In Leaked Letter, Kachikwu Accuses Baru of $24bn Contract Award Without Due Process

• Alleges campaign of calumny against him, insubordination by NNPC boss
• Wants recent NNPC appointments suspended, GMD keeps mum
• NLNG wins legal battle against NIMASA, agency to appeal ruling

Iyobosa Uwugiaren, Chineme Okafor in Abuja and Ejiofor Alike in Lagos

In continuation of the supremacy battle between the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, the minister has written to President Muhammadu Buhari, accusing the NNPC boss of flagrant violation of due process in the award of contracts and acts of insubordination.

Ever since Kachikwu was first appointed GMD of NNPC in 2015 and subsequently the Minister of State for Petroleum Resources, there’s been no love lost between himself and Baru, who shortly after Kachikwu’s appointment as GMD, was promoted to the post of Group Executive Director, Exploration and Production of the corporation.

The relationship, THISDAY had exclusively reported last year, took a turn for the worse when Kachikwu reorganised NNPC in March 2016 and created five core divisions and 20 Autonomous Business units.
Baru, it was alleged, shortly after the restructuring undertaken by Kachikwu began a campaign and whipped up sentiments behind the scenes to get the minister removed from the post of GMD on the grounds that he should not be allowed to hold the posts of minister and NNPC boss simultaneously.
Indeed, stories were published by certain online media outlets and attributed to Baru alleging that Kachikwu had been removed several weeks before Buhari eventually approved the latter’s ouster as NNPC GMD in July 2016.

Having succeeded in getting Kachikwu removed, THISDAY learnt that Baru, with the collusion of top officials in the presidency, has done everything to undermine the minister who still doubles as the chairman of the NNPC board, effectively rendering him rudderless.
Attempts to get Baru to respond to the allegations made by Kachikwu in his letter to the president were unsuccessful Tuesday, as the GMD did not return calls and a text message sent to his phone.
When contacted, the spokesman of the corporation, Ndu Ughamadu, said NNPC had no response to the letter, as it was not addressed to the corporation.

In the letter to the president, which sources informed THISDAY was just a tip of the iceberg, the minister accused the NNPC boss of labelling him as “corrupt”, “anti-north,” and also being “in collusion with militants”, in order to convince the president on the need to sideline him in the decision-making process in the state-run oil firm.
Kachikwu alleged that Baru awarded about $24 billion major contracts without his input or review by the NNPC board.

The minister added that he wrote the letter to the president after concerted efforts to have a one-on-one appointment with him at the State House fell through since his return from the UK for medical reasons.
Kachikwu’s letter came to light on the social media and blogs just as the Federal High Court sitting in Lagos Tuesday delivered judgment in favour of the Nigeria Liquefied Natural Gas (NLNG) Company Limited in a case between the company and the Nigerian Maritime Administration and Safety Agency (NIMASA) over the applicability of NIMASA levies.
In the letter dated August 30, 2017, Kachikwu alleged that he read about the recent massive changes at NNPC on the pages of the newspapers, as Baru never discussed the changes with him and members of the board of the corporation.

“Indeed, in anticipation of vacancies that would arise from retiring senior executives of NNPC, I wrote the GMD (Baru) a letter requesting that we both have prior review of the proposed appointments. This was to enable me to present same to the board or give an anticipatory approval and then review with the board later.
“I wrote to the GMD, given previous happenstance of this nature. In addition, thereafter, I called the GMD to a private meeting where I discussed these issues. Needless to say that, not only did he not give my letter the courtesy of a reply, he proceeded to announce the appointments without consultation or board concurrence,” Kachikwu said.

Kachikwu added that Baru did not also consult the Board Services Committee, whose function it is to review potential appointments and terminations of senior staff prior to implementation.
The minister also alleged that Baru had sidelined the NNPC Board in the awards of contracts.
According to the minister, the legal requirement is that all contracts above $20 million should be reviewed and approved by the NNPC board.
He told the president that in over one year of Baru’s tenure as the boss of NNPC, no contract has been run through the NNPC board.

“This is despite my diplomatic encouragement of Dr. Baru to do so to avoid wrongfully painting you as a president who does not allow due process to thrive in NNPC. Given the history of malpractices and the public perception of NNPC as having a history of non-transparency, the NNPC Tenders Board (NTB) cannot be the final clearance authority for contracts it enters into.
“The NTB, which is a collection of top-level NNPC executives and COOs, with the GMD as chairman, cannot continue to be the final approval authority for multi-million dollar contracts and transactions involving NNPC to the exclusion of the board.

“Board members have singularly and collectively raised these issues to no avail,” Kachikwu explained.
The minister listed major contracts awarded by Baru without the input of NNPC board to include $10 billion crude term contracts; $5 billion direct sales direct purchase (DSDP) contracts; $3 billion AKK pipeline contract; financing allocation funding contracts worth $3 billion; and NPDC production service contracts valued at $3-$4 billion.

“There are much more Your Excellency. In most of these activities, the explanation of the GMD is that you are the Minister of Petroleum and your approvals were obtained.
“However, the correct governance is that the Minister of State and the board review the transaction and give their concurrence prior to presentation to you.
“As in many cases of things that happen in NNPC these days, I learn of transactions only through publications in the media. The question is why is it that other parastatals which I supervise as Minister of State or chair their boards are able to go through these contractual and mandatory governance processes and yet NNPC is exempt from these?

“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. This is also not in consonance with your renowned standards of integrity,” Kachikwu said.
Kachikwu informed Buhari that even though the appointments of other heads of parastatals in the Ministry of Petroleum were made without his input, he has maintained a cordial and respectful relationship with all of them.

According to him, the heads of the other parastatals have continued to excel in their areas and adhere to mandatory governance processes.
He revealed that his working relationship with Baru has been “fraught with humiliation, sidelining, and campaigns of character defamation against me”.
“This is particularly frustrating given the many contributions I have made to the growth and stability of the Nigerian oil and gas industry through the many policies I have introduced since August 2015.
“If NNPC is considered and known to be one of the parastatals under the ministry, why does the GMD refuse to report to my office or to the board on serious issues such as above, especially given that I have been by Your Grace, the minister with oversight responsibilities over these parastatals for two years?” Kachikwu queried.

The minister further alleged that when he called for meetings, Baru would send his subordinates without the courtesy of a call to explain his absence.
He said he had managed the bad perception created by Baru’s blatant insubordination and disrespectful attitude and had also worked hard to avoid being seen as petty and meddlesome.
The minister alleged that Baru has created a fear culture in NNPC, against the open administration he had introduced with the president’s support in their first year of pushing reforms.
“NNPC staff are afraid of contacting me to avoid being punished, sidelined in appointments and targeted. Indeed, the key factor for growth and advancement in NNPC of today is to avoid the Minister of State’s Office,” Kachikwu added.

On the allegation being circulated by faceless blogs that he is anti-north, Kachikwu said all his appointments were generated with key inputs from all the COOs of NNPC and were balanced and based strictly on skills, experience, drive and ethnic balancing for senior management positions.
He stated that he is a detribalised Nigerian who grew up in Kano and had worked in various parts of the country.

According to him, he has no reason to be anti-north, as he has also found in his working career that good and skillful people abound everywhere in Nigeria.
He also denied the allegation of corruption being circulated by some blogs, stressing that all contracts awarded under his watch were based on merit, adding that he rarely participated in those contractual processes except to review them.
“Anyone peddling any contrary information is resorting to cheap blackmail,” he said.
Reacting to the allegation that he was in collusion with Niger Delta militants, Kachikwu reminded Buhari that the blueprint of all his engagements with the militants was discussed and approved by him (the president).

According to him, all the engagements with the militants was done in collaboration with the Office of the Vice-President, DSS and NSA, adding that he took the issue of security headlong because it was the primary causative factor for oil production that declined from 2.2 million barrels per day to 1 million barrels per day in November 2016.
“I took on the issue of security headlong because it was the primary causative factor for production that declined from 2.2 mbpd to 1 mbpd at our lowest point (November 2016). At great risk to my life, I visited militant camps, coordinated with our security apparatus, organised the tour of the HEVP (His Excellency the Vice-President) to several frontline states and worked with PANDEF and other groups to bring calm and increase production and some measure of stability to what it is today.

“I have never betrayed the trust that you placed on me. I did not deploy any public financial resources to achieve the results of the Niger Delta region. Most times I have utilised my own personal resources and goodwill accumulated over the many years prior to my appointment to achieve these far-reaching results and of course, all these were coordinated with agencies of government (Office of the VP, DSS, NSA, etc).

“I dare mention that the blueprint of these engagements was discussed with and approved by you.
“Given the sensitivity of my position, I remain one of the most tracked officers of your government, so if there is any truth to these rumours, you would have known,” Kachikwu added.
The minister also urged the president to save the NNPC and the country’s oil and gas industry from collapse arising from non-transparent practices and empower the NNPC board to do the needful.
He pleaded with Buhari to save him from the humiliation and disrespect by compelling NNPC to submit to oversight regulatory mandate and supervision, which he is supposed to manage on behalf of the president.
Kachikwu also wants the president to order the suspension of the recent appointments and promotions in NNPC until he and the NNPC board have made their inputs, noting that this would send a clear signal of process and transparency.

He also asked the president to encourage joint presentation meetings by the heads of parastatals and himself to Buhari in order to foster a culture of working together and implant discipline in the hierarchy.
When contacted to verify the authenticity of the letter, a statement from the Director of Press in the Ministry of Petroleum, Mr. Idang Alibi, confirmed the minister’s letter to the president.
He said in the statement that the letter was part of procedures often adopted to address developments in the ministry.

He stated: “The attention of the Ministry of Petroleum Resources has been drawn to a publication on a memo emanating from the HMSPR to the president.
“Please note the following: The communication under reference is a normal procedural correspondence by the minister to the president relating to developments in parastatals under his supervision.
“It is most distressing to the Ministry of Petroleum Resources that a confidential communication to the president on the performance of one of its parastatals can be made public.

“The focus of the communication was on improving efficiency and deepening transparency in the oil and gas sector for continued investor confidence. It is noteworthy that the president has been fully supportive of the efforts of the ministry to entrench good governance and accountability in the oil and gas sector.
“The Ministry of Petroleum Resources remains focused on achieving measurable progress in the implementation of the ongoing oil sector reforms in line with the mandate of the president,” it stated.

NLNG Floors NIMASA

In a related development, the Federal High Court, Lagos, Tuesday delivered judgment in favour of NLNG in a case between the company and NIMASA over the applicability of NIMASA levies.
NIMASA had alleged that NLNG was liable to pay three per cent gross freight on its international inbound and outbound cargo (Sea Protection Levy), two per cent cabotage surcharge on all activities carried out for and on its behalf, as well as other sundry claims, all of which NLNG disputed.
But in his judgment, Justice M.B. Idris held that NLNG was not liable to make the said payments to NIMASA and that all such payments already made by NLNG to NIMASA should be refunded to NLNG forthwith.
Justice Idris further held that NIMASA was wrong in blockading the Bonny channel for the purpose of enforcing the payments against NLNG.

NLNG, in 2013, filed the case at the court against NIMASA, seeking a judicial determination on, among other things, the legality or otherwise of the levies sought to be imposed on NLNG by NIMASA, and the consequent blockade of the Bonny channel by NIMASA and its agents as a result of the dispute.
NLNG had also sought a court order restraining NIMASA from further blockade of the channel.
An interim injunction granted in favour of NLNG by the court was disobeyed by NIMASA, which continued the blockade of the Bonny channel for over a three-week period whilst the matter was pending, thereby preventing NLNG vessels and other vessels doing business with the company from entering or exiting the channel.

Instead, NIMASA had filed a counterclaim restating its supposed entitlement to receive payment of the levies from NLNG.
However, Tuesday’s judgment reinforced NLNG’s position that by the provisions of the applicable laws, the company was not subject to payments to NIMASA of the three per cent gross freight as well as the Sea Protection Levy, and that the two per cent cabotage levy was inapplicable because the company’s LNG vessels were not involved in coastal trade or cabotage.

This decision also affirmed the sanctity of the guarantees and assurances conferred on the company and its shareholders by the Government of the Federal Republic of Nigeria, on the strength of which the shareholders made their investments from which the country has reaped immense returns.
NLNG’s General Manager in charge of External Relations, Dr. Kudo Eresia-Eke, said in a statement Tuesday that the company as a law-abiding company and a good corporate citizen remained committed to conducting its business in accordance with the laws of Nigeria.

However in his reaction to the ruling, the Director General of NIMASA, Dr. Dakuku Peterside, expressed the disatisfaction of his agency with the judgment of the court.
A statement by the agency’s head of corporate communications, Isichei Osamgbi, said the director general signified NIMASA’s intention to appeal the judgment.

Peterside was quoted as stating that the agency’s legal team was waiting for the certified true copy of the judgment which it will study and respond to appropriately.
Section 2(1) of the NIMASA Act states that “this Act shall apply to ships, small ships and crafts registered in Nigeria and extended to ships, small ships and crafts flying a foreign flag in the Exclusive Economic Zone, territorial and inland seas, inland waterways and in the ports of the Federal Republic of Nigeria”.
While Section 2(2) states: “The only vessels exempted from levies are…warships and military patrol ships.”

The statement added that NIMASA has portfolios of statutory revenues that it collects from shipping companies/ship operators, manning agents and seafarers.
“This, the agency pays into the coffers of the government. It is within these funds generated that the agency uses to develop and police the maritime sector. NIMASA does not receive any government allocations,” the statement added.
NIMASA further recalled that the court in 2013 had ruled on the agreement by both parties, stipulating that NLNG would pay outstanding levies and also continue to pay all applicable levies in line with the NIMASA mandate.