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No role for board in award of contracts, NNPC insists


Members of the Group Executive Council (GEC) of PENGASSAN & NUPENG paid a solidarity visit to the NNPC GMD, Maikanti Baru. PHOTO: TWITTER NNPC

‘Minister of state not in petroleum law’

The Nigerian National Petroleum Corporation (NNPC) insisted yesterday that in the award of contracts and its day-to-day running, there is no role reserved for its board and minister of state for petroleum under relevant laws setting up the corporation.

The Guardian learnt that a statement issued by the NNPC detailing the powerlessness of the minister of state over its daily affairs might have received the endorsement of President Muhammadu Buhari.

The source added that the minister’s team is currently weighing the options available not only to Dr. Ibe Kachikwu, but the entire Niger Delta region in the administration of the oil and gas sector.


The Group General Manager, Group Public Affairs Division of the NNPC, Ndu Nghamadu, said in Abuja yesterday that from the outset, the law and the rules do not require a review or discussion with the minister of state or the NNPC board on contractual matters.

He explained that 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.

According to the corporation, there are also 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.

NNPC further 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 $10 billion and $5 billion placed on them in the claim of Kachikwu.

The corporation declared that it is inappropriate to attach arbitrary values to the shortlists with the aim of classifying the transactions as contracts above NNPC Tenders Board limit.

The corporation also clarified that contrary to Kachikwu’s claim that he was not carried along in the 2017/2018 contracting process for the crude oil term contracts, he was consulted by the GMD and his recommendations were taken into account in following through the laid down procedure.

It stated that the contracting process is governed by the following: Provisions of the NNPC Act, the Public Procurement Act, 2007 (PPA); 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 dated 11th March 2009.

The corporation said when it sought clarification on the processes from the Bureau of Public Procurement (BPP), it explained that the NNPC Tenders Board is not the same as NNPC board.

While the governing board (NNPC Board) is responsible for approval of work programmes, corporate plans and budgets, 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, heads of departments (GEDs) as members and the head of procurement (GGM SCM) serving as the secretary of the NNPC Tenders Board.

“As can be seen, all these clarifications were sought and obtained prior to August 2015 and were implemented by Dr. Kachikwu as the GMD of NNPC. Dr. Kachikwu also constituted the first NNPC Tenders Board on 8th September 2015 and continued to chair it until his exit in June 2016.”

The corporation also explained that Crude Oil Term Contract (COTC), which is valued at over $10billion is not a contract for procurement of goods, works or services; rather it is simply a list of approved off-takers of Nigerian crude oil of all grades.


It added that the list does not carry any value, but simply states the terms and conditions for the lifting. In the same vein, the Direct Sale Direct Purchase (DSDP) Contract, which is equally valued at over $5billion, like the COTC, is not a contract for any procurement of goods, works or services, rather it is simply a list of off-takers of crude oil and suppliers of petroleum products of equivalent value.

NNPC stated that apart from the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline contract and NPDC production service contracts, all the other transactions mentioned in Kachikwu’s memo to President Buhari 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,” the corporation said.

In a reaction to the management crisis in NNPC, an oil and gas expert, Dr. Perisuo Dema, said there is no place for the minister of state in the Petroleum Act 1969 and NNPC Act 1977.

He explained that the name minister of petroleum was mentioned 252 times in the Petroleum Act 1969 mostly in sections two and eight.

Dema, who is the Director General of Umaru Shinkafi Centre for Africa Extractive Policy Research, argued that the minister of state is not a ranking minister and that the minister of petroleum is more powerful than the nation’s vice president which explained why President Buhari chose to retain the office with a minister of state assisting him to oversee the oil and gas sector.

Dema added that the GMD of NNPC is not obliged to report to President Buhari through the minister of state, saying “the reporting line of the president is through the permanent secretary.”

According to him, the powers of the minister of petroleum resources are too enormous and should be reduced to the barest minimum and vested in the president.

On his part, the Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Auwal Ibrahim Musa, emphasied the need for Buhari to relinquish the portfolio of the Minister of Petroleum Resources to a trusted Nigerian and concentrate on the monitoring of the activities in the oil sector.

Also, an Abuja-based oil and gas analyst, Ifeanyi Izeze, said it has become obvious that the gulf between the minister and the NNPC seemed to have widened, as manifested by the issue of the actual cost of producing one barrel of crude oil in Nigeria.

He cited conflicting costs of producing a barrel of crude oil: Baru said it costs $23 to produce a barrel but Kachikwu later declared that the cost remains at about $32.

According to Izeze, if the two topmost government officials in the sector could publicly disagree, then without doubt, it is either there is a communication gap or supremacy tussle between Kachikwu and Baru.


Besides, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has vowed to resist external influence on the administration of the NNPC.

The Group Secretary of the Group Executive Council (GEC) of PENGASSAN in NNPC, Sulaiman Sulaiman, said in Abuja yesterday that the re-organisation in the NNPC was in good faith and would encourage internal growth.

“We shall continue to reject and vehemently resist attempts in meddling in the day-to-day running of the organisation by non-executive officials of the corporation. We will not, any longer allow our institution to be an avenue to settle friends and cohorts into management positions of NNPC at the detriment of dedicated staff with all the requisite qualifications within the system,” he said.

Meanwhile, the police have deployed 128 officers to the NNPC headquarters to beef up security. A source told The Guardian yesterday that the step to beef up security, especially at the weekend, was to forestall protesters invading the premises. But the armoured tanks and dogs were withdrawn yesterday so that visitors could have easy access to the building.

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