20171010

Top Nigerians react as NNPC Boss says no role for Kachikwu

The Group Managing Director, Nigerian National Petroleum Corporation, Maikanti Baru, declared that it was most unfortunate for the Minister of State for Petroleum Resources, Ibe Kachikwu, to assert that he (Kachikwu) was never involved in the recent Crude Oil Term Contracts.

Kachikwu, who is the Chairman of the NNPC board, in a leaked memo to President Buhari, alleged that against the rules, Baru awarded major contracts worth $25bn without reviewing or discussing them with him or the corporation’s board.

NNPC's official reaction below:

The Group General Manager, Public Affairs Division, Mr. Ndu Ughamadu, faulted the assertions of the minister, adding that his (Kachikwu’s) recommendations with respect to Crude Oil Term Contracts were taken by the NNPC management.

The NNPC stated that its reaction was in response to Buhari’s directive to Baru and his team, mandating them to react to the issues raised in the petition by Kachikwu.

Also, on Monday, heavy security was sighted at the headquarters of the corporation with armoured tanks and police patrol vans strategically positioned on roads leading to the national oil firm.

In its official response to Kachikwu’s allegations, the NNPC stated that it was “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.”

It added, “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, 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’s approval that is required.”

NNPC said that the minister exaggerated some of the contract figures he mentioned in his petition.

It said, “It should be noted that for both the Crude Term Contract and the Direct Sale and Direct Purchase agreements, there are no specific values attached to each transaction to warrant the values of $10bn and $5bn 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 shortlist of prospective off-takers of crude oil and suppliers of petroleum products under agreed terms.”

The corporation said the transactions were not required to be presented as contracts to the board of the NNPC and, of course, the monetary value of any crude oil eventually lifted by any of the companies would go into the Federation Account and not to the company.

It said, “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.”

“In conclusion, due process has been fully followed in the shortlist of the off-takers of the Nigerian crude oil for the current term 2017/2018,” the NNPC added.

SAN, lawyers disagree on Baru reporting to Buhari 
A Senior Advocate of Nigeria, Dr. Olisa Agbakoba, faulted the argument by the NNPC that there was no law requiring recourse to the Minister of State for Petroleum Resources in the award of contracts.

Agbakoba argued that being the Chairman of the NNPC Board, the Minister of State, who supervises the corporation, must be carried along.

He said, “It cannot be the position of the law because the Minister of State (for Petroleum Resources) is the Chairman of the Board of the NNPC and the Chairman of the Board of the NNPC, together with the board, plays a corporate governance role.

“It is true that the President is the Chairman of the Board of Governors but if the President himself has appointed the Minister of State to be the chairman, then my conclusion is that the President is deemed to have delegated his powers to the Minister of State.

“So, the Minister of State is the proper, legally-appointed chairman because that power has been delegated to him by the President, just the same way that when the President was not well, his powers were delegated to the Vice-President.

“So, if the Minister of State is the Chairman of the Board, then the basic rules of corporate governance make it clear, without argument, that what the board does is to supervise the activities of the corporation. That is simple Company Law.

“So, the GMD is not correct at all; he’s not correct.”

But a Lagos-based lawyer, Mr. Jiti Ogunye Ogunye argued that the NNPC was legally correct to exclude the corporation’s board in contract awards.

Ogunye said under the Public Procurement Act, approval for award of contracts in public parastatals was done at two levels – the parastatal’s Tenders Board or the Federal Executive Council – depending on the volume of the contract.

He added that what had given room for controversy was that the constitution did not envisage that the President would double as the Minister of Petroleum Resources.

Ogunye said, “If the contract exceeds the threshold, the ministerial Tenders Board will process that contract award consideration and send it to the Federal Executive Council for approval.

“Now, what the NNPC is saying in the statement they pushed out is that in the NNPC Act, there is no provision of a Minister of State, which is true but it is also not expected that the President would be a minister in addition to being the President."

He stated that in view of the peculiar circumstance, the three authorities ought to work in tandem with full disclosure, saying what was playing out underlined the need for cohesion in the Buhari administration.