The Sun News

How Kachikwu, Baru face-off I’ll impact oil industry

By Adewale Sanyaolu

The recent face-off between the Minister of State for Petroleum Resources, Mr. Ibe Kachikwu and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Maikanti  Baru, may erode the gains recorded in the oil and gas sector in the last two years unless the Federal Government addresses the challenge promptly.
Kachikwu, had in a memo to President Muhammadu Buhari, with reference number: HMS/MPR/001/VOL.1/100, dated August 30, 2017, with the subject, Re: Insubordination and lack of adherence to due process perpetuated by GMD NNPC- Dr. Baru, alleged that his office was being undermined while several contracts awarded by Baru did not follow due process.
Following the memo which was leaked to the social media have been reacting to Nigerians, especially on twitter and facebook, lamenting that the development was capable of sending wrong signals to the international community and subsequently jeopardise the Foreign Direct Investment drive of the Federal Government.
Though, the Minister has since issued a statement in relation to the leaked letter, saying he was distressed that a private communication between himself and his principal found its way into the media space.
Indeed, some stakeholders who spoke to Daily Sun in separate interviews, warned that if not urgently addressed, the situation could snowball and lead to a mockery of the anti-corruption campaign of the Federal  Government Kachikwu’s memo said since Baru’s assumption of office, he has failed to consult and carry him along in the activities of the corporation. He alleged that acts of misbehaviour by Baru were already hindering all the envisaged positive changes for the oil and gas sector.
The Minister said he decided to bring the issues to the attention of the president after one year of tolerating “these disrespectful and humiliating conducts”. He said he would have preferred to personally discuss the issues with the president but he had not been able to secure an appointment despite many attempts.
Kachikwu appealed to Buhari to intervene and “save the NNPC and oil industry from collapse arising from above non-transparent practices and empower the board you inaugurated to do the needful”.
“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,” he wrote.
Working against Northern Interest. The minister said he had been accused of working against the north and also influencing the appointments of some persons. He denied the allegations and described himself as a “completely detribalised Nigerian”.
“I have lived my formative years in the east, west, north and south-south parts of the country,” he wrote.
“All my appointments were generated with key inputs from all the COOs of the NNPC and were balanced and based strictly on skills, experience, drive and ethnic balancing for senior management position.
“I have never betrayed the trust you placed on me. I did not deploy any public financial resources to achieve the results in the Niger Delta.”
Baru running ‘one man show’
The minister said he was not consulted in most of the appointments made by Baru. He said he learnt about them on social media or through press releases. Kachikwu explained that on one occasion, he held a meeting with the GMD to raise concerns about the appointments and also wrote a letter to him, but that Baru ignored him by making some changes without his involvement.
But to enure that this gross insubordination does not stand, Kachikwu appealed to the president to suspend these appointments.
“I resumed work confronted by many publications of massive changes within NNPC. Like the previous reorganisations and repostings done since Mr Baru resumed as GMD, I was never given the opportunity before the announcements to discuss these appointments,” he wrote.
“This is so despite being the 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 NNPC is meant to review these planned appointments and postings, was never briefed.
Members of the board learnt of these appointments from the pages of social media and the press release of NNPC. The above is just one of the many occurrences of disrespectful experience with the GMD as your minister of state.
In August, 55 management staff of the corporation were affected in a shake-up. The reshuffling raised dust, with Ohaneze Ndigbo, apex socio-cultural organisation of the Igbo, alleging that the north was clearly favoured while “the south-east totally ignored, he said’’.
$25bn contracts awarded without due process. The Minister in the memo alleged that, against the rules, some major contracts were never reviewed or discussed with him or the board of NNPC.
“The legal and procedural requirement is that all contracts above $20m would need to be reviewed and approved by the board of NNPC.  Mr. President, in over one year of  Baru’s tenure, no contract has been run through the board.
This is despite my diplomatic encouragement to Mr Baru to do so to avoid wrongfully painting you as a president who does not allow due process to thrive in the NNPC, Kachikwu noted.”
He listed some of the contracts which flouted the legal procedure to include; $10bn crude Term contracts,$5 billion Direct Sale Direct Purchase( DSDP) contracts, $3 billion AKK pipeline contract, various financing allocation funding contracts with the NOCs valued at over over $3 billion and various  NPDC production service contracts valued at over $3 billion to $4 billion.
Stakeholders seek Investigation But, some stakeholders in separate interviews with Daily Sun, called on Buhari to set up a committee to investigate the claims of the Minister.
Producer of the first Energy Talkshow on radio, Energie Platform and an oil and gas expert, Mr. Yemi Adeoye, said the allegations of the Kachikwu were too weighty to be swept under the carpet.
Adeoye, said it remained troubling that a Minister who superintends over the Ministry that rakes in over 70 percent of the country’s income does not have access to the President, adding that his Ministry is strategic to the achievements and plans of government.
On the implication of the feud, Adeoye said some of the milestones recorded by Kachikwu in the oil and gas sector, which included sustainable funding of the JVs which is to lead to an increase in national production from the current 2.2mbpd to 2.5mbpd by 2019, while the immediate effect of the new cash call policy to increase net Federal Government Revenue per annum by about $2 billion may be jeopardized.
On the other hand, he warned that  the $15 billion investment recently negotiated by the Minister in India may also hit the brickwall. The deal will see the Indian Government make an upfront payment for Crude purchase to Nigeria, to be repaid on the basis of firm Term Crude Contracts over some years. ‘‘A feud between the Minister who superintends over all the activities in the oil and gas industry and the GMD, who statutorily should report to him, sends a wrong signal to foreign investors because it shows that the government in not together and working at cross purpose. Also, remember that the world has become a global village, and all these stories are available on the internet, he said.
He said the feud will further put prospective investors who need advisory, regulatory and financial information in the oil and gas industry in a fix because they would certainly not know who to deal with in this instance, adding that at the end of the day, the country bears the brunt because such investment will move elsewhere.
Going down memory lane, Adeoye said this episode is a repeat of what happened under the erstwhile regime of the Central Bank of Nigeria Governor (CBN) Mallam Sanusi Lamido Sanusi, and the Ministry of Finance over conflicting role.
On his part, Publisher of Africa Oil and gas, Mr. Toyin Akinosho, said this development was not healthy for the oil and gas industry because the international community would perceive the country as being unserious in its derive to attract FDI.
‘‘This development is an embarrassment for the country, considering the fact we witnessed similar scenario between the CBN and the Ministry of Finance. Such unhealthy rivalry should be happening in any sane society,’’ he warned.
However, he said there should be clear cut demarcation of functions among public officials in order to avoid friction and know who to hold accountable when things go wrong.
He explained further that the same situation had played out during the regime of the former NNPC GMD, Mr. Jackson Gaius Obaseki and Late Dr. Rilwan Lukaman, as Special Adviser of Petroleum, stressing that former President Olusegun Obasanjo, was quick to call Lukman to order and allow Obaseki do his job.
‘‘For us as stakeholders in the industry, we want a Minister that will allow the NNPC to do his job, so that all this excuses they give about political interference will not be there. And by so doing, government and operators can know who to hold accountable if anything goes wrong. I am not saying Baru is doing a good job.No. But he must be allowed to exercise his role as the Chief Executive Officer. For Baru, a lot of NNPC projects are stunted and yet to be delivered. But he must be allowed to do his job’’ he advised.
A source in the Department of petroleum Resources (DPR), who pleaded not to be named, said the feud was likely to impact the planned marginal oilfields bid round, policy setting matters in the oil industry, and new investments.
Another source also said Baru unilaterally pursued the Lake Chad Basin oil search which led to the death of several team members in a Boko Haram ambush.

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