Osinbajo counters spin doctors; says he approved loans, not contracts

By Shitile Mbayansa, Abuja
In Abuja, when a scandal hits the public space, spin doctors seek to change the narrative, but in the case of Vice President Prof. Yemi Osinbajo in the trending disagreement between Petroleum Minister of State Ibe Kachikwu and Migeria National Petroleum Corporation Group Managing Director, Mikanti Baru, he has applied the brakes to efforts to give an impression that he gave approvals for the controversial oil contracts Kachikwu complained of.
Osinbajo says it was loans for the financing arrangements for the Joint Venture projects between the NNPC and IOCs he approved and not the contracts.
In Bonny Island at the flagging off of the Bodo-Bonny Road, Rivers state, Thursday, the Vice President said: “These were financing loans. Of course, you know what the Joint Ventures are, with the lOCs, like Chevron, that had to procure.
“In some cases, NNPC and their Joint Venture partners have to secure loans and they need authorisation to secure those loans while the President was away. The law actually provides for those authorisations.
“So, I did grant two of them and those were presidential approvals, but they are specifically for financing joint ventures and they are loans not contracts.”
His comment clarify earlier comments by his spokesman, Mr. Laolu Akande who tweeted: “In response to media inquiries on NNPC joint venture financing, VP Osinbajo, as Ag President approved recommendations after due diligence & adherence to established procedure. Action necessary to deal with huge backlog of unpaid cash calls which Buhari adm. inherited and also to incentivize much needed fresh investments in the oil & gas sector.”
Last week Kachikwu wrote to President Muhammadu Buhari, that for over one year, he had tolerated the disrespectful and humiliating conducts of the Group Managing Director.
“Mr. President, yesterday, like many other Nigerians, l resumed work confronted by many publications of massive changes within NNPC.
“Like the previous reorganisations and repostings done since Dr. Baru resumed as GMD, I was never given the opportunity before the announcements to discuss these appointments. This is so despite being Minister of State, Petroleum, and Chairman, NNPC Board.
“The Board of NNPC, which you appointed and, which has met every month since its inauguration and, which by the statutes of NNPC is meant to review these planned appointments and postings, was never briefed.
“Members at the Board learned of these appointments from the social media and the press release of NNPC.”
In the letter, Kachikwu said he had been in a race to stabilise and move the petroleum industry forward.
According to him, only innovative ideas could stop the alarming impact of the fall of oil prices on the national income.
He maintained that the innovations that he and his team had developed and started implementing in the downstream, upstream, policy generation, and Niger Delta security had enabled the sector to stabilise a little.
He said further: “However, truth is that given global challenge in this sector, we must aggressively pursue out-of-the-box ideas on rejuvenating this sector, getting the best yield and increasing our earnings from oil and gas.
“What this means is that parastatals in the Ministry and all CEOS of these parastatals must be aligned with the policy drive of the supervising Ministry to allow the sector register the growth that has eluded it for many years.
‘’To do otherwise or to exempt any of the Parastatals would be to emplace a stunted growth for the industry.”
He appealed to the President to save NNPC from going under due to the non-transparent practices in the NNPC, and empower the corporation to take the needed actions when needed.
Other intervention he sought from the country’s chief executive are:
“That you save the office of the Minister of State from further humiliation and disrespect by compelling all parastatals to submit to oversight regulatory mandate and proper supervision which I am supposed to manage on your behalf.
“You kindly instruct the GMD to effectively leave NNPC to run as a proper institution and report along due process lines to the Board and that Your Excellency instructs that all reviews be done with the Minister of State prior to your decision.
“That to set the right examples, you approve that the recently announced reorganisation changes be suspended until the GMD, myself and the board have made relevant input to same. This will send a clear signal of process and transparency.
“That Your Excellency encourages joint presentation meetings between heads of Parastatals and the Minister of State to you so as to encourage a culture of working together and Implant discipline in the hierachy.”
Baru, last Monday, however, described as most unfortunate Kachikwu’s position that he was never involved in the recent Crude Oil Term Contracts.
In an official response issued by the NNPC’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu, the corporation stated that its reaction was in response to Buhari’s directive to Baru and his team, mandating them to react to the issues raised in the petition.
The NNPC said It was “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.”
It added, “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, 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’s approval that is required.”
“It should be noted that for both the Crude Term Contract and the Direct Sale and Direct Purchase agreements, there are no specific values attached to each transaction to warrant the values of $10bn and $5bn 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 shortlist of prospective off-takers of crude oil and suppliers of petroleum products under agreed terms.”
The transactions, NNPC added, were not required to be presented as contracts to the board  and the monetary value of any crude oil eventually lifted by any of the companies would go into the Federation Account and not to the company.
“Furthermore, contrary to the assertion of Dr. Kachikwu that he was never involved in the 2017/2018 contracting process for the Crude Oil Term Contracts, Dr. 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,” the statement said.
On approving authority for contracts, NNPC disclosed that a federal government Circular on procurement threshold states that up to N2.7bn ($20m) can be awarded by the NNPC Tenders Board, while it was FEC that had the power to award contract above N2.7bn ($20m).
“The BPP expressly clarified that the NNPC Tenders Board is not the same as the NNPC Board. The governing board (NNPC Board) is responsible for approval of work programmes, corporate plans and budgets, while the NTB is responsible for approval of the 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, with Heads of Department (GEDs) as members with the Head of procurement (GGM SCM) serving as the Secretary of the NNPC Tenders Board.
“The above clarifications of the provisions of the procurement process show that approvals reside within the 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 the BPP.
“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 September 8, 2015 and continued to chair it until his exit in June, 2016.”