Kachikwu’s unsavory memo

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Ibe Emmanuel Kachikwu

By Priye John

It is no longer news that the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, wrote a ‘memo’ or letter to President Muhammadu Buhari alleging contract awards to the tune of $25 billion in one year.

Kachikwu had, in a leaked memo recently, accused Baru of insubordination and reversal of some of the gains he (Kachikwu) made while in charge of the corporation before Baru succeeded him in July 2016.

The minister also alleged that the NNPC GMD made some appointments without consulting the board and also awarded contracts without due process.

These allegations in the purported memo, has become a subject of national discourse and has aroused deep resentment among many citizens.

The NNPC responded in a statement signed by its spokesman, Ndu Ughamadu, describing Kachikwu’s claims as baseless.

Ughamadu made it clear that the response to the allegation was as a result of the directive of the the president which indeed was given credence by the Vice President Yemi Osinbajo on Thursday when he disclosed that he (Osinbajo) actually gave Baru the approval when President Buhari was on medical vacation in London.

The letter which was leaked by Kachikwu’s cohorts is perceived by many industry players as a mischievous and attempt to undermine the good works of his successor as the Group Managing Director (GMD) of Nigeria National Petroleum Corporation (NNPC), Dr. Maikanti Baru.

It is an unfavorable circumstance for the nation’s oil sector, for someone well-endowed with knowledge of operations in not just the industry not just in Nigeria but at the international level to condescend to the level of misleading the country.

Whatever the intention, it was indeed a calculated attempt to embarrass the government of President Muhammadu Buhari.

Buhari met with Kachikwu after the letter became public while Vice President Yemi Osinbajo also had a meeting with the GMD, though the issues discussed were not disclosed by the presidency.

However, it is good to put it on record that the minister while in charge of affairs as the GMD, did the same thing he accused Baru of doing.

It would be recall that when the NNPC sought to clarify transaction limits, referring to a circular dated March 11, 2009 by the Secretary to the Government of the Federation (SGF), the procurement methods and financial authority thresholds of application for NNPC transactions were listed as: Approving Authority/No Objection to Award Special Works (NNPC) BPP issues “No objection to award”/FEC approves N2.70 billion (USD 20M) and above NNPC Tenders Board Up to N2.7 billion (USD20M).

The NNPC maintained that these clarifications were “obtained prior to August 2015 and were implemented by Dr. Kachikwu as the GMD of NNPC who constituted the first NTB on September 8, 2015, and continued to chair it until his exit in July 2016.”

Also worth noting is the fact that the minister’s allegation of $25 billion contract awarded is a feign imagination that Baru awarded contracts amounting to $25 billion without consulting him or the board of the NNPC.

In his so-called memo, Kachikwu gave a breakdown of the contracts as: The Crude Term Contracts – valued at over $10 billion. The DSDP contracts – value over $5 billion. The AKK pipeline contract – value approximately $3 billion. Various financing allocation funding contracts with the NOCs – value over $3 billion Various NPDC production service contracts – value at over $3 billion – $4 billion.

But some experts have argued that the law and the rules do not require a review or discussion with the minister of state or the NNPC board on such contractual matters.

The board has no role in contracts approval process as advised by BPP. 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,” the experts said.

Meanwhile, the NNPC said all the contracts listed in Kachikwu’s letter were validly conducted within the expenditure limits of the agency.

The corporation also countered the argument that due process was not followed. The transactions were not required to be presented as contracts to the board of the NNPC.

A seven-step procedure for awarding contracts within the NNPC was outlined in the statement. From the initial approval of project proposal and contracting strategy by NTB, to the presentation of same contract to the federal executive council (FEC) for approval, it was reiterated that all contracts that passed through the national oil company followed due procedure.

Mentioning the direct sale direct purchase (DSDP) contract valued at over five billion dollars as an instance, it was said that the seven-step procedure was duly followed in shortlisting the DSDP partners for the 2017/2018 cycle under review.

According to the NNPC, a “detailed evaluation was carried out and the shortlist of the successful off-takers was presented to the approving authority (Mr. President) for consideration and approval.” The Vice President, Yemi Osinbajo on Thursday dispelled Kachikwu’s claims when he admitted to approving contracts for the NNPC.

The Senior Special Assistant on Media and Publicity, to the VP, Laolu Akande, in a series of tweets on his twitter handle @akandeoj, on Thursday, confirmed that the contracts were approved after due diligence by the Vice President when he acted as President, recently.

Akande said Osinbajo approved the recommendations for the contracts as part of necessary actions to deal with backlog of unpaid cash calls and incentivise investments.

He also said Osinbajo made the clarification in view of media enquiries that followed NNPC’s claim that the contracts were indeed approved by Osinbajo.

The tweets stated, “In response to media inquiries on NNPC joint venture financing, VP Osinbajo, as Ag President approved recommendations after due diligence & adherence to established procedure. Action necessary to deal with huge backlog of unpaid cash calls which Buhari administration inherited and also to incentivise much needed fresh investments in the oil & gas sector.”

Kachikwu and his cohorts should know that the structure and roles of the NNPC tenders board (NTB) and the NNPC board appointed by government were quite distinct.

While the NNPC board is a governing board that has oversight over the approval of work programmes, corporate plans and budgets, the NTB is responsible for approval of day-to-day procurement implementation.
If the minister, who has occupied the office of the NNPC GMD pretends he didn’t know that the NTB comprises 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 NTB, then he has an ulterior motive.

Perhaps, going by the VP’s declaration, Baru should be commended for taken prompt and decisive steps that have restored investors’ confidence and stabilized the nation’s oil sector. Such wild guess is indeed alarming and had created room for critics to discredit the Buhari government. How else can an enemy within be.

We from the Niger Delta have made it clear to the Vice President and indeed the President our demands. We want investments in the region. We are hoping that very soon the President will fulfill is side of the bargain. It is true we are aggrieved and want equity and fair share; we are strait to the point on what we want. We do not revel in cheap blackmail.

Priye John, wrote from Bayelsa.

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Afolabi Adesola is a Nigerian based financial journalist that has the passion for demystifying figures to tell clearer business stories. During her free time, she reads journals and novels. She loves watching movies, and Nigerian sitcoms. She co-runs a mini NGO #ProjectSALT, setup in support of today’s African Lady.

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