The Nigerian National Petroleum Corporation (NNPC) is perceived by many to be one of the corrupt agencies of government. Past governments attempted to introduce reforms aimed at sanitising the corporation, but to no avail. In this report, OLATUNDE DODONDAWA examines the issues surrounding its perception as a corrupt organisation.
Introduction
On Tuesday, October 3, 2017, a letter written by the Minister of State for Petroleum Resources, Dr Emmanuel Ibe Kachikwu alleging gross abuse of power by the Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Kachalla Baru over alleged award of contracts worth over $25 billion without recourse to the Board of the NNPC, was leaked to the media.
The letter which was dated August 30, 2017, alleged that a crude oil term contract worth $10 billion was awarded without due process; $5 billion worth of fuel import through Direct Sales Direct Purchases (DSDP); financing contracts with NNPC partners worth $3 billion; NPDC (a subsidiary of NNPC) service contracts given to other oil companies worth $3-$4 billion; Ajaokuta-Kaduna-Kano pipeline contract worth $3 billion; crude oil contracts have already been issued with 33,000 barrels per day allocation to 39 companies and allocation of 90,000 barrels per day contract to Duke Oil (NNPC subsidiary).
Kachikwu had insisted that as the chairman of the NNPC board and being the Minister of State for Petroleum Resources, he should have been carried along and regarded his neglect as insubordination.
However, in his reaction after a meeting with Minister of Petroleum Resources and the President of the Federal Republic of Nigeria, Muhammadu Buhari, Dr Baru claimed he was not answerable to the Minister of State but a substantive Minister of Petroleum Resources.
Furthermore, he stated that it was 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.
“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,” he said in a statement.
What does the NNPC Act say regarding award of contracts?
According to NNPC Act 1977: “The affairs of the Corporation 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 Director-General of the Ministry of Finance, three persons to be appointed by the National Council of Ministers (Federal Executive Council). The chairman shall be a Minister… and styled as the Minister of Petroleum Resources.”
The law mandates that NPC affairs be supervised by a Minister and not Minister of State. The Bureau of Public Procurement also stated that it is only the Federal Executive Council that the NNPC GMD should report to on any contract above $20 million.
Baru stated in his reaction that NPC contracting process is governed by provisions of NNPC Act, Public Procurement Act 2007, 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.
Reactions by stakeholders on the feud between Kachikwu and Baru
According to the Team Lead, Facility for Oil Sector Transparency and Reform in Nigeria (FOSTER), Mr Henry Adigun, he stated that “the best thing is for the Petroleum Industry Bill (PIB) to be passed. The key issue here is for the governance issues as enshrined in the proposed PIB to be adopted and the key thing is integrating accountability into the structure right now.
“As it is, NNPCcannot be transparent because of the appointment process and the structure of the board itself.”
When asked if Nigeria’s national oil company post-PIB could be trusted, he simply said, “Yes, it can happen. This is because trust can be created over a period of time.
“Remember that it was until 1978 when we had the first NNPC scandal. We never had such again until the oil wind saga during the Babangida regime. Trust can be built, but it won’t be immediate.It will take time.”
In his reaction, the National President of National Union of Petroleum and Natural Gas Workers (NUPENG), Comrade Achese Igwe argued that this perception has remained ever since former Military President Ibrahim Babangida took over, and has never changed.
“It was from that moment that the concept of running the NNPC changed. And from that moment, various governments have come and gone, but we are still in the same quagmire of not moving forward as an organisation.
“So, that’s why we are saying it is unfortunate these whole issues came into the public. We have had several accusations in the sector, the case shouldn’t be different. All major steps and processes should be taken to put the NNPC in the proper perspective,” he said.
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