The lingering controversy over the purported $25 billion NNPC contracts is one that could have been largely put to rest by a comprehensive statement, promptly issued by the competent and relevant organs, detailing the chain of events and the governing protocols around them.
Only in part though, as the bit fuelled by mischief, ignorance and genuine confusion would still have lingered, given that, in spite of all that is out, many still assume that there was some $25 billion contract in which government paid out or was to pay out such money.
But of interest for me here is the confusion which I have seen on the part of some, including a respected friend and strong man of investigative journalism, who, I dare say, have misled themselves into seeing what is on the table as procurement contracts, stricto sensu, hence their copious reference to the Public Procurement Act, the place of the Bureau of Public Procurement (BPP) and National Council of Public Procurement (NCPP), arguing that the Baru-led NNPC has acted in breach of the provisions of the law as it relates to procurement.
Perhaps it is the use of the word ‘contract’ that is responsible for the confusion and misrepresentation. But a lot of explanations on what this is about have been offered by experts knowledgeable in these matters. These are obviously Crude Term Contracts and the Direct Sale and Direct Purchase (DSDP) agreements.
They are not contracts for the procurement of goods, works or services, as is being erroneously projected but rather, “a list of off-takers of crude oil and suppliers of petroleum products of equivalent value.”
Are we then dealing, stricto sensu, with procurement contracts in the contemplation of the Public Procurement Act? I do not think so.
Yet even if that were to be the case, Section 17 of the PPA provides thus: “Subject to the monetary and prior review thresholds for procurements in this Act as may from time to time be determined by the Council, the following shall be the approving authority for the conduct of public procurement (a) in the case of (i) a government agency, parastatal, or corporation, a Parastatals Tenders Board; and (ii) a ministry or extra-ministerial entity, the Ministerial Tender Board.”
It confirms that indeed, in the case of the NNPC, the responsibility is that of the Tenders Board and not of the Board of Directors. From what is before us, the NNPC has complied with the Financial Authority Threshold as sanctioned by the BPP.
Where Femi Falana Missed It
Senior Advocate, Femi Falana has however argued that NNPC has acted in breach of the law. Her argues that Dr. Baru, in his defence, “has failed to take cognisance of the provision of section 6 (c) of the NNPC Act which has vested the Board of the NNPC with the exclusive power to “enter into contracts or partnerships with any company, firm or person which in the opinion of the Corporation will facilitate the discharge of the said duties under this Act.” For the avoidance of doubt, section 1 (2) of the NNPC Act states that the affairs of the Corporation shall be conducted by the Board of Directors of the Corporation.”
But Section 6(c) of the NNPC Act that he has quoted does not expressly mention the Board. Rather it states, the CORPORATION shall have powers to enter into contracts or partnerships with any company, firm or person which in the opinion of the Corporation will facilitate the discharge of the said duties under this Act.
Indeed, Section 1(2) of the Act says the affairs of the corporation shall be conducted by the Board of Directors of the Corporation but even that conduct is circumscribed within other provisions, for example, Part II of the Act and provisions of Section 3 of the Act which states that the Managing Director of the Corporation who shall be the chief executive officer of the Corporation and shall, subject to Part II of this Act, be responsible for the execution of the policy of the Corporation and the day-to-day running of the Corporation’s activities and its associated services.
So, how can it be said that routine, operational, day-to-day running of the activities of the NNPC, such as entering into contracts, agreements and partnerships will not be the responsibility of the managing director but that of a part-time board?
If the Act intended that it be the responsibility of the board to conduct day-to-day activities, would it have so assigned such, in clear terms, to the managing director?
Vice President Osinbajo Is Right
The statement by the vice president, yesterday, clarifying and confirming the position of the NNPC has triggered another round of confusion. Some are interpreting it as a denial of authorisation of contracts, but approval of loans.
A needless confusion! Where does Vice President Osinabjo come in? The NNPC statement had claimed it got presidential approval on July 10 and July 31 for the financing agreements – NNPC/CNL JV Project Falcon and NNPC/SPDC JV Project Santolina, worth $1 billion and $780 million, respectively. Somehow, these have again been misrepresented as contracts, in the same confused sense. They are not. Even the document put out by PREMIUM TIMES indicates them as loans! So why this confusion? Why the insistence on misrepresenting this as what it is not?
When these agreements were executed in London on July 31st, they were well reported by the media, a section of which is getting itself confused now.
We were told Project Falcon, on fruition, would net the federal government cumulative incremental earnings of $7.3 billion over the project’s life and Project Santolina would generate about $9 billion of incremental revenue to the federation account over the project’s life cycle and a Net Profit Value (NPV) of $5.2 billion over the loan life at 8 percent discount rate.
Involved in the project is a consortium of banks: Access Bank, Standard Chartered Bank, Union Bank and United Bank for Africa, UBA and some foreign financial institutions.
So, where is the confusion? Where is the contradiction? How has Professor Osinbajo contradicted NNPC here? How is Prof. Osinbajo being the fall-guy here? He says: “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.”
Purely routine commercial transaction to enable NNPC raise funds to fulfil its obligation in a joint venture, through third party financing to bridge the funding gap associated with federal government’s inability, over the years, to meet its cash call contributions!
Some have now misled themselves into confusing the Crude Term Contract and the Direct Sale and Direct Purchase (DSDP) agreements (not procurement contracts, in the first place), which the NNPC claims have no specific values attached, to have warranted the values of $10 billion and $5 billion ascribed to them by the minister, with the financing agreements cited by the NNPC, which the vice president has confirmed.
Simbo Olorunfemi works for Hoofbeatdotcom, a Nigerian Communications Consultancy and publisher of Africa Enterprise. Twitter: @simboolorunfemi
Credit: Simbo Olorunfemi, Premium Times
This case, this issue has gotten as crooked and complicated as a dogs’ hind legs. This complication is made possible by non other than the president himself…Buhari.
But as crooked and complicated as it’s gotten, this case is simple; there are only three (3) things that makes it simple: oversight, reciprocity, and common sense.
Of course, everyone knows that the managing director of a company most often runs the day-to-day affairs of the company; in Nigeria’s case, the group managing director. And with this explanation, Dr. Baru as the group managing director, is charged with the responsibility of getting contracts, making contracts and signing those contracts. However, this is where my three aforementioned points come to play.
First is oversight. Though that the group managing director runs the day to day affairs of the cooperation, the board of directors has oversight to oversee and approve the contracts. Therefore, Dr. Baru and his team of supporters can argue anything they want, the issue of who has oversight cannot be overlooked.
Two…reciprocity is very important in a group and for a group to work in harmony. Dr. Baru and his number one boss, President Buhari, sabotaged this aspect by injecting ethnic dynamism into it by appearing to favor one ethnic person over another, even though he was the person that appointed these two individuals. Now, instead of having an agency that is supposed to be making lots of money for the country and a government that is supposed to be fighting corruption, all we have is “he said – he said.” “The president told me this and the president told me that.”
These two professionals are now behaving like a bunch teenage girls fighting for the attention of a single boy or two young children trying to get their father’s attention.
Finally, my third point is common sense…neither Dr. Baru or Mr. Ibe Kachukwu seem to have this down. Somehow, they all including the president seem not care about the optics of all this. Mr. Ibe Kachukwu doesn’t seem to understand that he’s outnumbered by the president and his true men…of ethnicity and clansmen. Since this president has a token Igbo man that he doesn’t really care for his opinions, he is always going to go with his ethnic men…this is a point that Mr. Femi Fani Kayode exhumed a couple of weeks ago.
That idea of common sense is crucially missing in the Buhari administration.
And in all these, Nigerians have taken sides because that’s the way this president wants the game to be played. And the issue of $25 billion contract is forgotten because people are fighting over ethnicity rather than corruption and true process of doing things.
Cash Ezimako