Alleged N9trn diversion: Why I didn’t discuss contracts with Kachikwu – Baru

By Etuka Sunday

The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Maikanti Baru yesterday spoke to defend the alleged diversion of N9 trillion contracts sum at the Corporation.
Baru was queried in a memo written by the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu to President Muhammadu Buhari alleging contracts sidelining and diversion of N9 trillion.
Dr. Kachikwu said in his 30th August, 2017 memo, that Baru circumvented extant procurement regulations in awarding a series of contracts up to $25 billion-or N9 trillion at prevailing exchange rate of N360 to a dollar.
The breakdown of the contracts allegedly to have been awarded without recourse to the Ministry of Petroleum or the management board of the NNPC included: $10 billion crude term contracts;$5 billion direct sales direct purchase (DSDP) contacts and $3 billion AAK pipeline contract.
He also said, $3 billion was awarded as a contract for various financing allocation funding contract and another $3-4 billion NPDC production service contracts.
Baru however, in his response as ordered by President Buhari to consider and respond expeditiously to the allegations said, the assertion by Dr. Kachikwu that he was never involved in the contacts processes was not true, saying that he was expressly consulted and his recommendations were taken into account in following through the laid down procedure.
”The substance of the allegations made by the Minister of State for Petroleum Resources, in a letter to the President dated 30th of August 2017, is that a number of “major contracts were never reviewed or discussed with me (sic) the NNPC Board.
“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.
“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.
“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 Dr. 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.
“They are merely the shortlisting of prospective off-takers of crude oil and suppliers of petroleum products under agreed terms.
“These transactions were not required to be presented as contracts to the Board of NNPC and, of course, 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.
“Furthermore, contrary to the assertion of Dr. Kachikwu that he was never involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, Dr. 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,” he said.
NNPC had cause to clarify severally from Bureau of Public Procurement (BPP) as to the composition of NNPC Tenders Board and the role of NNPC Board appointed by Government. 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.
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.
In a statement by the NNPC spokesman, Ndu Ughamadu, Baru said: “the allegations were baseless and due process has been followed in the various activities.
He said: “it is established that apart from the AKK project and 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.”