Kachikwu’s claims on oil contracts unfortunate – NNPC

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The Nigerian National Petroleum Corporation (NNPC) on Monday dismissed as untrue claims by the Minister of State for Petroleum, Dr. Ibe Kachikwu, that he was never involved in the award of major crude oil contracts in the country.

NNPC said in a statement the minister was expressly consulted by its Group Managing Director (GMD), Dr. Maikanti Baru,  and his recommendations taken into consideration in the crude oil contracting process.

It also described Kachikwu’s instance that major contracts were never reviewed or discussed with him as “mostly unfortunate.”

According to the Corporation, the minister’s claim on the Crude Term Contract and the Direct Sale and Direct Purchase (DSDP) agreements where $10billion and $5billion values were placed on each transaction was equally unacceptable.

NNPC stressed that all it required to award a contract in the oil and gas sector was the approval of the Tenders Board and not the minister’s endorsement.

The state oil company’s response followed the report of alleged lack of adherence to due process in the award of contracts by Kachikwu in his August 30 letter to President Muhammadu Buhari.

The minister had claimed that several major contracts were never reviewed or discussed with him and the NNPC Board.

The President had since ordered Baru and the entire management team of the Corporation to respond expeditiously to the allegations.

The statement reads: “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 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.

“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.”

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