Government, by the lopsided appointment, accords numerical advantage to states in other geo-political zones to the detriment of the applicant’s Southeast geopolitical zone that is totally excluded from the board of the second respondent,” he said.

According to him, Section 42 of the 1999 Constitution guarantees the right of every citizen to freedom from discrimination.

Agbakoba said the Constitution also “prohibits any administrative or executive action of the government or application of any law in force in Nigeria discriminating between Nigerians or accords any privilege or disability to any Nigerian, on account of ethnicity, state of origin, etc.”

Attorney-General of the Federation, NNPC and the Federal Character Commission are the respondents in the suit filed at the Federal High Court in Abuja.

Agbakoba is seeking a declaration that the distribution of appointment into the NNPC’s Board made on July 5 last year violates the principle of democracy, social justice and Federal Character prescribed by Section 14(1) and (13) of the 1999 Constitution.

He is praying for an order of perpetual injunction restraining the Federal Government from further violation of the Constitution and other laws including the Federal Character Commission (Establishment, etc.) Act in appointment of NNPC board members.

He further asked for an order of perpetual injunction directing the Federal Government to henceforth apply the constitutional principles of democracy, social justice and all laws relating to Federal Character, including the Federal Character Commission (Establishment, etc.) Act in appointing NNPC board members.

October 9, 2017
Workers urge funding of NNRA with 2% oil proceeds

The staff of the Nigeria Nuclear Regulatory Authority (NNRA) have called on the Federal Government to earmark 2% of crude oil proceeds for the funding of the activities of the authority.

The NNRA chapter of the Petroleum and Natural Senior Staff Association of Nigeria (PENGASSAN), Chairman, Ifreke Udeme, made this request during the second Triennial Branch Conference in Abuja.

Its theme was “NNRA: Regulatory Responsibilities for Increased Performance viz-a-vis Safety, Security and Safeguards for Radioactive Substances.”

He explained that although the activities of the authority are mainly in the oil and gas industry, yet it has been underfunded from inception.

Udeme said that the National Assembly, the governing board of NNRA, PENGASSAN and NUPENG can jointly work towards earmarking 2% of oil and gas proceeds for the funding of the authority’s activities.

He said that: “The activities of the NNRA, 90% of it is in the oil and gas industry. We licensed the sources and we conduct well logging and this cuts across the oil and gas industry.so the proceeds from there, a percentage of it with a legislature should be used to fund the NNRA for its activities.

“One percent or two percent of the proceeds can fund the activities of the NNRA vis and vis the directive of government that we should exit the federation appropriation by 2020.

“We have to collaborate with the relevant stakeholders; the NNRA governing board, the National Assembly and the management of NNRA’ PENGASSAN and NUPENG to be able to achieve this.

“The NNRA is grossly underfunded right from inception. And the National Assembly together with our legal unit can sit down and work out the areas that we can achieve this: the activities in the oil and gas industry from seismic activities to exploration to upstream or downstream, we can look at these areas.”

Speaking, the Kaduna Zone PENGASSAN chairman, Comrade Yusuf Abubakar noted that the global economy is now diversifying from oil to other sources of energy and Nigeria can resort to nuclear.

He appealed to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu to reposition the NNRA with its next year’s budget for it to carry out the expected development of the nuclear energy.

The minister’s representative, who was from the Nigerian National Petroleum Corporation (NNPC), Sanusi Abdulakeem, promised to convey the demands of the association to Kachikwu.

He said that the ministry would consider the workers’ demand for a spacious office accommodation.

Kachikwu, however, advised them not to abuse the opportunity that the Director-General, Prof Lawrence Dim has allowed them to unionize.

The Deputy General Manager, Katsina Zone of the association, who represented Dim admonish the union to take the results of the Congress election in good fate.

A member representing Akoko Edo Federal Constituency in the House of Representatives, Comrade Peter Akpatason, promised the support of the lawmakers for whatever bill the NNRA may present to the lower chamber.

October 9, 2017
Kachikwu’s claims on oil contracts unfortunate – NNPC

The Nigerian National Petroleum Corporation (NNPC) on Monday dismissed as untrue claims by the Minister of State for Petroleum, Dr. Ibe Kachikwu, that he was never involved in the award of major crude oil contracts in the country.

NNPC said in a statement the minister was expressly consulted by its Group Managing Director (GMD), Dr. Maikanti Baru, and his recommendations taken into consideration in the crude oil contracting process.

It also described Kachikwu’s instance that major contracts were never reviewed or discussed with him as “mostly unfortunate.”

NNPC stressed that all it required to award a contract in the oil and gas sector was the approval of the Tenders Board and not the minister’s endorsement.

The state oil company’s response followed the report of alleged lack of adherence to due process in the award of contracts by Kachikwu in his August 30 letter to President Muhammadu Buhari.

The minister had claimed that several major contracts were never reviewed or discussed with him and the NNPC Board.

The President had since ordered Baru and the entire management team of the Corporation to respond expeditiously to the allegations.

The statement reads: “It is important to note from the outset that the law and the rules do not require a review or discussion with the Minister of State or the NNPC Board on contractual matters. What is required is the processing and approval of contracts by the NNPC Tenders Board, the President in his executive capacity or as Minister of Petroleum, or the Federal Executive Council (FEC), as the case may be. There are therefore situations where all that is required is the approval of the NNPC Tenders Board, while in other cases, based on the threshold, the award must be submitted for presidential approval. Likewise, in some instances it is FEC approval that is required.

“It should be noted that for both the Crude Term Contract and the Direct Sale and Direct Purchase (DSDP) agreements, there are no specific values attached to each transaction to warrant the values of $10billion and $5billion respectively placed on them in the claim of Dr. Kachikwu. It is therefore inappropriate to attach arbitrary values to the shortlists with the aim of classifying the transactions as contracts above NNPC Tenders Board limit. They are merely the shortlisting of prospective off-takers of crude oil and suppliers of petroleum products under agreed terms. These transactions were not required to be presented as contracts to the Board of NNPC and, of course, the monetary value of any crude oil eventually lifted by any of the companies goes straight into the federation account and not to the company.

“Furthermore, contrary to the assertion of Dr. Kachikwu that he was never involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, Dr. Kachikwu was in fact expressly consulted by the GMD and his recommendations were taken into account in following through the laid down procedure. Thus, for him to turn around and claim that ‘these major contracts were never reviewed or discussed with me’ is most unfortunate to say the least.”

October 9, 2017
We don’t need minister’s approval to award contract – NNPC

The Nigerian National Petroleum Corporation (NNPC) said on Monday that all it required to award a contract was the approval of the Tenders Board and not the minister’s endorsement.

The Corporation said in statement that the clarification followed the publication of alleged lack of adherence to due process in the award of contracts by the Minister of State for Petroleum, Dr. Ibe Kachikwu, in his August 30 letter to President Muhammadu Buhari.

The minister had claimed that “several major contracts were never reviewed or discussed with him and the NNPC Board.”

The President had since ordered the Group Managing Director (GMD) of the NNPC, Dr. Maikanti Baru and the entire management team of the Corporation to respond expeditiously to the allegations.

The statement reads: “It is important to note from the outset that the law and the rules do not require a review or discussion with the Minister of State or the NNPC Board on contractual matters. What is required is the processing and approval of contracts by the NNPC Tenders Board, the President in his executive capacity or as Minister of Petroleum, or the Federal Executive Council (FEC), as the case may be. There are therefore situations where all that is required is the approval of the NNPC Tenders Board, while in other cases, based on the threshold, the award must be submitted for presidential approval. Likewise, in some instances it is FEC approval that is required.

“It should be noted that for both the Crude Term Contract and the Direct Sale and Direct Purchase (DSDP) agreements, there are no specific values attached to each transaction to warrant the values of $10billion and $5billion respectively placed on them in the claim of Dr. Kachikwu. It is therefore inappropriate to attach arbitrary values to the shortlists with the aim of classifying the transactions as contracts above NNPC Tenders Board limit. They are merely the shortlisting of prospective off-takers of crude oil and suppliers of petroleum products under agreed terms. These transactions were not required to be presented as contracts to the Board of NNPC and, of course, the monetary value of any crude oil eventually lifted by any of the companies goes straight into the federation account and not to the company.

“Furthermore, contrary to the assertion of Dr. Kachikwu that he was never involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, Dr. Kachikwu was in fact expressly consulted by the GMD and his recommendations were taken into account in following through the laid down procedure. Thus, for him to turn around and claim that ‘these major contracts were never reviewed or discussed with me’ is most unfortunate to say the least.

October 9, 2017
$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
October 9, 2017
NNPC’s nine trillion Naira

•We want answers and we want them now

The nation did not expect that, under the Muhammadu Buhari administration, a whiff of scandal could ever come near the austere man who has risen in the esteem of many as the image of rectitude in a world of suffocating filth. The minister of state for petroleum, Dr. Ibe Kachikwu, stunned us with his epistolary tirade about what he described as the shady doings of the Nigerian National Petroleum Corporation (NNPC).

We must say that, as a newspaper, we are disappointed that up till the time of writing this piece, the president has not voiced a word to the Nigerian people. Whether the allegations are true, or partly true or woefully false and misleading, the Nigerian people do not deserve the silence from the highest democratic office in the land.

The allegations are weighty, and the implications too ominous for our prosperity, for the president not to say a thing about them. In spite of the focus of the letter on the NNPC group managing director, Dr. Maikanti Baru, and his alleged serial acts of impunity, he roped in the integrity of the president. Hear him: “in most of these activities, the explanation of the GMD is that you are the minister of petroleum and your approvals were obtained.”

Other than the fact that Dr. Baru heads the corporation, the scandal is an arrow that goes straight to the heart of President Buhari. Dr. Kachikwu lined up the impunities as amounting to $25 billion, which in local terms is equivalent to N9 trillion, rivalling our national budget.

The crimes were that the contracts were signed without recourse to the board. The limit for Dr. Baru is $20 million, which is even too much latitude in the hands of a government employee. The contracts include: 1) The crude Term Contracts at a value over $10 billion. 2) The DSDP contracts valued at over $5 billion. 3) The AKK pipeline contract – valued approximately $3 billion. 4) Various financial allocation funding contracts – valued at over $4 billion.

He adds, “There are many more, Your Excellency.”

The minister of state stated that he and some of the board members learned of the transactions via social media and the newspapers. He characterised Dr. Baru as running a “bravado management style.” There are a few other searing points raised in the letter.

One, Dr. Kachikwu alleged that as Dr. Buhari’s deputy in the ministry, he tried without success to secure an audience with the principal officer in the ministry.

Two, that he had written Dr. Baru on these matters and the MD ignored him.

Three, that appointments were made without consulting the board and the Board Services Committee held the right to review potential appointees.

Four, he said Dr. Baru’s attitude ran counter to the president’s standards of morality.

It is baffling that, as minister of state, Dr. Kachikwu could not have access to the president until he wrote the damning letter. He was slated to meet the president October 4, but was put off to the next day. In a normal, serious working milieu, a minister of state should be just a phone call away from the minister of petroleum. If this is not true, it creates a very bad impression of the president’s working sense of administrative hierarchy in Nigeria’s honey pot, the NNPC. It also gives the painful impression that the managing director enjoys a favour that neither the rules nor decency entitles him. He therefore makes the position of the minister of state sinecure.

That Dr. Baru has allegedly treated him with cold contempt and worked without recourse to the law is so serious we want to know whether the president was aware of this. If he was aware, he must have shown a condemnable detachment from that valuable part of the Nigerian economy and allowed indiscipline and contempt for order and rules to thrive while his administration puffs about its devotion to integrity in office.

The board was quiet through all these, and we might never have known of these things if Dr. Kachikwu did not squeal. We are assuming that the contents of his letter are true. The board itself has drawn angry public flak for its brazen ethnic lopsidedness and the inclusion of the president’s chief of staff as member.

During the Jonathan administration, the president’s party, the All Progressives Congress (APC), railed at the seedy stories of corruption. He even said famously that “if we don’t kill corruption, corruption will destroy us. If Kachikwu has said the truth, it means the president is presiding over what he condemned in his predecessor.

Since he was sworn in, his Economic and Financial Crimes Commission (EFCC) has unleashed its fangs on some of the big players of the Jonathan era. They include the relatives of the former President, including his wife Patience, Sambo Dasuki, his national security adviser, Diezani Alison-Madueke, the president’s predecessor as oil minister and a host of others. They have taken the quality of a soap opera and have levitated the profile of the Buhari administration as the icon of integrity.

Dr. Kachikwu noted in the letter in perhaps the most frontal passage: “I know that this bravado management runs contrary to the cleansing operations you engaged me to carry out at the inception of your administration. This is also not in consonance with your own renowned standards of integrity.” This is at once a lurking indictment and adulation, or an indictment that comes as flattery.

We must note that a scandal that consumes N9 trillion is no small matter. It is the biggest scandal in our history, only exceeding the N2.8 billion scandal of another era.

There are questions the president must answer and quickly. What was the role of the president in these contracts? Did the president subordinate his role to that of Dr. Baru? What were these contracts, how were they awarded and to whom? How far have these contracts been executed? How were the contracts resourced? Did the managing director tell the president? What did the board do when it heard of these contracts?

It is clear that much as Dr. Baru is the man in the centre of the contracts, it is the president that should answer these questions. He is not only the head of government, he is also the chief accounting officer of Nigerian oil.

What has happened with the NNPC is what the nation has witnessed in other areas. For instance, the vice president has since submitted a report on secretary to the government of the federation, Babachir Lawal, and Ayodele Oke of the National Intelligence Agency, but the president has frozen the documents in his vault. Recently, the head of the National Health Insurance Scheme, Usman Yusuf, was accused of impunity and contempt for due process by health minister, Isaac Adewole. When he was suspended, he defied the minister’s authority. The report of the inquiry is with the president but he has neither acted on nor spoken about it. This sort of attitude has tended to confirm charges of ethnic bigotry and nepotism at the president.

Dr. Kachikwu’s charges do not call for any cynical panel of inquiry that may fade away with time. We want answers and we want them now. The nation cannot afford a cabal that presides over our money as though the rest of us do not count and own this country together.

October 9, 2017
NNPC: Buhari will not allow anyone to dent his image- DG VON

The Director General of Voice of Nigeria (VON), Mr. Osita Okechukwu has reassured Nigerians that President Muhammabu Buhari would do the needful and not disappoint on the allegations against the Group Managing Director of the Nigeria National Petroleum Corporation (NNPC).

Okechukwu spoke against the backdrop of the feud between Minister of State for Petroleum Resources, Dr Ibe Kachikwu and the Group Managing Director of Nigeria National Petroleum Corporation (NNPC), Dr Maikanti Baru.

Kachikwu had written to the President, complaining about Baru’s excesses including alleged award of contracts worth over 25 billion dollars without due process and approval of NNPC Board which he (Kachikwu) heads.

Fielding questions from reporters in Enugu over the weekend, Okechukwu said: “President Buhari will do the needful and will not allow anyone to dent his image or tarnish his integrity quotient, if the allegations are valid. This is his political capital upon which we followed him, upon which Nigerians voted for him and upon which the international community endorsed him”

The VON DG equally noted that Buhari’s urgent meeting with Kachikwu has vindicated some of them who believed abinitio that the Minister’s letter did not get to the President,

“As I said before, I have not seen nor heard from Mr President since the altercation, am at Enugu as you know, but permit me to opine from my observation that the meeting President Buhari had with Kachikwu vindicated some of us who had expressed the candid view that it is possible that those who blocked Kachikwu from seeing Mr President might had blocked the letter from getting to him. Otherwise the urgent verification meeting he had with Kachikwu signposts this assumption. Aso Villa has unresolved culture of mix-bag.”

Okechukwu said that for the much he knew of President Buhari, he had always placed public interest above self and cannot allow his political capital of integrity quotient to be extinguished by anyone, even his traducers can attest to his selflessness.

He attributed the unfolding events to “the palace guards, in every palace, who sometimes in this instance, work 100 degrees at variance with Buhari’s public service trajectory. They wittingly or unwittingly fail to recognize the treasury and premium Buhari places on the Social Contract he has with Nigerians to make a change.”

October 8, 2017