NNPC not answerable to minister of state for petroleum on contracts -Baru

The Nigerian National Petroleum Corporation( NNPC ) yesterday responded to allegations made against Maikanti Baru, its group managing director, saying that by the law establishing the corporation, it is not meant to defer to the minister of state for Petroleum or NNPC Board on contractual matters.
The NNPC, in a press release signed by Ndu Ughamadu, the group general manager, Public Affairs said: “Following the publication of alleged lack of adherence to due process in the award of NNPC contracts, the President ordered the Group Managing Director (GMD) and Management of the Nigerian National Petroleum Corporation (NNPC) to consider and respond expeditiously to the allegations.

The statement described the allegations by the minister as baseless, as according to it, due process was followed in the various activities engaged in.

The corporation further stated that it has been established that apart from the Ajaokuta-Abuja and Kano (AKK) gas pipeline project and Nigerian Petroleum Development (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.

“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.

“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 (FEC) as the case may be.

Baru explained that there are 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, while in some instances, it is the Federal Executive Council (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 Emmanuel Ibe 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”. He said they are merely the short listing of prospective off-takers of crude oil and suppliers of petroleum products, under agreed terms. These transactions, he said, are not required to be presented as contracts to the Board of NNPC, adding that 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.

Baru further observed that contrary to the assertion of Emmanuel Kachikwu, he (Baru) was never involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, “Emmanuel 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.

Baru said the contracting process in the NNPC is governed by by the following: “Provisions of the NNPC Act, the Public Procurement Act, 2007 (PPA), Procurement method and thresholds of application and the composition of the 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.

On the various financing arrangements considered with International Oil Companies (IOCs) he stated that the arrangements reported as contracts, are part of the process of exiting Cash Call approved by the FEC. “It entails negotiations with JV Partners on alternative funding of some selected projects, through third party financing to bridge the funding gap associated with the Federal Government’s inability to meet its cash call contributions”.

The third party financing option, Baru said, emanated from the Appropriation Act provisions, which allow for sourcing of financing outside regular cash call contributions.

On the approving authority for contracts, he said, the SGF’s circular on procurement threshold, provided the following authority limits for NNPC transactions, as well as the composition of the NNPC Tenders Board: He stated that Bureau for Public Procurements (BPP) issues “No objection to award”/FEC approves N2.70 billion (USD 20M) and above just as the NNPC Tenders Board can also approve up to N2.7 billion (USD20M

He said the NNPC had cause to clarify severally from the BPP, as to the composition of NNPC Tenders Board and the role of the NNPC Board appointed by Government.

In the course of this, he said the following clarifications were made

“The BPP expressly clarified that NNPC Tenders Board (NTB) is not the same as NNPC Board. The governing board (NNPC Board) is responsible for approval of work programmes, corporate plans and budgets, while the NTB is responsible for approval of day-to-day procurement implementation”.

He said the BPP referred to the SGF circular for the composition of the NTB, to compose of the Accounting Officer (GMD NNPC) as the Chairman, with Heads of Department (GEDs) as members, with the Head of procurement (GGM SCM) serving as the Secretary of the NNPC Tenders Board.

Baru further said the above clarifications of the provisions of the procurement process, show that approvals reside within the NTB and where thresholds are exceeded, the NNPC refers to FEC for approval. Therefore, the NNPC Board has no role in contracts approval process as advised by BPP.

“As can be seen, all these clarifications were sought and obtained, prior to August, 2015 and were implemented by the minister, as the GMD of NNPC. Emmanuel Kachikwu he said, also constituted the first NNPC Tenders Board on 8th September, 2015 and continued to chair it until his exit in June, 2016”.

On specific contracts like Crude Oil Term Contract (COTC) which was valued at over $10bn, he said COTC is not a contract for procurement of goods, works or services; rather it is simply a list of approved off-takers of Nigerian crude oil of all grades. This list does not carry any value, but simply state the terms and conditions for the lifting.

The Direct Sale Direct Purchase (DSDP) Contract- valued at over $5bn, he said, like COTC is not a contract for any procurement of goods, works or services. Rather, it is simply a list of off-takers of crude oil and suppliers of petroleum products of equivalent value.

He said this list does not carry any value, but simply states the terms and conditions for the lifting and supply of petroleum products

As regards the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Contract, the NNPC said the gas pipeline project is a contractor financed contract, stating that approval of project proposal and contracting strategy was given by NTB.

Meanwhile, Oil workers under the aegis of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have vowed to resist any attempt by officials who are not designated for the administration of the Nigerian National Petroleum Corporation (NNPC) to meddle with the affairs of the Association.

The workers warned that they would stop non-executive officials from using top management positions in the National Oil Company, to settle cronies , to the detriment of dedicated staff.

In a statement signed by Sulaiman Sulaiman, Group Secretary of the Group Executive Council (GEC) of PENGASSAN in NNPC, they noted that the recent re-organisation in the NNPC was in good faith and encouraged internal growth.

They stated, “We are convinced that the recent re-organisation in the NNPC is in good faith, and in tandem with our call for allowing internal growth in the system, through hard work and positive appraisals.

“We shall continue to reject and vehemently resist attempts in meddling into the day-to-day running of the organisation by non-executive officials of the Corporation. We will not any longer, allow our institution to be an avenue to settle friends and cohorts into management positions of NNPC, at the detriment of dedicated staff with all the requisite qualifications within the system.

“Problems will continue to occur, as long as the Chairman of the Board will continue to meddle into day-to-day running of the organizations, which is a management role. Any attempt to allow this to happen will spell doom for the country and create a window for abuse.”

 

OLUSOLA Bello and Harrison Edeh