NNPC $25bn Scandal: Kachikwu Malicious Fabricator And Ignorant To Use Term ‘Contracts’ – Osinbajo

Prof Yemi Osinbajo
  • $25 billion claims in Kachikwu’s memo fabricated – Osinbajo

by Samuel Ogundipe

The Vice President, Yemi Osinbajo, on Sunday pushed back against allegations of contract infractions raised by the Minister of State for Petroleum, Ibe Kachikwu, saying the $25 billion the minister stated in his leaked memo to President Buhari “does not exist.”

The vice-president said the Nigerian National Petroleum Corporation only conducted a shortlisting process for crude oil lifting which did not involve financial transactions as stated by Mr. Kachikwu.

“It is therefore wrong and misleading to refer to them as though they’re contracts involving the expenditure of NNPC funds, or public funds of any sort,” Mr. Osinbajo said in a statement signed by his spokesperson, Laolu Akande. “There is no $25 billion missing.”

A spokesperson for Mr. Kachikwu, Uche Ozurumba, did not respond to PREMIUM TIMES requests for comments Sunday night. But the minister had been reported as playing down the content of his memo as administrative complaints and less severe than media reports about it suggested.

The statement is the fifth to come out of the State House since Friday, as administration officials scramble to contain a public relations nightmare set off by Mr. Kachikwu’s memo.

The correspondence was addressed to Mr. Buhari on August 30, but leaked on the Internet on October 3. It remained unclear if the president received it for the five weeks between the day it was sent and when it was anonymously leaked.

Mr. Kachikwu informed Mr. Buhari that Mr. Baru circumvented extant procurement regulations in awarding a series of contracts up to $25 billion —or N9 trillion at prevailing exchange rate of N360 to a dollar— warning of grave consequences the decisions could wreak if allowed to stand.

Mr. Kachikwu gave a breakdown of the contracts said to have been awarded without recourse to the Ministry of Petroleum or the management board of the NNPC as including $10 billion crude term contracts; $5 billion direct sales direct purchase (DSDP) contracts and $3 billion AKK pipeline contract.

He also said $3 billion was awarded for various financing allocation funding contracts and another $3-4 billion NPDC production service contracts.

The NNPC responded on October 9, denying all allegations of sharp practices. The state-run oil giant said it only entered into loan arrangements for joint ventures with Shell Nigeria and Chevron in July.

Mr. Osinbajo acknowledged granting the presidential approvals for the loans on Friday, but insisted they should not be defined as contracts.

“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,” Mr. Osinbajo said on the side-lines of a road project inspection in Bonny, Rivers State.

In his latest statement, Mr. Akande said all the claims bothering on contract improperly in Mr. Kachikwu’s memo were “wrong and misleading.”

“When you look diligently at the referenced projects/transactions one by one, you will see, as NNPC has shown, that none of them was actually a procurement contract.

“Take both the Crude Term Contract and the Direct Sale, Direct Purchase (DSDP) agreements for instance, these are not procurement contracts involving the expenditure of public funds.

“Both transactions are simply a shortlisting process, in which prospective off-takers of crude oil and suppliers of petroleum are selected under agreed terms, and in accordance with due process.

“It is therefore wrong and misleading to refer to them as though they’re contracts involving the expenditure of NNPC funds, or public funds of any sort,” Mr. Akande said.

Mr. Akande suggested that Mr. Kachikwu’s decision to place a monetary value of $10 billion and $5 billion values on “these contracts is an arbitrary act that completely distorts understanding of the situation.”

The spokesperson informed Nigerians that “whenever there is a monetary value on any consignment of crude oil lifted in this country by any firm, the proceeds go directly to the Federation Account and not to any company. In fact, the Buhari administration in the implementation of the TSA has closed down multiple NNPC accounts in order to promote transparency and probity.”

Mr. Akande said even in compiling the shortlisting for the prospective off-takers of crude oil and suppliers of petroleum under agreed terms, “there were public placements of advert in the mass media seeking Expressions of Interest (EoI). Bids were publicly opened in the presence of NEITI, DPR, BPP, Civil Society groups and the press. In some cases even, these events were televised live.”

“For the sake of emphasis let me state clearly that both the Crude Term Contract and the Direct Sale and Direct Purchase agreements are not contracts for any procurement of goods, works or services, and therefore do not involve the use of public funds. Instead, they are simply a shortlisting of off-takers. And unlike what has been reported in the media so far, it is important to set the records straight that the list of approved off-takers does not carry any financial values but simply states the terms and conditions for the lifting and supply of petroleum products.”

He also disclosed that the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Contract “is a contractor-financed contract which has not yet been finalized or awarded; it is still making its way to the Federal Executive Council, FEC.”

Lastly, on the NPDC, he said there is no contract in the $3 billion to $4 billion range as claimed by Mr. Kachikwu in his memo and later reported in the media following its leakage.