News

Why I Did Not Consult Kachikwu, NNPC Board on Multi-billion Dollar Contracts – GMD Maikanti Baru

Published

7 years ago

October 10, 2017

The embattled Group Managing Director of the state oil firm, NNPC, Maikanti Baru, made his first public defence of the allegations against him, saying he did no wrong.

Mr. Baru has faced stringent criticisms since a letter written by the Minister of State for Petroleum, Ibe Kachikwu, leaked to the media.

In the letter addressed to President Muhammadu Buhari, Mr. Kachikwu, who is also the chairman of the Board of NNPC, accused Mr. Baru of illegality by awarding contracts worth about $25 billion (N9 trillion) without following due process in consulting the NNPC Board.

He also accused Mr. Baru of insubordination and improper appointments in the state oil firm.

In his response, sent to PREMIUM TIMES on Monday, Mr. Baru admitted not consulting the NNPC board in the contract awards, saying such consultations were not necessary as he got approvals for his actions from President Muhammadu Buhari.

“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,” Mr. Baru said. “What was required was the processing and approval of contracts by the NNPC Tenders Board, the President in his executive capacity or as Minister of Petroleum, or the Executive Council of the Federation, FEC.

“There were situations where only approval by the NNPC Tenders Board was required, while in other cases, based on the threshold, the award must be submitted for presidential or FEC approval.”

Mr. Baru’s stance appears to conflict with Section 2 of the NNPC Act which states that “the affairs of the Corporation (NNPC) shall, subject to Part II of this Act, be conducted by a Board of Directors of the Corporation which shall consist of a Chairman and the following other members.”

The GMD’s position would, therefore, imply that the NNPC “affairs” to be conducted by the board excludes contractual matters, a stance he emphasised.

According to him, the NNPC Board has no role in contracts approval process, as members were appointed by government for the purpose of approving NNPC’s work programmes, corporate plans and budgets.

VALUE OF CONTRACT

Mr. Baru also questioned Mr. Kachikwu’s valuation of the contracts awarded without consulting the NNPC Board.

Citing both the Crude Term Contract and the Direct Sale and Direct Purchase, DSDP, agreements, Mr. Baru said contrary to Mr. Kachikwu’s allegations, no specific values of $10 billion and $5 billion respectively were attached to each transaction to warrant them being classified as contracts above NNPC Tenders Board limit.

He said the contracts were mere shortlist of prospective off-takers of crude oil and suppliers of petroleum products under agreed terms, which were not required to be presented as contracts to the NNPC Board.

Describing as “most unfortunate” allegations by the minister that he was not involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, COTC, Mr. Baru said Mr. Kachikwu was not only consulted, but his recommendations were taken into account in following laid down procedures for the award of the contract.

He said the NNPC contracting process was governed by the NNPC Act and the Public Procurement Act, 2007 (PPA), which spell out the procurement method and thresholds of application as well as 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, of March 11, 2009.

In line with the NNPC procurement process, Mr. Baru said, authority to approve contracts resided with the NNPC Tenders Board, NTB, and contracts above certain threshold would then be referred to FEC for approval.

Under the NNPC contracting process, Mr. Baru said, the NTB is authorised to approve contracts valued up to a maximum of N2.7 billion, or $20 million; while contracts above that value would be sent to FEC for approval upon receiving certificate of no objection from Bureau for Public Procurement.

On the other hand, he said, the NTB was responsible for approval of day-to-day procurement implementation.

Members of the NTB consist the GMD NNPC as the Chairman/chief accounting officer, with heads of department (Group Executive Directors) as members and the head of procurement (Group General Manager) as the secretary of the NNPC Tenders Board.