NNPC operates outside the Law!—Femi Falana SAN - Welcome to Uju Ayalogu's Blog

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Wednesday, 11 October 2017

NNPC operates outside the Law!—Femi Falana SAN

NNPC operates outside the Law!—Femi Falana SAN

Femi Falana

In his defence of the allegations of unilateral award of $25 billion contracts and sole management of the Nigerian National Petroleum Corporation (NNPC) to the exclusion of the Board and the Minister of State in the Ministry of Petroleum Resources, the NNPC GMD, Dr. Maikanti Baru has categorically stated that he has the power to award contracts without any reference to the NNPC Board.

He also pointed out Dr. Ibe Kachukwu, the Minister of State in the Ministry of Petroleum Resources had equally awarded contracts without the approval of the Board when he was the NNPC GMD. As far as Dr. Baru is concerned the NNPC Tenders Board is competent to award contracts in line with the NNPC Handbook.

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For reasons best known to him, Dr. Baru did not deem it fit to respond to the unilateral appointments of key staff in the NNPC without the approval of the Board of Directors.

Since this particular allegation was not denied it is reasonable to conclude that it is admitted by the NNPC management even though the appointments in question were made in utter violation of the Federal Character Commission Act.

It is however germane to review the matter within the ambit of the law notwithstanding the report that the presidency has thrown its weight behind the NNPC GMD in the face off with the Minster of State in the Petroleum Ministry.

But for the national issues involved in the ongoing imbroglio one would have wanted to say that it serves Dr. Kachukwu well. After all, sometime in 2015, I had requested for information on the huge fund collected from the NLNG but which was not transmitted to the Federation Account.

I was flabbergasted when Dr, Kachukwu who was then the GMD refused to accede to my request made pursuant to the Freedom of Information Act on the grounds that the NNPC is not a public institution!

However, the defence of Dr. Baru  has failed to take cognizance 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.

Since it is conceded by Dr. Baru that some contracts are subject to the approval of either the Board or the Federal Executive Council he is yet to inform the Nigerian people who approved the $25 billion contracts.

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It is pertinent to state, without any fear of contradiction, that by virtue of section 3 of the NNPC Act the GMD as the chief executive of the Corporation shall 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.

But contrary to the erroneous impression conveyed by the management of the NNPC there is no conflict whatsoever between the provisions of the NNPC Act and the Public Procurement Act, 2007 to justify the usurpation of the powers of the NNPC Board by the Tenders Board of the NNPC headed by the GMD.

Therefore, the unilateral award of multi-billion dollar contracts in the NNPC by Dr. Baru or the Tenders Board is illegal, null and void in every material particular.


With respect, the totality of Dr. Baru’s defence was anchored on the mistaken belief that the NNPC Act does not require him to report to the Minister of State but to President Buhari in his capacity as the Minister of Petroleum Resources.

Dr. Baru must have forgotten that upon the removal of Dr. Kachukwu as the NNPC GMD in 2016 the President appointed him as the Chairman of the reconstituted Board of the NNPC in line with section 3 of the NNPC Act.

Therefore, the decision of Dr. Baru to bypass the Chairman of the Board in the award of the contracts and appointment of NNPC staff cannot be justified either under the NNPC Act. Since Dr. Kachukwu was not removed as the Chairman of the Board the President ought not to have encouraged Dr. Baru to treat him and with such pompous disdain and arrogance.

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In saying that he followed due process in the award of the $25 billion contracts Dr. Baru gave the highly misleading impression that once the President was briefed with respect to the award of the contracts due process was observed in line with the PPA. With respect, such position is neither backed by the NNPC Act nor the PPA.

But as far as the PPA is concerned, the competent authorities that have the final say in the award of contracts and disposal of public assets under the current political dispensation are the Bureau of Public Procurement (BPP) and National Council of Public Procurement (NCPP).

The NCPP is not chaired by the President but by the Minister of Finance. The other members of the NCPP include some officials of the federal government and representatives of relevant professional bodies and civil society organizations.

Apart from constituting the NCPP and the BPP the President has not been empowered to approve any contract whatsoever. In fact, there is no reference whatsoever to the Federal Executive Council in the entirety of 61 sections of the PPA.

To that extent, the FEC presided over by the President cannot approve the award of contracts which is the exclusive duty of the NCPP and BPP. Although the PPA was enacted in 2007 the President or the Federal Executive Council (FEC) has been approving multi-billion dollar or naira contracts, albeit illegally.

Such illegality was perpetrated by the Yaradua and Jonathan regimes. Even the Buhari administration which has loudly undertaken to fight corruption has ignored calls from many civil society organizations to set up the NCPP.

Since neither the President nor the Federal Executive Council is competent to approve the award of contracts under the PPA the claim of the NNPC GMD that the controversial contracts were approved by the President cannot be justified under the PPA.

To avoid a situation whereby the $25 billion contracts and others being awarded by the Buhari administration are annulled and set aside on the grounds that they were awarded by either the President or the FEC without any legal authority I hereby call on President Buhari to constitute the NCPP without any further delay.

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If this call is ignored, once again, the civil society anti corruption bodies ought to approach the Federal High Court for a writ of mandamus to compel the President to inaugurate the NCPP.

Apart from breaching the NNPC Act and PPA the NNPC has conveniently ignored the National Extractive Industries Transparency Initiative Act. Hence it has refused to comply with the directive of the NEITI to remit $21.7 billion and N376 billion illegally withheld from the Federation Account.

Even though Dr. Kachukwu recently disclosed that the nation had lost $60 billion due the NNPC has refused to recover same by implementing the provisions of the Deep Offshore and Inland Basin Production Sharing Contracts Act.

And instead of directing the NNPC to recover and remit the the huge fund to the Federation Account the Federal Government is busy piling up external loans. It is also worthy to note that the NNPC does not subject its budgets to the National Assembly for appropriation as stipulated by the Constitution and the Fiscal Responsibility Act.

Shortly before proceeding on its annual vacation the Senate disclosed that the NNPC and 33 other agencies of the federal government had failed to submit their 2017 budget to the National Assembly. Characteristically, the NNPC management ignored the disclosure knowing that the Senate would not pursue the matter.

Finally, Dr. Kachukwu owes it a duty to react to the allegation of the management of the NNPC that as NNPC GMD he too had engaged in the unilateral award of multi -billion dollar contracts. Even if the allegation is true it cannot justify the reckless impunity that has characterized the management of the affairs of the NNPC since 1999.

No doubt, the allegations and counter-allegations of Dr. Kachukwu and Dr. Baru over contract awards have reinforced my call on President Mohammadu Buhari to relinquish the post of the Minister of Petroleum Resources and appoint a full-fledged Minister to run and coordinate the affairs on the oil and gas industry in strict compliance with the law.

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Furthermore, the NNPC Board should be reconstituted because it is currently constituted by 9 members instead of the 6 persons provided for by section 1(2) of the NNPC Act.

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