23 October 2017

Nigeria: Govt Considers Review of NNPC Appointments

Photo: Daily Trust
NNPC towers.

Abuja — The presidency is currently considering a review of the recent senior executive appointments of the Nigeria National Petroleum Corporation (NNPC) made by its Group Managing Director, Dr. Maikanti Baru, THISDAY has learnt.

The decision to consider a review of the appointments is predicated on the alleged breach of due process in the appointments and contract awards to the tune of $25 billion raised by the Minister of State for Petroleum, Dr. Ibe Kachikwu against the NNPC boss in his letter to President Muhammadu Buhari on August 30.

It has also come to light that the Senate ad hoc committee charged with probing the award of the $25 billion contracts by Baru without recourse to the governing board of the corporation would also focus on the preferential treatment accorded to Duke Oil, a subsidiary of NNPC, in oil lifting contracts and oil swaps, despite the charge that it was incapable of fulfilling the contracts.

But whilst NNPC and the presidency have separately responded to the allegation of the $25 billion contract awards in breach of due process, both institutions have remained silent on the appointments of senior executive officers of the corporation, despite the plea by Kachikwu in his letter that the appointments be suspended.

In their defence of the contract awards, the presidency and the corporation had claimed that the contracts had passed through the NNPC Tenders Board and got No Objections from the Bureau of Public Procurement (BPP), following which final approvals were granted by Buhari and Vice-President Yemi Osinbajo, in his capacity as acting president.

However, a top presidency official who confided in THISDAY, said the silence from the presidency on the appointments was not an endorsement on the action taken by Baru, adding that if after thorough examination the appointments were indeed found to be in breach of the extant laws or the federal character principle, they will duly be reviewed.

According to him, the president and his deputy are advocates and promoters of due process who would not hesitate to reverse themselves when cases of apparent breaches are established, instead of allowing their egos to get in the way and maintaining indifference to wrongful acts.

Buttressing the position, the presidential source said it is on record that the president had previously reversed himself on certain decisions when his attention was drawn to initial errors, adding that he would not fail to do so again.

Against this backdrop, he said the current situation would not be the exception, as the president will not hesitate to right the wrongs in the NNPC appointments even if they had his initial blessing.

"It is going to be reviewed. Extant laws would be checked to verify if NNPC did not comply with them. The appointments will be checked to see if they are not in line with federal character.

"Even if the president had approved them, if they are found not to be in accordance with the extant laws and federal character, this president and even the vice-president will review them and ensure that proper things are done.

"You know that on one or two occasions, some decisions had been taken in error in the past and the president did not hesitate to reverse them. If the same thing is established in this situation, it will be reviewed," he stated.

When queried on the absence of governance raised by Kachikwu in the award of contracts, the presidency source doubled down, saying that the allegation was a hoax and maintained that the contracts were not procurement contracts.

Focusing solely on the joint financing loans approved by Osinbajo, he said what was important was the approval of the joint venture financing by the presidency and not necessarily the board, stating that it was the president that had put the board in place and its power could not have exceeded that of the president.

"This has been explained over and over that they were not procurement contracts. It was the president who put the board in place. That there is a board in place does not preclude the power of the president," he stated.

Meanwhile, it has come to light that the Senate ad hoc committee charged with probing the award of contracts to the tune of $25 billion by Baru without recourse to the governing board of NNPC would also turn the spotlight on the preferential treatment accorded to Duke Oil in oil lifting contracts and oil swaps, despite charges that it was incapable of fulfilling the contracts.

Duke Oil is a wholly owned subsidiary of NNPC registered in Panama in 1989. It is engaged in direct oil trading activities in the spot market to achieve operating capability, downstream integration and additional profits from oil operations.

One of the allegations against the firm is that does not pay taxes in Nigeria.

It has also been named in several NNPC deals which are being investigated, including the oil swaps and unaccounted crude oil lifting worth $17 billion.

Baru again is being accused of giving preferential treatment to Duke Oil, as have successive heads of the oil corporation.

Despite the preferential treatment in contract awards, the company has been discovered to sublet several of its contracts since it cannot fulfill them.

The committee headed by Senator Aliyu Wamakko (Sokoto APC), which was set up to probe the allegations thrown by Kachikwu in his letter, the financial situation of NNPC and the operations of Duke Oil, would focus on Duke Oil, said a source on the committee.

Specifically, the spotlight will be turned on how Duke Oil continues to do massive business in the oil sector without meeting the requisite qualifications for contract awards.

Speaking with THISDAY yesterday, the source said the probe into Duke Oil would expose the corrupt practices in NNPC and the oil sector as a whole.

"The dealings in Duke Oil are known only to the management of the NNPC, not to the National Assembly, not to any other regulatory agency.

"The company makes billions, yet it does not pay tax here. We assumed that would changed when President Buhari came to power, but it has been business as usual," the source said.

Continuing he added: "As Senator Anyanwu (Samuel) pointed out when he moved this motion, Duke Oil is a money spinner for NNPC and by extension, which ever government is in power.

"It is the sole importer of diesel for NNPC retail and PPMC, but it executes the contracts through third parties.

"Remember that during the oil swap probe in the House of Representatives, the same Duke Oil through its MD, Mr. Abdulkadir Seidu admitted earning $36.3 million in commissions after it had sub-contracted its swap contract to three other companies. Yet it did not pay a dime in Nigeria as tax, despite its physical presence here."

The source said there are pertinent questions which the committee would address in the course of the investigation.

"Where did that commission and others go? If Duke Oil is a subsidiary of the NNPC, does that not translate that it is an agency of the Nigerian government? Are we going to continue this way?

"Can the executive just have an agency where it takes money from without appropriation? Unravelling Duke Oil would go a long way in investigating the finances of the NNPC," the source added.

THISDAY had earlier reported that the Senate committee was under pressure from the presidency to give Baru a soft landing and clear him of the allegations levelled against him in Kachikwu's letter.

It was gathered that committee is mindful of the attention that Kachikwu's letter has generated and the allegations that it is being lobbied to soft-pedal on the probe.

When asked what had become of the mandate to probe the contract awards raised by Kachikwu, he said: "That aspect of the probe will happen. The members are aware that the eyes of Nigerians are on them."

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