Approval of Minister of State not required for award of contracts, says NNPC

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The Nigerian National Petroleum Corporation (NNPC) says the approval of the Minister of State for Petroleum resources is not required before contracts could be awarded.

Ndu Ughamadu, General Manager Public Affairs of the NNPC, made this known in a statement issued on Monday.

This is following the brouhaha caused by a memo written to President Muhammadu Buhari by Ibe Kachikwu, the Minister of State for Petroleum Resources, which was leaked to the media.

In the memo, Kachikwu alleged that Maikanti Baru, the Group Managing Director of the NNPC, unilaterally awards contracts running into billions of dollars without the approval of the board of which he (Kachikwu) is the Chairman.

He also said appointments into strategic positions in The NNPC were made without any input from the board, among other acts of “insubordination” by Baru.

However, according to the statement by the NNPC, the only approval required before certain contracts could be awarded is that of the Minister of Petroleum or the Federal Executive Council.

“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 but the President’s approval in his executive capacity as Minister of Petroleum, or the Federal Executive Council (FEC) as the case may be,” the statement read.

“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.”

The statement also noted that “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.”

Kachikwu and Buhari met behind closed doors on Friday and their discussion is believed to be based on the NNPC controversy, even though Kachikwu refused to speak to the press after the meeting.


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