$25bn Contract Scam: Kachikwu Lied, Allegations Baseless, Mischievous Says NNPC

$25bn Contract Scam: Kachikwu Lied, Allegations Baseless, Mischievous Says NNPC

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Post Views: 713 • No Law, Rule Says I Must Discuss Contracts With Minister- GMD Situation’s as “truly worrisome- Ezekwesili Maikanti Baru, Group...

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• No Law, Rule Says I Must Discuss Contracts With Minister- GMD
Situation’s as “truly worrisome- Ezekwesili

Maikanti Baru, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), on Monday said Dr. Ibe Kachikwu, his predecessor, now Minister of State for Petroleum Resources was being economical with the truth by saying he was not consulted, just as the allegation that it did not follow due process in the award of $25bn contracts were baseless.
The corporation, reacting to the content of a letter by Minister dated August 30, 2017, bordering on a series of contracts that were allegedly not discussed by the corporation’s board and therefore did not follow due process, said “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.”
Reacting to the allegations based a directive by President Muhammadu Buhari, the corporation, while frowning at the attachment of arbitrary values to the various “contracts,” most of which do not carry any value, said nonetheless it broke no law or rule, since none “require a review or discussion with the Minister of State or the NNPC Board on contractual matters.”
NNPC’s statement by Ndu Ughamadu, Group General Manager, NNPC’s Group Public Affairs Division said, for example, the Crude Oil Term Contract (COTC)- valued at over $10bn is not in itself a contract for procurement of goods, works or services; but a list of approved off-takers of Nigerian crude oil of all grades which does not carry any value
The contract, Ughamadu continued, simply states the terms and conditions for the lifting crude, following which it is “inappropriate to attach a value to it with the aim of classifying it as contract above Management limit,” stressing that due process was fully followed in the shortlisting of the off-takers of the Nigerian crude oil for the current term 2017/2018.
The same, it said, goes for the Direct Sale Direct Purchase (DSDP) Contract- valued at over $5bn, which “is simply a list of off-takers of crude oil and suppliers of petroleum products of equivalent value,” which does not carry any value.
It contained “terms and conditions for the lifting and supply of petroleum products. It is therefore mischievous to classify it as contract and attach a value to it that is above Management’s limit.”
The Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Contract, he continued, are contractor financed contract and procurement contracts subjected to the approved procurement procedures.
“There were no breaches of any extant procurement processes. For the benefit of doubt, it is confirmed that there is no single NPDC (Nigerian Petroleum Development Company) contract that has been approved by the relevant Tenders Board beyond its limit of financial authority and there is no single contract that is in the $3bn to $4bn range claimed in the write-up.”
Furthermore, the statement stressed that apart from the AKK project and NPDC production service contracts, all the other transactions mentioned were not procurement contracts. The NPDC production service contracts have undergone due process, while the AKK contract that requires FEC approval has not reached the stage of contract award.
Contrary to what Kachikwu wrote in his letter to the President, which was leaked to the press, the NNPC said it only required the processing and approval of its “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.”
Contract process in the corporation, it continued, is governed by the “Provisions of the NNPC Act; The Public Procurement Act, 2007 (PPA); Procurement method and thresholds of application and the composition of Tenders Board as provided by the Secretary to the Government of the Federation (SGF) Circular reference no. SGF/OP/1/S.3/VIII/57, dated 11th March, 2009; NNPC Delegation of Authority Guide; Supply Chain Management Policy & Procedure documents; (and) NNPC Ethics Guide Approving Authority for Contracts.”
It further explained that the SGF’s circular on procurement threshold provided authority limits for NNPC transactions such as a “no objection to award” from the Bureau of Public Procurement and Federal Executive Council approval for contracts up to N2.7bn or US$20m and above; and NNPC Tenders Board approval for those up to N2.7bn or US$20m.
The corporation said the contracts were within the purview of the NTB and where thresholds were exceeded, such were referred to the FEC for approval, following which the NNPC board has no role in contracts approval process.
The various “clarifications were sought and obtained prior to August, 2015 and were implemented by Dr. Kachikwu as the GMD of NNPC. Dr. Kachikwu also constituted the first NNPC Tenders Board on 8th September, 2015 and continued to chair it until his exit in June, 2016.
In an interview with Reuters published on September 29, 2015, President Buhari said he had split the corporation into two entities, and was considering breaking it for improved efficiency and to better root out corruption.
“I haven’t absolutely made up my mind about that. We want to see what we have done in reducing the size and redeploying most of the management. We want to see the impact of that before we decide further,” he was quoted as saying, while promising to re-evaluate the issue in about 18 months.
Reacting on twitter, #BringBackOurGirls campaigner and former Minister during the President Olusegun Obasanjo administration, Mrs. Oby Ezekwesili, expressed no surprise at all the allegations contained in Kachikwu’s memo, even as she wonders which aspect of due process or BPP Act the NNPC Group as a group has ever followed.
She described the situation as “truly worrisome.”
According to Ezekwesili, “for an administration that projects a strong Anti-Corruption Stance, President Buhari’s Federal Government cannot afford to be seen tolerating breach of due process.”

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