9 October 2017
By CHUKWUDERA EZE
Following the allegation by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu against the Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Maikanti Baru, the group has faulted the allegations, insisting it had not erred in any way with regards to procedures in awarding its multi-million dollar contracts.
NNPC gave the response Monday morning in a statement signed by its Spokesman, Ndu Ughamadu, who said the input of the NNPC Board or the Ministry is not required before certain contracts are awarded and executed.
The statement read: “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 continued: “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”, the statement read.”
Furthermore, the NNPC management said contrary to the assertion of Kachikwu that he was never involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, “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”, it added.
Reacting to the specific allegations of Kachikwu beginning with the Crude Oil Term Contract (COTC) – valued at over $10bn, the NNPC management said the COTC 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. This list does not carry any value, but simply state the terms and conditions for the lifting. It is therefore inappropriate to attach a value to it with the aim of classifying it as contract above Management limit.
In arriving at the off-takers list for 2017/2018 COTC, the following steps were followed: adverts were placed in national and international print media on Monday, 17th October, 2016, the bids were publicly opened in the presence of all stakeholders (NIETI, DPR, BPP, Civil Society Organisations, NNPC SCM Division and the press as well as live broadcasts by the NTA and other TV stations) and detailed evaluation was carried out and the short list of the successful off-takers was presented to the approving authority (Mr. President) for consideration and approval”.
On the Direct Sale Direct Purchase (DSDP) contract valued at over $5bn, the corporation said:
“Like the COTC, the DSDP 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. This list does not carry any value, but simply state the terms and conditions for the lifting and supply of petroleum products. It is therefore mischievous to classify it as contract and attach a value to it that is above Management’s limit.
On the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Contract, the NNPC said the AKK Gas pipeline project remains a contractor financed contract.
“The process adopted for this contract is as follows: Approval of project proposal and contracting strategy was given by NTB; placement of adverts for expression of interest in some National and International print media and NNPC’s website; expression of interest for pre-qualification received and evaluated. Technical and Commercial tenders issued and evaluated. NTB considered and endorsed tender evaluation result for FEC approval since this contract is above NTB’s threshold subject to obtaining the following certificates of no objections: BPP certificate of no objection (obtained). Certificate of no objection from Infrastructure Concession and Regulatory Commission (ICRC) (obtained). Certificate of no objection from Nigerian Content Monitoring & Development Board (NCMDB) (being awaited)
BPP and ICRC certificates have been obtained, while that of NCDMB is being awaited after which the contract will be presented to FEC for consideration and approval”, it said.