5 October 2017

Nigeria: Senate Probes $25bn NNPC Contract Allegations

Abuja — Senate yesterday set up a 7-man panel to clinically investigate the alleged insubordination, due process abuse and maleficence made by Minister of State for Petroleum, Ibe Kachikwu, against the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, leading to the award of contracts worth over $25 billion.

The resolution which followed a motion moved by Senator Samuel Anyanwu (Imo East), with Kabiru Marafa (APC, Zamfara State) seconding it, caused the red chamber directing that the investigation be extended to allegations of series of shady deals in another NNPC subsidiary, the NNPC Trading company.

Consequently, senate set up a 7-man adhoc committee led by a former Sokoto State governor, Senator Aliu Wammako to carry out the investigation.

Other members of the adhoc committee to conduct the investigation are Senators Tayo Alasoadura, Kabir Marafa, Albert Bassey, Sam Anyanwu Ahmed Ogembe, Chukwuka Utazi,Rose Okoh and Baba Kaka Garbai.

Senator Marafa had in an amendment to Anyanwu's original motion, drawn the attention of the Senate to the wieght of Kachikwu's allegation which was contained in an official memo to President Muhammadu Buhari.

Marafa noted that the issues in the memo could not be glossed over by the Senate because they touched on the issue of corruption which the Buhari administration was supposed to be fighting.

In the August 30, 2017 memo, Kachikwu attributed the slow growth in the oil and gas sector to illegal practices by the departments and agencies under his ministry, especially the Nigerian National Petroleum Corporation (NNPC) headed by the Group Managing Director, Dr. Maikanti Baru.

He told President Muhammadu Buhari that the country's petroleum industry would have recorded tremendous progress but for Baru's alleged inactions.

Kachikwu who also presented five prayers to the President to save the oil sector from collapse said he was always being blocked from seeing the President.

He said he was disturbed that $25billion contracts were awarded by Baru without his input and that of the Board.

Kachukwu stated that, "The legal and procedural requirement is that all contracts above $20million would need to be reviewed and approved by the Board of the NNPC. Mr President, in over one year of Dr Baru's tenure, no contract has been run through the Board."

This is despite my diplomatic encouragement to Dr Baru to do so to avoid wrongfully painting you as a President who does not allow due process to thrive in the NNPC.

"Given the history of malpractices and the public perception of the NNPC as having a history of non-transparency, the NNPC Tenders Board (NTB) cannot be the final clearance authority for contracts it enters into."

"The NTB, which is a collection of level NNPC executives and COOs, with the GMD as chairman cannot continue to be the final approval authority for multimillion dollar contracts and transactions involving NNPC to the exclusion of the Board.

Board members have singularly and collectively raised these issues to no avail. "The following major contracts were never reviewed by or discussed with me or the Board of NNPC:

The Crude Term Contracts - value at over $10bThe DSDP contracts - value over $5bThe AKK pipeline contract - value approximately $3bVarious financing allocation funding contracts with the NOCs - value over $3bnVarious NPDC production service contracts - value at over $3bn - $4bn

"There are many more Your Excellency. In most of these activities, the explanation of the GMD is that you are the minister of petroleum and your approvals were obtained. However, the correct governance should be that the Minister of State and the Board review the transaction and give their concurrence prior to presentation to you.

"As in many cases of things that happen in NNPC these days, I learn of transactions only through publications in the media. The question is why is it that other parastatals which I supervise as Minister of State or Chair of their Boards are able to go through these contractual and mandatory governance processes and yet NNPC is exempt from these?

"I know that this bravado management style 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."

He added: :I would have wanted to come personally after receiving you at the airport to felicitate with you and discuss matters herein contained, however, I have been unable to secure on appointment to see you despite very many attempts.

"Mr. President, like many other Nigerians, I resumed work confronted by many publications of massive changes within the NNPC. Like the previous reorganisations and reposting done since Dr. Baru resumed as GMD. I was never given the opportunity before the announcements to discuss these appointments. This is so despite being minister of State Petroleum and Chairman NNPC Board.

"The Board of NNPC which you appointed and, which has met every month since its inauguration and, which by the statutes of NNPC is meant to review these planned appointments and postings, was never briefed. Members of the Board learnt of these appointments from the pages of social media and the press release of NNPC.

"I only need to add that previous attempts to rush through these appointments through non-governance backdoor and present same to the Acting President were met with a request that this be discussed with me. This was never done.

"Indeed in anticipation of vacancies that would arise from retiring senior executives of NNPC, I wrote the GMD a letter requesting that we both have prior review of the proposed appointments. This was to enable me present same to the Board

"I wrote to the GMD given previous happenstance of this nature. In addition, thereafter, I called the GMD to a private meeting where I discussed these issues, Needless to say that , not only did he not give my letter the courtesy of reply, he proceeded to announce the appointments without consultation or Board concurrence.

"Mr. President, please note that there is a Board Services Committee whose function is to review potential appointments and terminations of Senior Staff prior to implementation. This committee was also not consulted.

The five prayers which the Minister presented to the President to save the oil sector from collapse also reads:

"My prayers most humbly and respectively are:

That we save NNPC and the oil industry from collapse arising from the above non-transparent practices and empower the Board you inaugurated to do the needful. That you save the office of the Minister of State from further humiliation and disrespect by compelling all parastatals to submit to oversight regulatory mandate and proper supervision which I am supposed to manage on your behalf. You kindly instruct the GMD to effectively leave NNPC to run as a proper institution and report out along due process lines to the Board and that your Excellency instructs that all reviews be done with the Minister of State prior to your decision. That to set the right examples, you approve that the recently announced reorganization changes be suspended until the GMD, myself and the Board have made relevant input to same. This will send a clear signal of process and transparency. That Your Excellency encourages joint presentation meetings between heads of parastatals and the Minister of State to you so as to encourage a culture of working together and implant discipline in the hierarchy.

"These in my view, Mr. President, will provide you balanced analysis on issues and avoid exposing the exalted office of Mr. President to ridicule. It will also reduce nonproductive, unsubstantiated rumour peddling."

On the alleged corrupt practices im the NNPC trading company which the Wammako committee would also investigate, the Senate was informed by the motion's sponsor, Anyanwu that the NNPC Trading is composed of Duke Oil; Hyson/Carlson (JV); NAP Oil (JV); and West Africa-Gas LTD (JV);

The motion also drew Senate's attention to the fact that "the decision by the current GMD of NNPC to allocate almost all products to Duke Oil, this is in addition to its automatic inclusion in the lifting of Crude Oil, Gas etc, which thus, made Duke oil a money spinning outfit that is accountable only to NNPC;

According to Anyanwu, "We are also aware of the general lack of transparency and level playing field in favour of Duke Oil to lift products without payment as against its competitors in the sector;

Further aware that these have combined to make Duke Oil the highest money earner and at the same time, the highest money waster because of the massive corruption in the way and manner they transact business" he added.

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