By Caxton Fatanmi
In the last two days, the letter written to the President by the Minister of State for Petroleum, Dr. Ibe Kachikwu against the Group Managing Director of Nigeria National Petroleum Corporation (NNPC) has trended, as well as generated a lot of controversy, culminating in the invitation of both men for a briefing in Aso Rock Villa.
However, some believe that the story was so twisted, stressing that the Nigerian media has failed to properly educate the people, but presented a poor, highly sensational reportage.
Read Fatanmi’s opinion on the issue
First, there is nothing like a Contract Award in the real sense of the word where money is paid out by NNPC to Contractors.
NNPC selling crude oil to a customer is not a Contract Award, it is a Commrercial transaction.
It is the GMD of NNPC that has ever been signing Crude Oil Sales Term Contract at NNPC from the begining of that corporation as NNOC. From Lawrence Amu, to Chief Marinho, Arets Adam until even when Kachikwu was GMD.
When a Customer signs a Term-Contract to buy Nigerian Crude Oil it is covered by the customer’s bank opening in favor of NNPC either a Standby Letter(s) of Credit (SBLC) or a Documentary Letter(s) of Credit (DLC). Such banks are only amongst the top 50 international banks that are acceptable.
It is after lifting any crude oil under the Sales Contract that the L/C is negotiated and the proceeds goes to the account of the Federal Republic of Nigeria, in the name of NNPC. These accounts are held in New York, mostly.
There is no cash that changes hands between individuals for and on behalf of NNPC.
The insinuation that NNPC through the current GMD is holding some wild figures is plain stupid !
Dr Kachikwu as GMD it was that signed these same Contracts in his capacity in 2015/16.
Now, for the rest of the muddle we have been thrown into, you may wish to read the extant statutory laws that governs NNPC’s Procurement Processes herebelow.
There is no law violated here by the NNPC.
AN X-RAY OF DR. IBE KACHIKWU’S LETTER TO MR. PRESIDENT ACCUSING DR. MAIKANTI K. BARU OF LACK OF ADHERENCE TODUE PROCESS IN THE AWARD OF CONTRACTS.
Nigerians yesterday woke up in the morning and were greeted with a supposed leaked memo from Dr. Ibe Kachikwu the Honourable Minister of State for Petroleum Resources to Mr. President against Dr. Maikanti Kachalla Baru the GMD of NNPC.
This write up will attempt to x-ray the alleged wrong doing in the procurement processes of NNPC vis-à-vis the extant laws that regulate such (Public Procurement Act PPA).
Please note that I am neither the spoke person of NNPC nor that of Dr. Maikanti K. Baru. Section 2 of the PPA provides “The Council shall: (a) consider, approve and amend the monetary and prior review thresholds for the application of the provisions of this Act by procuring entities.”
In exercise of the above provision, Bureau of Public Procurement vide a circular ref: SGF/OP/I/S.3/VIII/57 dated 11th March, 2009 from the office of the Secretary to the Government of the Federation conveyed the Council’s approval in respect of “Implementation of approved revised thresholds for service wide application and special application to the Ministry of Petroleum Resources for expenditure related to the Nigerian National Petroleum Corporation (NNPC), Procurement Methods and thresholds of application and the composition of Tenders Board.”
In the above circular particularly part (b) thereof, it approved the establishment of five Tenders Boards for NNPC namely: NNPC Tenders Board (NTB) with approval of less than USD$20 Million; Group Executive Committee (GEC) with approval limit of less than USD$10 Million; Directorate Executive Committee (DEXCOM) with approval limit of less than USD$4 Million; Management Executive Committee (MEXCOM) with approval limit of less than USD$2 Million; Divisional Committee (DIVCOM) with approval limit of less than USD$0.50 Million respectively. Section 17 of the PPA provides: “Subject to the monetary and prior review thresholds for procurements in this Act as may from time to time be determined by the Council, the following shall be the approving authority for the conduct of public procurement (a) in the case of (i) a government agency, parastatal, or corporation, a Parastatals Tenders Board ; and (ii) a ministry or extra-ministerial entity, the Ministerial Tender Board.”
From the above provision, it is very clear that the only recognised approving authority for the conduct of public procurement in NNPC is the NNPC Tenders Board (NTB) and not the Board of Directors of NNPC as the Honourable Minister of State for Petroleum Resources wants us to believe. I have gone through the PPA or the approved threshold and can’t find anywhere reference is being made to NNPC Board as an approving authority for NNPC. In case where the contract sum is excess of USD$20 Million, the circular quoted above mandated NNPC to forward such to Federal Executive Council (FEC) and not the Board of Directors of NNPC. Section 20.—(1) of the PPA provide “The accounting officer of a procuring entity shall be the person charged with line supervision of the conduct of all procurement processes; in the case of ministries the Permanent Secretary and in the case of extra-ministerial departments and corporations the Director-General or officer of co-ordinate responsibility. (2) The accounting officer of every procuring entity shall have overall responsibility for the planning of, organization of tenders, evaluation of tenders and execution of all procurements and in particular shall be responsible for : (a) ensuring compliance with the provisions of this Act by his entity and liable in person for the breach or contravention of this Act or any regulation made hereunder whether or not the act or omission was carried out by him personally or any of his subordinates and it shall not be material that he had delegated any function duty or power to any person or group of persons ; (b) constituting the Procurement Committee and its decisions; (c) ensuring that adequate appropriation is provided specifically for the procurement in the Federal budget; (d) integrating his entity’s procurement expenditure into its yearly budget; (e) ensuring that no reduction of values or splitting of procurements is carried out such as to evade the use of the appropriate procurement method; (f ) constituting the Evaluation Committee; (g) liaising with the Bureau to ensure the implementation of its regulations.”
The import of the above section is that the GMD of NNPC being the Accounting officer of procuring entity, NNPC, has the overall responsibility for the planning of, organization of tenders, evaluation of tenders and execution of all procurements. This is the intention of the drafters of the PPA.
I am very sure if they have Board of Directors of NNPC or that of any Parastatal in mind, they could have stated such clearly in the Act except if the Honourable Minister of State has now abrogated to himself the powers of interpretation of the Act to include the Board of Directors of NNPC which he chairs. It should be noted that all the contracts listed in the Honourable Minister of State Memo to Mr. President followed strictly all the laid down procedures before they were approved by the relevant approving authority. In conclusion, it is my considered opinion that the Honourable Minister of State for Petroleum Resources Memo was sent to Mr. President and subsequently leaked to public with the sole aim of tarnishing the good image of the NNPC and GMD and as well subject the duos to public ridicule.
Dr. Kachikwu is a lawyer. He should have been better guided in his outburst in that Memo.
The social media is agog with ill-informed narratives.
Even the opposition PDP and NASS are showing serious ignorance on this issue.
Please know before you talk.
– Caxton Fatanmi