$ 26 billion NNPC contracts; Due Process was followed - Baru responds
The embattled Group Managing Director of the state oil firm,
NNPC, Maikanti Baru, made his first public defence of the allegations against
him, saying he did no wrong.
In the letter addressed to President Muhammadu Buhari, Mr.
Kachikwu, who is also the chairman of the Board of NNPC, accused Mr. Baru of
illegality by awarding contracts worth about $25 billion (N9 trillion) without
following due process in consulting the NNPC Board.
He also accused Mr. Baru of insubordination and improper
appointments in the state oil firm.
In his response, sent on Monday, Mr. Baru
admitted not consulting the NNPC board in the contract awards, saying such
consultations were not necessary as he got approvals for his actions from
President Muhammadu Buhari.
“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,” Mr. Baru said. “What was required was
the processing and approval of contracts by the NNPC Tenders Board, the
President in his executive capacity or as Minister of Petroleum, or the
Executive Council of the Federation, FEC.
“There were situations where only approval by the NNPC
Tenders Board was required, while in other cases, based on the threshold, the
award must be submitted for presidential or FEC approval.”
Mr. Baru’s stance appears to conflict with Section 2 of the
NNPC Act which states that “the affairs of the Corporation (NNPC) 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 the following other members.”
The GMD’s position would, therefore, imply that the NNPC
“affairs” to be conducted by the board excludes contractual matters, a stance
he emphasised.
According to him, the NNPC Board has no role in contracts
approval process, as members were appointed by government for the purpose of
approving NNPC’s work programmes, corporate plans and budgets.
VALUE OF CONTRACT
Mr. Baru also questioned Mr. Kachikwu’s valuation of the
contracts awarded without consulting the NNPC Board.
Citing both the Crude Term Contract and the Direct Sale and
Direct Purchase, DSDP, agreements, Mr. Baru said contrary to Mr. Kachikwu’s
allegations, no specific values of $10 billion and $5 billion respectively were
attached to each transaction to warrant them being classified as contracts
above NNPC Tenders Board limit.
He said the contracts were mere shortlist of prospective
off-takers of crude oil and suppliers of petroleum products under agreed terms,
which were not required to be presented as contracts to the NNPC Board.
Describing as “most unfortunate” allegations by the minister
that he was not involved in the 2017/2018 contracting process for the Crude Oil
Term Contracts, COTC, Mr. Baru said Mr. Kachikwu was not only consulted, but
his recommendations were taken into account in following laid down procedures
for the award of the contract.
He said the NNPC contracting process was governed by the
NNPC Act and the Public Procurement Act, 2007 (PPA), which spell out the
procurement method and thresholds of application as well as 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, of March 11, 2009.
In line with the NNPC procurement process, Mr. Baru said,
authority to approve contracts resided with the NNPC Tenders Board, NTB, and
contracts above certain threshold would then be referred to FEC for approval.
Under the NNPC contracting process, Mr. Baru said, the NTB
is authorised to approve contracts valued up to a maximum of N2.7 billion, or
$20 million; while contracts above that value would be sent to FEC for approval
upon receiving certificate of no objection from Bureau for Public Procurement.
On the other hand, he said, the NTB was responsible for
approval of day-to-day procurement implementation.
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