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NNPC: We Followed The Law/Rules On Contractual Matters

Unic Press UK: Nigerian National Petroleum Corporation (NNPC) has responded to allegations against its management by the Minister of State for Petroleum Resources, Ibe Kachikwu.

In a statement captioned ‘Allegations of Lack of Adherence to Due Process in NNPC Contract Awards’, the Group General Manager of NNPC’s Group Public Affairs Division, Ndu Ughamadu, said that under the Law and applicable rules a review or discussion with the Minister of States or the NNPC Board is not a condition for decision 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… approvals reside within the NNPC Tenders Board (NTB) and where thresholds are exceeded, the NNPC refers to FEC for approval. Therefore, the NNPC Board has no role in contracts approval process as advised by BPP,” Ughamadu said.

The NNPC further laid bare its the governance of contracting process and the approving authority for contracts

GOVERNANCE OF NNPC CONTRACTING PROCESS

  1. Provisions of the NNPC Act
  2. The Public Procurement Act, 2007 (PPA)
  3. 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 reference no. SGF/OP/1/S.3/VIII/57, dated 11th March, 2009.
  4. NNPC Delegation of Authority Guide
  5. Supply Chain Management Policy & Procedure documents
  6. NNPC Ethics Guide 

TYPICAL NNPC CONTRACTING PROCESS

  1. Approval of project proposal and contracting strategy by NTB.
  2. Placement of adverts for expression of interest in electronic and print media.
  3. Soliciting for tender (Technical and Commercial)
  4. Tender evaluation
  5. Tender approval by NTB for contracts within its threshold; otherwise
  6. Obtain BPP certificate of no objection before presentation to FEC.
  7. Present to FEC for approval.

All Contracts awarded by the Nigerian National Petroleum Corporation (NNPC) follow the above procedure, the statement reads.

APPROVING AUTHORITY FOR CONTRACTS

Approving Authority/No Objection to Award Special Works (NNPC)
BPP issues  “No objection to award”/FEC approves ₦2.70 billion (20 million USD) and above
NNPC Tenders Board Up to ₦2.7 billion (20 million USD)


In a letter [‘matters of insubordination and lack of adherence to due process perpetuated by the GMD NNPC – Dr Baru’] to the Nigeria President Buhari, which was dated 30th August 2017, the Minister of State for Petroleum Resources and the immediate past Group Managing Director of the Nigerian National Petroleum Corporation, Ibe Kachikwu, accused the current GMD of the NNPC Maikanti Baru of violating due process in the award of contracts valued at circa 24 billion USD.

The minister Kachikwu accused the GMD of NNPC Baru of:

  • Total disrespect to the NNPC Board: Kachikwu cited widespread personnel changes – appointment and postings – without recourse to the NNPC Board. The Nigerian National Petroleum Corporation (NNPC) announced in August 2017 a major re-organisation/transfers involving 55 top executives.

 “… these executive actions by NNPC were supposed to benefit from mine and the Board’s input prior to presentation to you… previous attempts to rush through these appointments through a non-governance backdoor and present same to the Acting President were met with a request that this be discussed with me. This was never done,” Kachikwu wrote in the letter to Buhari.

  • Flouting due process in contract awards: Due process, legal/procedural requirements that all contracts above $20 million be reviewed and approved by the Board of the NNPC has never been adhered to since Baru was appointed GMD NNPC, Kachikwu said. The letter listed several contracts awarded by Baru-led NNPC in disregard to legal requirements: Crude Term Contract valued at over $10 billion, Direct Sale of Crude Oil and Direct Purchase of Product (DSDP) Contract worth more than $5 billion, Ajaokuta-Kaduna Kano (AKK) Pipeline Contract with a value that is in excess of $3 billion, various financing allocation funding contracts worth more that $3 billion, various production service contracts in excess of $3 billion, inter alia.

“I know that this bravado management style runs contrary to the cleansing operations you engaged me to carry out at the inception of your administration”, Kachikwu said.

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